Posted on 05/20/2009 4:28:09 AM PDT by GOP_Lady
Sweeping new restrictions on credit-card companies would ban extra fees and fluctuating rates and arm tens of millions of consumers with more information on their debts.
Starting in February 2010, a Senate bill passed Tuesday would ban practices such as charging consumers to pay by phone and sudden surges in interest rates. Payments above the minimum due would be applied to balances with the highest interest rates. Information once relegated to tiny print must be made clearer, and consumers will soon be told how long it would take to pay off a balance if they pay only the minimum due.
(Excerpt) Read more at online.wsj.com ...
There are a couple of reasons why merchants want a minimum purchase amount. First, most merchant accounts charge a per transaction charge as well as a percentage of charged sales. The transaction charge may be something like a quarter, and the percentage might be around 3%. On a $50 purchase, the entire charge to the merchant would then be about $1.75, or about 3.5% of the total purchase. But on a $10 purchase, the total charge is $0.50, or about 5%. And on a $5 purchase, the total charge is about $0.40, or about 8% of the purchase.
Now, a merchant can shop for an account with a very low per transaction charge, but conversely, his percentage charge of charge sales will rise the lower he gets his transaction charge.
The second reason is that with many merchant accounts, the percentage that one pays on transactions varies according to two parameters: total monthly sales volume (or perhaps a rolling average) and average sales per transaction. The merchant will receive a better rate if his average transaction is, say, $25, than if it's $12. And he doesn't lose much on the volume by getting rid of all the small purchases.
sitetest
I do buy stuff off the internet quite frequently. Often there is free shipping if the order exceeds a certain amount. Even if I have to pay for shipping, I can often find what I want for enough less to make it worth my while.
Example: My local shoe store at the mall sells Piloti driving shoes for $99 plus tax or about $106 and change. I found the same shoes at clearance online for $26. I bundled them in with 3 other items and shipping was free.
In store retail is going to be dead in a few years with the exception of perishable items.
:) Well that’s part of the generation gap. Checks are very often abused, as the owner of the establishment I work at is frustrated with constantly. There are electronic verification systems for checks, but it’s easier on most people to swipe the card. It does lead people to swipe irresponsibly, but I would not mourn a second if all checks were fazed out, I’d make my life easier, until the big EMP hits us that is...
Freedom DOES rock! :-)
Congratulations to you!
Basically I am against government meddling in business but I think the credit card companies have brought this on themselves. In my opinion they have stayed up all night figuring out ways to trap the unwary card user. I have gotten many offers that I threw in the trash after reading them and sometimes it took three readings to find the “catch 22”.
Finally, the compelling argument =) Thanks, I didn’t factor the per transaction fee...
For the most part, I have found that you can actually get better deals on the internet if you compare pricing, watch for sales and free shipping offers. On-line coupons (e.g., Coupon Mountain, RetailMeNot) are also an option and I like that I can read reviews before buying.
As an example, I recently was looking for black jelly beans for my husband and I went to a local candy store and they were going to charge me $11/lb. I found them on-line for $4/lb. with free shipping. So it really makes more sense IMHO to shop on-line vs. wasting the gas and energy it takes to physically go to the store. Now if they start the "interest as soon as it rings up" BS, I may have to reconsider my options.
In all sincerity if someone cares to explain their logic behind it, I’d be open, but I’ve never been able to figure it out.
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The combination of a percentage rate plus a per transaction fee can result in a considerably higher percentage rate on small transactions. If the percentage were constant it wouldn’t matter to the merchant.
I recall back in the 70’s or so my parents getting their first Mastercard. It was a big deal to them and they held it in regard as a potential huge danger too. Oddly enough I've never forgotten their caution.
Then came the 1980’s and 1990’s. I got married and soon it was ‘off to the races’ to establish enough credit that we could buy a home. By that time it was if you didn't have several credit cards, you didn't have enough credit to buy any large items like a house, condo, or car. At the time it was like the banks created this funky prerequisite with their major CC’s. You couldn't then book a plane flight, hotel room, rent a car. Somewhere along the line my ex-husband lost the temptation battle with stuff and his resulting habits ended our marriage(it wasn't just the debt, but other things not fit to print in a public forum).
It took me years to payoff the mess he created. He would have never paid it off and no matter how much I argued with the CC’s and banks regarding the court ordered responsibility for abuse of marital assets...I still had to pay. Some cards he had I was never even a signor. And the things he charged on his personal cards...well it was nothing I ever benefited from either. But marriage is marriage and at the time the banks didn't really care.
So here we are with this new legislation and it was just a few years ago they (Fed) allowed the CC’s to change their rules. Raise rates and minimum monthly payments (recently doubled these). Some of this is just turning the clock back a bit.
Credit Cards are a necessary evil in our modern world. Recently I found my statement to hold an increased interest rate for no apparent reason that I could tell. I had been making bi-monthly payments in an effort to payoff the last card. I called to find out why. Why? It was some convoluted reason of the bi-monthly payments, paying it down too quickly, and my credit score for having low amounts of credit? It was very convoluted and I still don't really understand it. I told the lady on the phone that I was being punished for having a home paid off, no car payment, and one stinkin’ credit card? What a joke.
I need one of those balance transfer offers right about now.
But that is not really the answer now is it. I tend to agree with some other viewpoints that the CC’s are out of control. I can't wait to have this last card paid off and get back to living with the caution that my parents had with their first card.
