Credit Card Firms Won as Users Lost

http://www.latimes.com/news/nationworld/nation/la-na-bankruptcy4mar04,0,7113947.story?coll=la-home-headlines

Credit Card Firms Won as Users Lost

They sought new laws but found ways to make money even on people who went bankrupt.

By Peter G. Gosselin
Times Staff Writer

March 4, 2005

WASHINGTON — In the eight years since they began pressing for the tough bankruptcy bill being debated in the Senate, America's big credit card companies have effectively inoculated themselves from many of the problems that sparked their call for the measure.

By charging customers different interest rates depending on how likely they are to repay their debts and by adding substantial fees for an array of items such as late payments and foreign currency transactions, the major card companies have managed to keep their profits rising steadily even as personal bankruptcies have soared, industry figures show. As a result, while they continue to press for legislation that would make it harder for individuals to declare bankruptcy, the companies have found ways to make money even on cardholders who eventually go broke.
At the same time, under the companies' new systems, many cardholders — especially low-income users — have ended up on a financial treadmill, required to make ever-larger monthly payments to keep their credit card balances from rising and to avoid insolvency.

"Most of the credit cards that end up in bankruptcy proceedings have already made a profit for the companies that issued them," said Robert R. Weed, a Virginia bankruptcy lawyer and onetime aide to former Republican House Speaker Newt Gingrich.

snip

Credit card companies have come in for harsh criticism in recent years for their penalty fees and the "risk-based pricing" under which they charge customers different interest rates depending on their credit histories and their likelihood of paying. Consumer advocates have accused firms of not adequately disclosing such controversial practices as universal default, when a company can jack up a cardholder's annual percentage rate, often to more than 30%, based on the cardholder's performance with another creditor, not the card company.

Regulators and law enforcement officials have accused companies of deceptive practices. In 2000, the U.S. Office of the Comptroller of the Currency and the San Francisco district attorney's office ordered Providian to pay $300 million in restitution after customers complained that the company didn't credit their payments on time and then imposed late fees.

continued

I get an offer for a credit card once a week..I toss it out. I own only one card and IF I use it its only for emergencies . Sadly, many people have been suckered into using the damned things with the tight squeeze on incomes ...now they are up to their eyeballs in debt.
The unseen toll this economy has taken on the citizens of this country is abominable.

:shrug:

"many people have been suckered into using the damned things"

What...they couldn't resist the offers and were forced to use the cards? Somebody put a gun to their temples and made them buy on credit?

Ever hear the old saying "a fool and his/her money are soon parted."

I use a credit card for every purchase I can. I pay nothing in fees because I pay the balance each month. I also receive airline miles for my purchases, which is good, cause I like to travel.

Credit cards can be great, IF you are smart about your money.

If you make enough money to live on. But when any unexpected expense HAS to go on the credit card - like getting your car fixed, or medical expenses, it becomes a noose around your neck.

Just .02 from someone whose noose is about to kill them.

never missed a payment or made a late payment. They have access to all financial information about you and even a late or missed utility payment can bring them down on you like a ton of bricks. Once interest rate penalties are applied they are never removed even if the situation that prompted them to raise them changes. If you can only afford the minimum payment and are paying 30% interest, you will never climb out of that hole.

Most debtors have been bled this way for years before they ever declare bankruptcy. The companies make money from these people. That is why they want this bill, they make billions from forcing people into insolvency and now they will be able to bleed them for many more years and seize assets even though they have lost nothing in the process.

:shrug:

w/o insurance? Oh hell, w/insurance today, it doesn't really matter if you have it.

In such a case, "using my credit card wisely" means squat.

Unless you are independently wealthy...

In the 80's I was severely injured. My insurance co paid for a small % of my medical bills, then dropped me. I could not work, so the rest went on credit cards.

It took years to pay off the cc debt. I then cut them up and have never used them again.

Be very, very careful, it only takes seconds to become disabled.

i paid my cc's off last may and now only have one (no balance) that i only use for emergencies. what a relief...never again...

