Federal Reserve OKs credit-card proposals

Market Watch ^ | 5-2-08 | Ruth Mantell

[RKBA Democrat]

The Federal Reserve on Friday issued proposals to restrict various credit-card billing practices, including double-cycle billing and unreasonable late charges.

The proposals aim to protect credit-card users and clarify costs by prohibiting actions such as raising an annual percentage rate unless certain exceptions apply, treating a payment as late unless consumers have been provided with a reasonable amount of time to make payments and unfairly maximizing charges.

-SNIP-

In a statement Friday, Edward Yingling, president and chief executive of the American Bankers Association, said the Fed's proposal is an "unprecedented regulatory intrusion" into the marketplace.

"The proposal would greatly restrict the ability of card companies to charge interest rates that reflect the risks of different consumers, similar to how insurance companies charge different rates depending on drivers' records. If card companies cannot fully reflect risk, then millions of consumers with good credit histories will end up with higher rates," Yingling said. "The proposal would also have the likely effect of ending zero- or low-interest balance-transfer options, which have helped consumers and small businesses."

[RKBA Democrat]

It's hard to decide who the bigger villain is here. Would it be the Fed using this proposal to divert attention from their latest scheme to accept the banks junk debt as collateral? Or is it the parasites in the credit card industry who are whining about even these minimal restraints on their usury practices?

Hmmm. Tough choice.

[HighlyOpinionated]

If they want to make me happy, they’ll allow a credit card user who has stopped using credit cards and is trying to pay them off to have SIMPLE interest on the debt instead of compounded.

[muawiyah]

Edward Yingling is the kind of guy who makes bankers seem to be evil and uncaring.

[meyer]

"You're introducing some new rules that are going to take some time to sort out," she said. "And in that interim period we are likely to find that people who have had credit, now may not."

She says that like it's a bad thing. There are many people out there who have abused their credit to a level that would warrant not being allowed to borrow again. At least not until they learned to pay back what they owed.

[muawiyah]

Let me add, if usury were made a capital crime you'd still have guys like Edward Yingling advocating that banks be allowed to charge usurious rates right up to their hanging date.

[driftdiver]

Loan sharks are easier to work with than credit card companies.

[RKBA Democrat]

“Edward Yingling is the kind of guy who makes bankers seem to be evil and uncaring.”

Well, since many of them are, that’s to be expected. Free speech is usually a good thing; it allows the underlying character of people and institutions to come shining through.

[meyer]

Edmund Mierzwinski, consumer program director for U.S. Public Interest Research Group, told lawmakers recently that the true cost of credit has often been inadequately disclosed, encouraging the most at-risk customers to carry large unpaid balances at unaffordable interest rates.

Lots of good lines in this article. People carrying large unpaid balances at unaffordable interest rates have only themselves to blame. Noboby held a gun to their head and told them that then had to use credit to get that big screen, new car, and complete wardrobe.

[driftdiver]

“She says that like it’s a bad thing. There are many people out there who have abused their credit to a level that would warrant not being allowed to borrow again. At least not until they learned to pay back what they owed. “

Sure you do. You also have banks putting out huge advertising campaigns focusing on how much fun you can have paying for everything with your card.

And then there are the banks giving cards to people who dont make any money.

[RKBA Democrat]

“Loan sharks are easier to work with than credit card companies.”

And arguably of better character; at least a loan shark doesn’t act as if they’re occupying some sort of lofty high ground in the community. And they generally don’t hire lobbyists to flack for them, either.

[driftdiver]

“Noboby held a gun to their head and told them that then had to use credit to get that big screen, new car, and complete wardrobe. “

True but banks have virtually eliminate the risk of not being paid back with the bankruptcy law changes.

They give people credit when they don’t the risk is high. And then they seek legal protection to protect themselves from that risk.

Kinda like the mortgage lenders.

[mysterio]

Regardless of what they decide, I won’t be using a credit card again if I can help it.

[driftdiver]

“They give people credit when they don’t the risk is high”

Should be - They give people credit when they KNOW the risk is high

[yefragetuwrabrumuy]

What would really be the end of many unscrupulous credit card company practices would be to require a “plain language” statement of every possible condition and fee under that CC agreement.

The plain language would have to be mandated and inclusive, so that they would be uniform, down to font size and print contrast on paper. Every single change made would have to be included at least one billing period or month before it was implemented.

In essence, this would mean a government devised and regulated system of contract between the CC companies and the public.

This would be tolerable in a free market only because it was a service agreement involving only money. As such, it is the same as strict banking regulation for consumer protection.

[TCats]

"the Fed's proposal is an "unprecedented regulatory intrusion" into the marketplace."

Undoubtedly, the Lobbyist said this with a straight face. Marketplace? What Marketplace. At best it is a duopoly with significant collusion between the providers in setting usurious interest rates and onerous, unjustified fees and charges.

You are right about which is worse, the Fed backstopping poor credit risks with our money, thereby abusing the Taxpayer or this kind of arrogance in the face of obvious abuse of the Consumer. Both suck IMO.

[kcm.org]

The FED’s actual powers is coming to light. And, the conspiracy was some kind of theory, eh?

[4yearlurker]

I haven’t had a credit card for 5 years now and I love it!

Don’t want one don’t need one.

[count-your-change]

Here’s an idea, If people don’t like the interest rates don’t use the cards. I have credit cards but I use them only for emergencies and then no matter how painful I pay them off early.
And always read everything, there is simply no excuse for not doing so, none.

[ex-Texan]

The are hundreds of report out there about ABUSIVE credit card policies. Just one example: You forget to pay one bill promptly within the time limits. Suddenly, under the terms of the contract all your other credit cards are 'deemed to be at risk.'

Your guaranteed 6.5% APR jumps to 22% on all your other card. Your minimum monthly payment payment doubles and then triples. Suddenly you are SOL . . . And nobody with the credit card companies wants to listen to your reasonable complaint.

The best thing to do with credit cards in cut them into pieces. Never use them again: Forever ! Screw them all ! 'Nuff said.

[Post-Neolithic]

"Here’s an idea, If people don’t like the interest rates don’t use the cards. I have credit cards but I use them only for emergencies and then no matter how painful I pay them off early"

To a great extent this is true, however there are some CC companies that wait until you have a balance on a card and raise the rates to 20+ percent. This is with a AAA credit rating and payments made ahead of time.BOA is a good one for that.

I had a Visa card that did just that, I paid off the balance that month, cut the card up, and mailed it back to them with my thoughts on their practice.

Funny part was within 2 weeks they called back offering to give me another card with a low balance, don't think they liked my answer.