Credit Card Reform Rant.

[SilverStone05]

What do you all think about this credit card reform that was shoved through back in May?

I'm pretty ticked. I've just learned this week that, as a result of this legislation, 3 of my cards now levy annual fees ranging from $40 up to $100, and my Blue Cash reward card has lowered my cash back payout by 20%. This crappy legislation is going to cost me about $500+ this coming year.

What really kills me is there's not much I can do about it. Try cancelling a card with a 15K limit and see what it does to your credit score.

Instead of fixing things, once again, our lovely government has spurred action in the way of the responsible subsidizing the irresponsible. Makes me want to puke.

What is happening now is people responsible with their credit are subsidizing a financial institution's inability to properly price based on risk. Which is pretty counter-intuitive....if you reduce a companies' ability to effectively apply risk based pricing, you are simply going to reduce, if not eliminate, credit available for those who need it most, in this case the subprime, at the expense of the prudent consumer.

Figures.

 

[tosugrad]

Its socialism. If you really want to get your blood pressure going think about the money you are spending to prop up GM, AIG, and the rest. Much more than $500 a year.

 

[Matt_337]

Try cancelling a card with a 15K limit and see what it does to your credit score.

Sorry to digress from the topic, but what does that do to your credit score?
I am in the process of moving (just submitted an offer yesterday) and I canceled a $25k card recently along with 2 other cards (both around $20k each) since I didn't use any of them.

 

[SilverStone05]

The second biggest factor in determining your credit score is your debt/credit ratio.

Meaning how much debt you are currently using as compared to how much total you have available.

You cut the total available, and your debt to credit ratio shrinks pretty good...(assuming you use your credit cards every month and regardless of whether you pay them off every month too)

Causing your score to shrink pretty good.

It's stupid.

 

[ediddynsx]

It hurts your credit score, because even though you don't use them it shows that you have history of having them.

Many consumers close credit cards after becoming what seems like too delinquent to catch up. There seems to be the notion that closing cards makes delinquency go away. Not only is this not the case, closing out a delinquent credit card will hurt your credit more than it will help.

Here are five credit cards that you should never close.

1.Any credit card that still has a balance.
When you close a credit card that has a balance, your total available credit is lowered to $0. Since you still have a balance on that credit card with no credit limit, it looks like you’ve maxed out. The amount of debt you have is 30% of your credit score; so a maxed out credit card, or one that appears to be maxed out, can have a very negative impact on your credit score.



2.Your only credit card with available credit.
Closing out this card will decrease total available credit and increase your credit utilization, which, as before, is not a desired situation.



3.Your only credit card.
Since part of your credit score into consideration the different types of credit you have, keeping a credit card in the mix will add points to your credit score. You could get turned down for a credit card in the future because the creditor thinks you don’t have enough experience with credit cards.



4.Your oldest credit card account.
Closing out your old credit cards shortens your credit history. Lenders tend to view borrowers with short credit histories as riskier than borrowers with longer histories. Closing your oldest credit card won't impact your credit score immediately. But, once the credit card falls off your credit report 10 years down the road, you might see an unexpected credit score drop.



5.The credit card with the best terms.
Why let a good thing go? If you have a credit card that has a low interest rate, no annual fee, and other perks like travel insurance, keep it. A credit card that charges you less for making purchases is far better than one that charges you more.
It’s ok to close out a newer credit card that you no longer use as long as the card does not have a balance and you have other credit cards.

In identity theft and fraud situations, your creditors will advise you to close the credit card to keep the thief from damaging your credit even further.

The right way to close a credit card is by sending a written notice to the card issuer. For your records, you should request written confirmation that the account was closed in good standing.

You should be just as selective about the credit cards you close as the ones you open. Before you pick up the phone to alert your creditor that you want to close your account, make sure it’s not going to affect your credit score in a negative way.

Grabbed that from online, so don't take it as the bible, but I am sure its informative.

 

[Matt_337]

Sorry ediddynsx

None of my accounts were ever delinquent. They were just not used in the last year or two and I didn't like knowing I had these open accounts (I did have someone do fraudulent activity before on one of my cards...and it had to do with an aftermarket car parts company).

Oh well....what's done is done. I need to go talk to my mortgage broker lady.

 

[ChopsJazz]

I noticed that the interest rate on one of my cards jumped from 3% to 26% in one billing period. The phone representative said that I failed to respond to a letter that asked me if I would like to have my interest rate raised to 26%! I told them that I never saw the mailing, and if I did I most likely couldn't make sense of it, have you ever tried to read the fine print on a credit card mailing? And who in their right mind would want to raise their rate anyhow? I had a manager change it back.