There is absolutely nothing responsible in how they give credit. This bill will only encourage them to behave more recklessly than they have in the past.

Why should the rest of us have to pay for their unwillingness to police themselves? This is corporate welfare in the extreme and somewhere this deregulation and corporate protectionism has to stop. Apparently in the repube world, "free market" only applies to consumers but not to corporations and stockholders.

i remember a few horror stories in the news a couple years back about how some bad parents took cards out in their pre-teen kids' names...when those kids grow up their credit is fucked...

and yet they make it easier still. my credit is now fucked (working on rehabilitation) because someone got 5 cards in my name!! How?? The companies sent a bunch of pre-approved requests in my name to an apartment i no longer live in...All it took was an anonomyous person to sign my name, and he gets cards!! WTF?

Normal people will stop using them, and the consumption spending junkies will eventually get cut off from their fix. The current BK laws actually help the industry make a profit.

Obviously they are getting ready for the economy bust heading our way...

totally cash.

I stopped using CC in 1995, and I've uaed cash since. It hasn't affected my lifestyle one bit. We're so conditioned to spend money that sometimes we're not even aware of it. A CC makes it easier for us to buy things that we don't even need.

I also pay off my balance in full each month and get airline miles for my purchases. It costs me nothing to keep and use.

A CC is a behavioral conditioning device, much like the bell to Pavlov's dog. It's conditioning you to spend by making it so convenient and easy that you're not even thinking before you spend. No matter how diligent you are, you're probably spending money that you wouldn't ordinarily spend if you were paying cash for everything.

Even if you pay off your balance completely by the end of the month, you are endangering your long-term financial health because sooner or later the convenience of buying will eventually break your discipline. When you have some kind of emotional stress, positive or negative stress, you're going to be more likely to spend the money.

CC are not needed, and it's the main reason why our savings rate is so low. Think of this way, just because you're not over-weight, that doesn't mean that you can eat at McDonald's every day.

Money does burn a hole in my pockets, and I do buy a lot of stuff, mostly wine and sports equipment. I put all of that stuff on cc.

I've also fully funded my and my wife's IRAs since college and we have a nice nest-egg (along with our individual accounts). I'm 31, make a modest salary, have a family and a dog, and only have mortgage debt.

So far, my discipline has not been broken and am well on my way to acheiving my financial goals. All because I didn't let a piece of plastic rule my life. It's a convenience that I temper with a "pay myself first" policy.

I see cc's as a tool that is to be used only when the means to repay the debt are available each month. Thankfully, they have been available.

Ten years ago, I lived your lifestyle. I bought stuff and paid off my CC, until I went to grad school and my regular income got cut off. However, my CC-learned spending behaviors still remained in place. I wasn't spending lavishly, but when the mood struck, I bought something that I liked, a CD, takeout food, a magazine, etc. However, with my income cut off, I fell behind in my bills and I spiraled downward.

Since then, I stopped using CCs, and I started to track all of my spending dollar for dollar in my own homemade database. You cannot believe how much money I spent on stupid every day things. I have stopped doing that and now I'm turning my financial debts into assets. Yet, in my tracking of my spending, there are still small amounts of money that I spend that I don't even remember spending. That's called unconcious spending, a trait left over from CC days.

So, my advice to you is, Great! that you're paying off your balances, but there may come a day when you may not make as much money as you're making now. So. I'd suggest that you get your spending under control.

I don't use credit cards any more. I haven't used one for probably six years now.

Instead, I write checks, or pay with a debit card, which works like the credit card, is processed like the credit card, but it pays from money I have, not money I don't.

And I haven't looked back. I don't spend money I don't have, and don't have to deal with outrageous interest rates.

I actually thought about getting a credit card a few months ago for the free airline miles, but then I saw the Frontline program on CC companies.

I would be too concerned that they were going to pretend they didn't get my payments or decide to raise my rates sky high for no reason and I'd be screwed if my business went under or I had an emergency.

Free miles aren't worth that kind of stress.

