Credit Cards Don’t Kill Credit Ratings, People Do

NRO Corner ^ | May 28, 2009 | by Jim Manzi

[Obadiah]

Very well said. Allow me to summarize your point thusly:

The credit card companies surrendered to their own prurient naked greed.

[the invisib1e hand]

any reasonably inteligent person

not to split hairs, but...

Anyway, you might want to read up on "ambiguity."

[CottonBall]

It is an unfortunate reality that there are many people who are not equipped to get along in a capitalist system. They lack some combination of (rarely) the basic intelligence and (much more frequently) the emotional maturity and self-discipline required to make their way in a world in which others are not looking out for them.

That's exactly it. That's the same mentality that makes people say they're not responsible for buying a house that could never afford.

As education gets dumbed down more with each passing year, we get more people incapable of acting like adults.

[dalereed]

If you can’t read a simple credit card contract and understand it you are stupid.

Go hire someone to explain it to you.

[JWinNC]

"His conclusion is that credit-card companies are, morally speaking, “scumbags.” "

Yep.

While I firmly agree that people are responsible for themselves and their own debts, these companies are the modern equivalent of the "Company Store" system that kept people in debt bondage.

They encourage debt. They encourage paying forever and never retiring the debt while at the same time changing the rules and rates to make it harder to pay off the debt.

jw

[EBH]

You do see what I am trying to communicate.

There is no place in Capitalism for the lust of greed. Working for one's self-interest yes, but not lusting after greediness. The Bible warns of these two deadly sins to the individual and society.

For the banks, lusting after their greed, actually harms themselves in the long-term.

For the consumer, lusting after their greed, again actually harms them in the short-term.

Constructive self-interest has been replaced with first jealousy, then lust, and now blatant greed.

[the invisib1e hand]

You’ve just articulated Rand’s Contradiction.

[Leisler]

Detroit has a 25% graduation rate, and what fine graduates those are. Commonly, urban HS have rates around 50%.
( I suspect the rates are even worse, but long story )

These kids would learn more math on the streets, borrowing from leg breakers than the Public Skools.

The kids are victims. Victims of the unions, the administrators and the politicians.

Yeah, “the parents”. The problem is the parents went through the same ‘skools’. So now the system is bullet proof and self sustaining.

The parents you are thinking of, died out generations ago.

[DoughtyOne]

The idea the credit card companies have to raise rates from 7% to 30% overnight, just because a person is a day or two late with their payment, is ludicrous.

Take a look at your bills folks. If you’re one hour late paying your bill, you will be charged a “late”, “penalty”, or some other version of a fee, related to your tardy status. Generally that’s a $25 to $35 dollar fee.

The credit card company doesn’t have to hire more staff to have this facilitated. It’s computers do the task for it.

If you’re paying 7% interest and you’re a day or two late, the $35 fee more than makes up for any loss. One could say yes, but that’s just for one account. They loose gazillions if everyone is late. Yes, and they gain gazillions by charging everyone $35 because they are late.

If you pay your card late, you also pay interest on a higher amount that you would have. And so the repayment schedule is pushed on out one month, and the credit card company makes more money as a result. If this happens across the board, another words if say 100,000 accounts go 24 hours, the credit card company stands to make a significant increased profit due to this small individual increase in interest rate paid.

These credit care companies plead that their business model is destroyed if people pay even one hour late. Like hell it is. That’s not true.

The public is getting jobbed by these exhorbitant interest rates folks.

You can make all your payments on time all year, and be paying off less than 20% of the sum total of the money you sent in.

I figured it out recently. It could take you 30 years to pay off a loan making your minimum payment, if the interest rate is 30%. That is flat out abusive, and should be a criminal act.

There’s no call for that under any circumstances.

[Goldsborough]

There are many credit card apologists here on FR who, (naively IMO), blame credit customers for all of the "problems" that have resulted in the jackasses taking aim at card issuers. Were only that true, the outrage would be justified.

I am a lawyer and therefore equipped by both interest and training to read my cardholder agreements thoroughly. Part of the trouble is that one shouldn't have to be legally trained in order to clearly understand all of the terms and rights of the respective parties.

I particularly love it when apologists for lenders say "don't sign something if you don't understand it." My bet would be that even most of them only have a rudimentary understanding of what they themselves have signed, be it their mortgage, their car financing papers, or the documents that resulted in the plastic in their wallets and purses.

I have no beef with people who are careful with their money, but most of those who are self-righteous about their observance of their obligations are mainly doing the right thing on principle, and not because of their increased acumen about credit card companies.