In North Dakota it is legal to have a 70% interest rate. NEVER accept a credit card from a N. Dakota bank.

 

[nsxotic911]

Wealth redistribution, war on the middle class, war on the economy, a promise kept and the sheer stupidity of the people to vote in this type of catastrophic 'Change.' My interest rate jumped as well and I have a near 800 credit score.

xMarxism and Socialism have the highest of intentions (well, not really, but it sounds good on paper so we'll give it the 'benefit of the doubt') yet, everytying touches goes from either fair/bad to catastrophically worse. I don't completely get it - it's as if these politicnas and the WH is either dislexic, willfully incompetent and ignorant of history or in fact hate the middle class and anyone that doesn't share a marxist political ideaology. Given that the WH has unequivocally showin contempt for the First Ameendmt by trying to ban FoxNews, I'm having a hard time believing it's anything but the lattermost*. 2010 and 2012 can't come soon enough.

Wait unitl "Health Care reforum" is complete and your rates will increase, your coverage decreases(or ceases to exist), and the quality of health care that you will have decrease as well. You can quote me on that.

Moderator: If you delete this, a fundamentally true statement, please, really, ban me. You can hide behind "private forum" all you want, but people aren't buying it.


Note: To it's credit all of the other news organizations, including MSNBC refused to interview the recent socialist czar, errgh.. pay czar to their credit unless Fox was invited. Even they saw how absolutely assinine this type of tyranical** behavior is.

BTW, in case someone wants to dispute whether it's tyrannical or not, here's the dictionnary.comom definition:

tyr⋅an⋅ny  /ˈtɪrəni/ Show Spelled Pronunciation [tir-uh-nee] Show IPA

–noun, plural -nies.
1. arbitrary or unrestrained exercise of power; despotic abuse of authority.
2. the government or rule of a tyrant or absolute ruler.
3. a state ruled by a tyrant or absolute ruler.
4. oppressive or unjustly severe government on the part of any ruler.
5. undue severity or harshness.
6. a tyrannical act or proceeding.

 

[swerve2007]

all they are doing is trying to 'recover' their profits because they can. it has nothing to do with government, marxism or socialism. this is capitalism at its purest (and a monopoly to some extent as they are all doing it).
best thing you can do is to adjust your lifestyle to limit your dependance on blood sucking banks.

 

[tosugrad]

all they are doing is trying to 'recover' their profits because they can. it has nothing to do with government, marxism or socialism. this is capitalism at its purest (and a monopoly to some extent as they are all doing it).
best thing you can do is to adjust your lifestyle to limit your dependance on blood sucking banks.

The point is they are forced to make money in "other" ways due to government intervention. This is NOT capitalism.

 

[nsxotic911]

The point is they are forced to make money in "other" ways due to government intervention. This is NOT capitalism.

Right. The common illogical argument of those that promote the ideals of socialism is that it was Capitalism that is the reason for the NEGATIVE economic 'consequences' when the government trys to "make the level playing field fair" and implement socialistic ideas. Every country has become poorer and more miserable since then.

It happened in every capitalist - > socialist country from Cuba to Romania etc... Not ironically is that China has a much more aggressive Capitalist economy + totalitarian political hand and their GDP growh in this "recession" was ~8.0% in the last quarter! It has to be the most embarassing thing to the Western world that this is happening.

 

[jond]

Which part of the reform do youguys specifically not like?
All of it seems kind of logical except the sub-prime limits.

Things like giving you 21 days from when they mail your bill to pay it? How can you argue with that?


http://www.whitehouse.gov/the_press...orms-to-Protect-American-Credit-Card-Holders/

 

[queenlives]

the banks are doing whatever they can to make money from whomever they can make it.

ken, they actually asked you if you'd like your interest rate raised? "uh, sure, can you double it, then triple it 3 months later cause i'll be finished paying my alimony payments then and will have some extra cash to burn."

 

[SilverStone05]

all they are doing is trying to 'recover' their profits because they can. it has nothing to do with government, marxism or socialism. this is capitalism at its purest (and a monopoly to some extent as they are all doing it).
best thing you can do is to adjust your lifestyle to limit your dependance on blood sucking banks.

You're wrong. This has "EVERYTHING" to do with government. Their crappy policies are what spurred all of this. And you're also wrong in the sense that this is capitalism at its purest. Capitalism at its purest would have been the status quo - where companies can charge what they want to who they want without government intervention.

And while you may view it as dependence on blood sucking banks. I hand picked each of these individual cards each because of their convenience to me. I.E American Express pays ME to use their card. Bofa gives me reward points, etc etc. I can pay cash for anything I want. But why do that when I get cash rewards for using their cards?