20 sneaky credit card tricks
By Amy C. Fleitas • Bankrate.com

Credit card companies can be as slippery as a handful of greased Jell-O. They have all kinds of tricks to gouge your wallet and drive up your bill. While arguably unfair, all these tricks are legal, leaving you no alternative but to stay as informed as possible to protect yourself.

Read your statement, report any irregularities immediately and watch for these 20 sneaky credit card company tricks. Start saving on fees now.

The old bait and switch

So you've got this ingenious plan. You're going to apply for a great credit card that gives you tons of frequent-flier miles, put all your shopping on it, and then head to the Bahamas in February. Stop -- the miles you earn, if any, might get you no farther than Hope, Ark.

When and if you get that card, study the terms carefully. If you don't qualify for the great card, the credit card company can send you a completely different card with different terms. If it's not what you want, don't activate the card. Call the company and cancel the account.


http://www.bankrate.com/brm/news/cc/20021106a.asp

Step 1 -- Make offers of credit to people who you know aren't credit-worthy.

Step 2 -- Make sure that as few people as possible have health insurance (half of all bankruptcies are due to medical bills)

Step 3 -- Make it nearly impossible for bankruptcy to shield personal assets.

Step 4 -- Make Social Security a "private account" that is subject to being siezed for bankruptcy.

Step 5 -- Count your money.

our brains out.

...have recently paid off all credit card debt and am now a "cash only" person. I felt like a huge weight was lifted from my shoulders as I made that last payment. Yes, a credit card is good to have for an *emergency* but a shoe sale is not such an *emergency* if you simply don't have the cash.

Where are the Christians on this? Usury is a sin. Where is Pat Robertson on this issue? What does Billy Graham have to say about it?


Exodus 22:25-31 25 If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury. 26 If thou at all take thy neighbour's raiment to pledge, thou shalt deliver it unto him by that the sun goeth down: 27 For that is his covering only, it is his raiment for his skin: wherein shall he sleep? and it shall come to pass, when he crieth unto me, that I will hear; for I am gracious. 28 Thou shalt not revile the gods, nor curse the ruler of thy people. 29 Thou shalt not delay to offer the first of thy ripe fruits, and of thy liquors: the firstborn of thy sons shalt thou give unto me. 30 Likewise shalt thou do with thine oxen, and with thy sheep: seven days it shall be with his dam; on the eighth day thou shalt give it me. 31 And ye shall be holy men unto me: neither shall ye eat any flesh that is torn of beasts in the field; ye shall cast it to the dogs.

Leviticus 25:23-38 23 The land shall not be sold for ever: for the land is mine; for ye are strangers and sojourners with me. 24 And in all the land of your possession ye shall grant a redemption for the land. 25 If thy brother be waxen poor, and hath sold away some of his possession, and if any of his kin come to redeem it, then shall he redeem that which his brother sold. 26 And if the man have none to redeem it, and himself be able to redeem it; 27 Then let him count the years of the sale thereof, and restore the overplus unto the man to whom he sold it; that he may return unto his possession. 28 But if he be not able to restore it to him, then that which is sold shall remain in the hand of him that hath bought it until the year of jubile: and in the jubile it shall go out, and he shall return unto his possession. 29 And if a man sell a dwelling house in a walled city, then he may redeem it within a whole year after it is sold; within a full year may he redeem it. 30 And if it be not redeemed within the space of a full year, then the house that is in the walled city shall be established for ever to him that bought it throughout his generations: it shall not go out in the jubile. 31 But the houses of the villages which have no wall round about them shall be counted as the fields of the country: they may be redeemed, and they shall go out in the jubile. 32 Notwithstanding the cities of the Levites, and the houses of the cities of their possession, may the Levites redeem at any time. 33 And if a man purchase of the Levites, then the house that was sold, and the city of his possession, shall go out in the year of jubile: for the houses of the cities of the Levites are their possession among the children of Israel. 34 But the field of the suburbs of their cities may not be sold; for it is their perpetual possession. 35 And if thy brother be waxen poor, and fallen in decay with thee; then thou shalt relieve him: yea, though he be a stranger, or a sojourner; that he may live with thee. 36 Take thou no usury of him, or increase: but fear thy God; that thy brother may live with thee. 37 Thou shalt not give him thy money upon usury, nor lend him thy victuals for increase. 38 I am the LORD your God, which brought you forth out of the land of Egypt, to give you the land of Canaan, and to be your God.