“I think it’s a good thing if the result of this bill produces contract details for the card in which the average user can actually understand.”
If you’re too stupid to understand the agreements, hire someone to explain them to you before you sign them or suffer the consequences.
Anyone that carries a balance deserves to be raped!!!
That’s Old School thought. Nowadays, people who overextend themselves get rewarded on the backs of those of us who control ourselves.
No one can be screwed by a CC company if they pay their bill 100% on time every month.
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Never underestimate the pettiness of these people. More than once I have paid the full amount on a statement and then gotten billed for a few cents interest on the next statement without my making any other charges on the account. The first time this happened I simply paid the small amount and was astounded to get a bill for an even smaller amount the next month. When I finally called to ask the meaning of this insanity I was told that the first charge was for interest incurred between the time the bill was sent out and the time I paid it. The second charge for a few cents was said to be the interest incurred on the first miniscule amount after the bill was sent out. I simply told the person on the line that this could go on for eternity and I had no intention of paying two cents every month forever so they cancelled the remaining bill.
This has happened to me not once but at least three times! The only experience I can recall that was more frustrating was an account I set up at a hardware store for the little business I used to run. I mistakenly paid my bill twice which resulted in a credit balance. For the next few months I had little need for anything from the store and was amazed to find that they were charging interest on my credit balance! When I called about it they told me it was a flaw in their computer program and they would get it straight, nothing was done and I called a couple of more times and got the same story. Finally I called and really let them know I wasn’t going to put up with this and they corrected the balance and stopped charging interest. As soon as I needed something from them I used the credit and made sure I never had a credit balance again.
I heard that people like us may end up paying some kind of penalty for being responsible in order to subsidize the others. Is that true?
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The CC companies have for a long time considered people like us “deadbeats” and “freeloaders” because we choose not to pay them interest.
I’ve read articles years ago with them complaining that we cost them money and how they want to charge us fees or figure out some other way to make us pay for the privelege of using their cards, so it’s not a new idea.
They don’t need us to subsidize the others. They just can’t stand that we aren’t paying throught the nose like MOST of their customers do.
I agree. The people in trouble right now because of job losses will still be in that kind of trouble, I expect a goodly number of them to file bankruptcy since the job market will not come back even if the economy recovers a bit.
Credit card companies will just try to make money by screwing over their "good" customers with annual fees, dumping of rewards, and higher interest rates. Those customers are smart enough to tell them where to stick it.
Credit card issuers should be about the place where GM and Chrysler are now, in about a year.
“It was very convoluted and I still don’t really understand it. I told the lady on the phone that I was being punished for having a home paid off, no car payment, and one stinkin’ credit card?”
That’s BS!
The only thing i’ve ever paid interest on in my life was our first home and it’s been paid off for 20 years.
We have one CC wirh a $30k limit and always pay it off in full every month as soon as the statement is available.
Last month I got a notice that my maximum was cut in half to $15k and I called them and after talking to them for a few minutes got it raised back to the $30k.
He mentioned my credit score and I asked what it was. He wouldn’t tell me but said that it was within the upper 10%.
I reduse to pay to find out what my credit score is since I never borrow to buy anything and never have in my life including my airplane and the condo we are currently living in.
You might be someone they haven't gotten around to yet. I'm in the same situation, I have had good relations with my credit card companies, except for one situation that was my fault. I missed a payment deadline with Amex, and they jacked the interest rate to over 20%, but since I now pay them off in full every month (I just run some expenses with them to get Hilton HHonors points), it really doesn't affect me.
However, if they start charging an annual fee for that card, or dumping the points, I'm outta there. I'll keep the card if there is no annual fee, but I'll be darned if I'm going to use it for nothing, and let them collect fees from merchants without giving me a bit of something for it.
I always search for coupons and free shipping it’s usually cheaper and better selection than brick and mortar stores.
” I expect a goodly number of them to file bankruptcy “
Bankruptcy no longer gets out of CC debt, you still have to pay it off!
Credit cards are out of fashion in our home (thanks, Dave Ramsey). That's what we have an emergency fund for. Debt sucks! ($16K down in 13 months, about $1K to go)
And to all who will argue that it's impossible to save money in this day and age, it most certainly is. My husband brings home $3600/month (I am a stay at home mom). Out of that comes our mortgage ($800), our utilities (phone, cable, internet, gas and electric), the kids' Catholic school tuition ($500/month 10 months out of the year), groceries for six plus four pets, clothing, gas for the cars, charitable giving, and spending money for dh and myself (the kids get chore money, which they must put into savings, giving, and spending banks). The rest of our money either goes into the emergency savings acct or the other savings we have set up for Christmas/pet care/house maintenance/car maintenance. Before the month starts, we put down where all the money is going on our spreadsheet. Right now we are down to a bit of a student loan and our mortgage in the debt category.
Right now we're living like no one else so later we can live like no one else. Right now we live pretty frugally--the kids' clothes come from consignment shops and a lot of clearance racks (or hand me downs). Eating out is a rare treat. Cable and internet are our luxury items. Our home is 60 years old but it's very livable. Our cars are a 2000 Ford Windstar and a 1988 Honda CRX. People may look at us and think we have no money or very little, and in a sense they are right (we do have 4 kids, LOL), but we know how we're paying for Christmas, we know how we are going to pay when a car needs work or the water heater goes out, and it's not by whipping out a credit card. It's a great feeling of independence to be able to do that. It just takes self discipline.
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