 

[SilverStone05]

Which part of the reform do youguys specifically not like?

The fact that I have money coming out of my pocket now, when before, I didn't.

It used to be, I didn'tt have to worry about their dirty tricks.

Like an informed consumer, I read my disclosures and paid my bloody bills on time.

Now i'm subsidizing those who were too stupid or lazy to do so.

 

[jond]

The fact that I have money coming out of my pocket now, when before, I didn't.
It used to be, I didn'tt have to worry about their dirty tricks.
Like an informed consumer, I read my disclosures and paid my bloody bills on time.
Now i'm subsidizing those who were too stupid or lazy to do so.

I agree with all of that.
My guess on what we're seeing is round one of banks attempt to stay fat.
When people who are responsible who used to only use credit cards out of convience STOP using them, the banks will be forced to shrink to a maintainable size. At that point they'll lower their rates back down.

 

[queenlives]

My guess on what we're seeing is round one of banks attempt to stay fat. When people who are responsible who used to only use credit cards out of convience STOP using them, the banks will be forced to shrink to a maintainable size. At that point they'll lower their rates back down.

yep.

 

[alum04org]

What do you all think about this credit card reform that was shoved through back in May?

I'm pretty ticked. I've just learned this week that, as a result of this legislation, 3 of my cards now levy annual fees ranging from $40 up to $100, and my Blue Cash reward card has lowered my cash back payout by 20%. This crappy legislation is going to cost me about $500+ this coming year.

What really kills me is there's not much I can do about it. Try cancelling a card with a 15K limit and see what it does to your credit score.

Instead of fixing things, once again, our lovely government has spurred action in the way of the responsible subsidizing the irresponsible. Makes me want to puke.

What is happening now is people responsible with their credit are subsidizing a financial institution's inability to properly price based on risk. Which is pretty counter-intuitive....if you reduce a companies' ability to effectively apply risk based pricing, you are simply going to reduce, if not eliminate, credit available for those who need it most, in this case the subprime, at the expense of the prudent consumer.

Figures.

Well said, Silverstone05. It stinks. That said, I'm going to "tread lightly on politics."

 

[sahtt]

Stop being so intelligent and informed, go back in the herd like a good sheep.

Banks=Bad.
Government=Good.

They even keep the letters consistent so the slower sheep can still nod in understanding.

 

[swerve2007]

You're wrong. This has "EVERYTHING" to do with government. Their crappy policies are what spurred all of this. And you're also wrong in the sense that this is capitalism at its purest. Capitalism at its purest would have been the status quo - where companies can charge what they want to who they want without government intervention.

And while you may view it as dependence on blood sucking banks. I hand picked each of these individual cards each because of their convenience to me. I.E American Express pays ME to use their card. Bofa gives me reward points, etc etc. I can pay cash for anything I want. But why do that when I get cash rewards for using their cards?

in my previous response i was not targeting your spending habits at all, it was a general statement on banks.

just because you do not agree it does not mean the government policy is completely wrong- afterall the law they passed limits predatory lending, changing the rates on a whim, giving cards to minors etc. the banks have been cashing in on that shit for years. yes, now it is an inconvenience to everyone as they are trying to 'shock the system' with these new costs to get the kind of backlash that you see even here, so we all run to government and bitch. do you really think the banks are in business for your good?

 

[Big_D]

I agree, If mine do that I will call them and threaten to cancel the card. Because I have been with them for umpteen years they usually back down.

 

[docjohn]

amex is not looking bad after all:wink:

 

[sahtt]

in my previous response i was not targeting your spending habits at all, it was a general statement on banks.

just because you do not agree it does not mean the government policy is completely wrong- afterall the law they passed limits predatory lending, changing the rates on a whim, giving cards to minors etc. the banks have been cashing in on that shit for years. yes, now it is an inconvenience to everyone as they are trying to 'shock the system' with these new costs to get the kind of backlash that you see even here, so we all run to government and bitch. do you really think the banks are in business for your good?

Nobody's in business for anyone's good besides the business owner's. The key is to have multiple businesses competing against each other, then as if by a miracle it is the consumer who benefits most.

 

[swerve2007]

sure, problem is they are not competing but doing the same crap together.
i did cancel my BofA card too after they raised my rates.
word of advice- credit unions folks.

 

[sahtt]

sure, problem is they are not competing but doing the same crap together.
i did cancel my BofA card too after they raised my rates.
word of advice- credit unions folks.

Right.. except then you could go start a credit card company and become massively wealthy since all the other cc companies are ripping us off. Just like how "big oil" is ripping us all off while .001% of the population has any understanding as to the risk, capital, time, and expertise involved in getting oil out of the ground.