Of course the safest way to use a credit card is to never carry a balance. Shy of that however, say for a medical or vehicle repair situation where budgeting and savings have fallen short in covering the sudden expense, many ordinary folks have found that what their credit card companies are doing is not so much providing a contracted service on concrete terms as they are into gaming their "customers" for every dime they can be taken for.

Hell, even carrying no balance is fraught with risk these days. When my toddler put her sister's flute into my TV a few months ago, I charged its replacement with the intent of paying if off so that I could get some more airlines "miles" as a "benefit." My timely payment in full was electronically sent via Bank of America, but was not "processed" by the issuer until after it was one day "late" for which I was hit with a penalty surcharge which was added to my balance. One voice jail ridden phone call later, the charge was rescinded after I had threatened to shred the card. If that is how a card issuer tries to game someone who makes every effort to not owe on the card, I can only imagine what they attempt to do to people that cannot pay them off in a month.

After being subjected to "processing" tricks personally, all I have to say is that the "reforms" that these issuers are having imposed upon them by politicians could have been easily avoided by their being more honorable in the first place.

When the term "late" in a contract has been perverted millions of times against millions of people by including the issuer's foot dragging on electronic transfers, the word "late" is going to be redefined in the law for them, like it or not.

If it is a "no brainer" to not carry a card balance, it should also be a reciprocal "no brainer" to not piss off so many card holders as to draw the unwanted attention of grandstanding congressmen.

In some other reality I might have mounted some opposition to what is happening to credit card issuers, but in this world they tried to screw me unnecessarily for a paltry $35.00 to which they had no legitimate claim. Burn baby burn. If they try to dodge their stupidity tax by taking it out on me via increased fees, the end of "rewards" etc., I simply walk.

The issuers have no one else to blame. They built a business of convenience that in the beginning was simply financed by giving good credit risks a service for which merchants paid a transaction fee and balance carrying customers paid interest. Eventually, this model must have seemed unequal to the task of fattening the bottom line for it was made Kafkaesque, and cards issued willy-nilly to the unworthy, (losses to be borne by squeezing merchants and those customers who did the right thing with their balances), in order to maximize their capacity to nickel and dime ALL customers in every way possible. Screw 'em.

[dfwgator]

Take a look at your bills folks. If you’re one hour late paying your bill, you will be charged a “late”, “penalty”, or some other version of a fee, related to your tardy status. Generally that’s a $25 to $35 dollar fee. The credit card company doesn’t have to hire more staff to have this facilitated. It’s computers do the task for it. If you’re paying 7% interest and you’re a day or two late, the $35 fee more than makes up for any loss. One could say yes, but that’s just for one account. They loose gazillions if everyone is late. Yes, and they gain gazillions by charging everyone $35 because they are late.

Fine. Don't like it, cut up the cards. A market-based solution that doesn't need to government to get involved. But people are too damned lazy to take matters into their own hands, so they call on Uncle Sugar.

[the invisib1e hand]

too bad you’re a lawyer. you seem like good people.

[EBH]

What? A is A?

[the invisib1e hand]

“Greed is Good.”

[chris_bdba]

Same company just did the same to us. I’ve never been late or missed a payment. Luckily we don’t have a very large balance and good credit so when the next good offer came I jumped on it and transfered the balance at a free transfer, 5.99% until it is completely paid off and a 1.9% for the first year. Go look up what HSBC is offering right now and see if you can do the same. :)

[DoughtyOne]

When the credit card companies simply raise the rates to 30% arbitrarily, it is wrong. If you can’t grasp that, don’t talk to me on the issue.

The government already regulates these industries. It’s an abdication of oversight to allow this to continue.

These rates are userous. There’s no other term for it. It’s surpases the level of loan sharking.

I can’t believe you would defend this, and yet your come back is, well cut up your credit card. And then pay out for thirty years under these terms? Are you nuts?

Something needs to be done about this.

[Virginia Ridgerunner]

Ah, dale, the same guy who said last week that anyone who "that carries a balance deserves to be raped!!!"

Classy. I bet you work for one of the CC companies don't you.

[dfwgator]

When the credit card companies simply raise the rates to 30% arbitrarily, it is wrong. If you can’t grasp that, don’t talk to me on the issue.

And I agree, so cancel the cards, and tell all of your friends not to do business with the credit card company. That's the way the market works. If the people abdicate their responsibilities as good consumers, you get a Nanny State.

[Virginia Ridgerunner]

Great post! Thank you!

[EBH]

Nope, you missed it then.

Greed is not good. Greed functions against a persons own best self-interest.