Deuteronomy 23:19 Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury:

Deuteronomy 23:20 Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury: that the LORD thy God may bless thee in all that thou settest thine hand to in the land whither thou goest to possess it.

Nehemiah 5:6-13 6 And I was very angry when I heard their cry and these words. 7 Then I consulted with myself, and I rebuked the nobles, and the rulers, and said unto them, Ye exact usury, every one of his brother. And I set a great assembly against them. 8 And I said unto them, We after our ability have redeemed our brethren the Jews, which were sold unto the heathen; and will ye even sell your brethren? or shall they be sold unto us? Then held they their peace, and found nothing to answer. 9 Also I said, It is not good that ye do: ought ye not to walk in the fear of our God because of the reproach of the heathen our enemies? 10 I likewise, and my brethren, and my servants, might exact of them money and corn: I pray you, let us leave off this usury. 11 Restore, I pray you, to them, even this day, their lands, their vineyards, their oliveyards, and their houses, also the hundredth part of the money, and of the corn, the wine, and the oil, that ye exact of them. 12 Then said they, We will restore them, and will require nothing of them; so will we do as thou sayest. Then I called the priests, and took an oath of them, that they should do according to this promise. 13 Also I shook my lap, and said, So God shake out every man from his house, and from his labour, that performeth not this promise, even thus be he shaken out, and emptied. F11 And all the congregation said, Amen, and praised the LORD. And the people did according to this promise.

Psalms 15:1-5 1 LORD, who shall abide in thy tabernacle? who shall dwell in thy holy hill? 2 He that walketh uprightly, and worketh righteousness, and speaketh the truth in his heart. 3 He that backbiteth not with his tongue, nor doeth evil to his neighbour, nor taketh up a reproach against his neighbour. 4 In whose eyes a vile person is contemned; but he honoureth them that fear the LORD. He that sweareth to his own hurt, and changeth not. 5 He that putteth not out his money to usury, nor taketh reward against the innocent. He that doeth these things shall never be moved.


Proverbs 28:8 He that by usury and unjust gain increaseth his substance, he shall gather it for him that will pity the poor.

Ezekial 18:8 He that hath not given forth upon usury, neither hath taken any increase, that hath withdrawn his hand from iniquity, hath executed true judgment between man and man,

Ezekiel 18:10-20 10 If he beget a son that is a robber, a shedder of blood, and that doeth the like to any one of these things, 11 And that doeth not any of those duties, but even hath eaten upon the mountains, and defiled his neighbour's wife, 12 Hath oppressed the poor and needy, hath spoiled by violence, hath not restored the pledge, and hath lifted up his eyes to the idols, hath committed abomination, 13 Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live: he hath done all these abominations; he shall surely die; his blood F71 shall be upon him. 14 Now, lo, if he beget a son, that seeth all his father's sins which he hath done, and considereth, and doeth not such like, 15 That hath not eaten upon the mountains, neither hath lifted up his eyes to the idols of the house of Israel, hath not defiled his neighbour's wife, 16 Neither hath oppressed any, hath not withholden the pledge, neither hath spoiled by violence, but hath given his bread to the hungry, and hath covered the naked with a garment, 17 That hath taken off his hand from the poor, that hath not received usury nor increase, hath executed my judgments, hath walked in my statutes; he shall not die for the iniquity of his father, he shall surely live. 18 As for his father, because he cruelly oppressed, spoiled his brother by violence, and did that which is not good among his people, lo, even he shall die in his iniquity. 19 Yet say ye, Why? doth not the son bear the iniquity of the father? When the son hath done that which is lawful and right, and hath kept all my statutes, and hath done them, he shall surely live. 20 The soul that sinneth, it shall die. The son shall not bear the iniquity of the father, neither shall the father bear the iniquity of the son: the righteousness of the righteous shall be upon him, and the wickedness of the wicked shall be upon him.


