Posted on 12/04/2007 5:29:07 AM PST by Brilliant
In one of the cases cited by the subcommittee, Marjorie Hancock of Arlington, Mass., wound up with interest rates on her four Bank of America credit cards of 8 percent, 14 percent, 19 percent and 27 percent, even though her credit risk is the same for all four.
For on thing, I don't understand why anyone would have four credit cards through one bank. Secondly, I would venture to guess that Bank of America would be perfectly amendable to the idea of combining all four of them into a single account -- and probably at the lowest rate, too!
They aren’t all the same. Freep-mail me if you’re interested, and I’ll send you a link to my bank — which stands head and shoulders above the rest when it comes to this kind of thing.
Profitable industry? Well, we can't have that now, can we?
“For on thing, I don’t understand why anyone would have four credit cards through one bank. Secondly, I would venture to guess that Bank of America would be perfectly amendable to the idea of combining all four of them into a single account — and probably at the lowest rate, too!”
Well, I would guess the person in question has “Affinity” cards. Say a special card for Nascar fans or a particular college. Every time you go to a sporting event you see booths offering free stuff for filling an application.
All those different rates, I would guess the person missed a payment or made cash advances. A CC would not want to combine the cards. Once you make a cash advance the company reserves the right to use your payment to pay off your balance as they see fit. Say your card has rate of 6% for purchases but 20% for cash advance. You technically have two balances. The company would use your payment to put a dent in your purchase balance and keep your cash advance balance higher for the higher interest.
Another thing the government has no business in.
On a side note I have mixed feelings about using credit scores for insurance rates:
On one hand, if you already have home or auto insurance (with any provider) and apply for new insurance or your current company re-evaluates you, you should be priced the same as others with similar dollar amounts of claims, coverage amounts, and length of time with insurance, regardless of credit score, assuming you’ve paid on time. Simply having a low credit score, due to whatever reason it may be low, is not an indication that your house is any more likely to burn down, or that you’re a bad driver, again, assuming you have a history of insurance and are being compared with others with a similar claims history.
However, for a new applicant with no existing insurance of that type, and they have little else to go off of, it makes sense.
There’s also a possibility that she had credit cards from four different banks that were acquired by Bank of America over time. That’s happened to me over the years, and I’ve had to combine/juggle the accounts because I carry three different credit cards from three different banks (one for personal use, one for work-related expenses, and one for my own small business).
Conceivably, the credit cards have different features. For example, I have one that gives me Upromise $$. I have another that gives me a rebate. I also have an American Express card and a Discover Card, though those cards are not usually issued by banks.
Some of them may have annual fees and others not. The bank usually adjusts the other charges so that they make out.
You are correct. And if you have a long history of making timely payments with credit card company A, they should not "universal default" you into a 30% bracket because you may be having a dispute with company B.
But that is what happens. It's thievery. My wife and I were negotiating with one company to pay off the debt. All of the other cards we had slammed us with higher rates, which led to credit limit problems, which led to more fees which led to higher rates, etc. etc.
Granted, we were not in the best of situations, but there is only so much one can do when a spouse becomes unable to work and the gov't has not yet or will not recognize her disability. These things take time.
Money doesn't suddenly sprout from nowhere.
So one attempt to negotiate a payoff triggered every other card, despite years of timely payments, to put us into 30% rates.
If credit card companies wanted people to go into bankruptcy, they would not act any differently. How they expect to get blood from a stone is left unstated.
Yea, I called an told the companies that my rates were too high and they gave me a lower rate. Whats so hard about that?
Industry critics say it's another example of abusive, confusing credit card practices that can push consumers deeper into debt.
All this means is that Congress needs another round of lobbyist dinners and bribes. No other explanation could account for 30%+ default rates.
People make mistakes. It’s always “best” to pay off at the end of every month, but no amount of preaching can magically erase existing debt. Some people just don’t have much money, and easily get into trouble. Should they manage it better? Sure. Do they? Sometimes in time they learn to, yes, but it’s not because a holier-than-thou pretentious jerk tells them “well ya woulda, shoulda, coulda” over and over and calls them an idiot.
Calling someone an idiot doesn’t suddenly erase their problems.
No kidding. They make it sound as if it were some magical, oppressive beast that just fell on the country overnight.
Good grief. This kind of government meddling just encourages people to take LESS responsibility for their actions. I can’t believe this is the BEST way they can think of spending their time. Ridiculous.
* I get 2% cash back from the CC on groceries and gas, and 1% cash back on everything else. It's free money.
*I pay no interest, no fees, nothing, just get free money.
*If a product doesn't deliver as promised, I can just get my money back from the CC company by disputing the charge. It's like insurance on things you buy. I only did that once, though.
*If someone fraudlently charges something on my CC, I am not charged, but if they use my debit card, it is my responsibility.
*I have a checking account that earns interest. When I use my credit card to buy stuff the money stays in my checking account, earning interest, until I get the CC bill and pay it. It's like getting almost up to two month's worth of interest on the checking account.
*My CC provides me with free travel, car rental, and accidental death insurance, and other free perks and services, such as a 'concierge' service.
The gov't needs to unmeddle what they meddled with last time. In order to "help" people with credit card debt, they suddenly doubled the minimum monthly payment amount. In theory, this means consumers will pay off their debts much faster.
In practice, people paying minimums (or near minimum) don't have money laying around. Especially with energy costs skyrocketing.
So they fail to meet the new minimum. So the card they failed to make the payment on charges fees. And puts them into the 30% bracket. And, if this pushes them over the credit limit, it hits them with more fees.
And, with "universal default" every other card they may have now treats them in the exact same way. Even if they have been making the new increased payments.
That surely helps. People muddling along making minimum or minimum "plus a little extra" payments are now swamped. Why? Because the gov't wanted to help.
RE: lots of cards.
I was able to borrow $9000 for about 3 years for about $100 in fees. This was during the 0% craze a few years ago. I slowly cancel the excess cards as to not lower my credit score.
The card compinies were betting that I would default and make them some money, they lost.
None of the above. I’m not endorsing the destruction of an industry. I am endorsing tighter controls on an out of control industry.
Out of the points I listed, this is the one that troubles me. It is wrong, IMHO, to make someone lose their home so unsecured debt can be repaid. It's just plain stupid and it has been linked to one of the problems in the housing market. Banks are losing money in foreclosures rather than credit card debts. Only someone who is heartless would rather see people kicked out of their homes so Visa can get repaid.
But that doesn't make sense in the world of debit visa cards and such. You don't need a CC for convenience if you have the cash to pay the bill.
“You don’t need a CC for convenience if you have the cash to pay the bill.”
I do. I don’t want to go to the bank every other day to withdraw cash. I don’t want to carry a lot of cash. I keep about $20 on my person, and use the credit card whenever I can. $20 will last me all week.
The credit card companies are going to have to recover the loss occasioned by people who don’t pay on time, or don’t pay at all from someone. Since I pay like clockwork, I don’t see why it should be me.
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