Ezekiel 22:1-16 1 Moreover the word of the LORD came unto me, saying, 2 Now, thou son of man, wilt thou judge, wilt thou judge the bloody city? yea, thou shalt shew her all her abominations. 3 Then say thou, Thus saith the Lord GOD, The city sheddeth blood in the midst of it, that her time may come, and maketh idols against herself to defile herself. 4 Thou art become guilty in thy blood that thou hast shed; and hast defiled thyself in thine idols which thou hast made; and thou hast caused thy days to draw near, and art come even unto thy years: therefore have I made thee a reproach unto the heathen, and a mocking to all countries. 5 Those that be near, and those that be far from thee, shall mock thee, which art infamous and much vexed. 6 Behold, the princes of Israel, every one were in thee to their power F91 to shed blood. 7 In thee have they set light by father and mother: in the midst of thee have they dealt by oppression with the stranger: in thee have they vexed the fatherless and the widow. 8 Thou hast despised mine holy things, and hast profaned my sabbaths. 9 In thee are men that carry tales to shed blood: and in thee they eat upon the mountains: in the midst of thee they commit lewdness. 10 In thee have they discovered their fathers' nakedness: in thee have they humbled her that was set apart for pollution. 11 And one hath committed abomination with his neighbour's wife; and another hath lewdly defiled his daughter in law; and another in thee hath humbled his sister, his father's daughter. 12 In thee have they taken gifts to shed blood;

thou hast taken usury and increase, and thou hast greedily gained of thy neighbours by extortion, and hast forgotten me, saith the Lord GOD. 13 Behold, therefore I have smitten mine hand at thy dishonest gain which thou hast made, and at thy blood which hath been in the midst of thee.

14 Can thine heart endure, or can thine hands be strong, in the days that I shall deal with thee? I the LORD have spoken it, and will do it. 15 And I will scatter thee among the heathen, and disperse thee in the countries, and will consume thy filthiness out of thee. 16 And thou shalt take thine inheritance in thyself in the sight of the heathen, and thou shalt know that I am the LORD.

Outside of that, there are no sins.

indentured servitude among lower and middle income folks. They are corporate insurance for a stable and submissive work force. They help insure against a labor strike and the political and economic power of labor. You can't go on strike if going on strike will rapidly drive you into massive debt, and if you can't strike you lose your ability to challenge corporate policy regarding working conditions, wages, and benefits.

We the People become we the sheeple, "owing our souls to the company store".

IMO, credit cards are an unnecessary evil, and even if they are used in a fiscally responsible manner by some people, they still cause far too much suffering, hardship and stress to others to ethically justify their use by anyone. And trading freedom for minor economic convenience is not a good idea.

Mass boycotting of credit cards might help us regain a substantial measure of political and economic power in this world of ever increasing corporate control of our government and our lives.

I filed for bankruptcy in December of 2002. It was one of the best decisions I've ever made.

And you know the scare about having the information on your credit report for 10 years? That's mostly a propaganda scheme perpetrated by the credit card companies! It's been less than 2 years since my debt was "discharged" by the courts, and already, I'm told by lenders that I have "good credit".

I believe that the best card for anyone to have - whether you've declared bankruptcy or not - is a secured credit card. I'm sure that my decision to get a secured card and to start using it immediately after receiving my discharge is a major reason why I now look good to creditors.

Yes, there really are advantages to having a credit card. My biggest reason for having one is that I shop online often, and I'd rather not have money taken directly out of my checking account by an unknown business (as happens when you use a debit card).

With a secured card, you're MUCH less likely to spend more than you can afford, because it's not as if you're using "free money". And if you do ever lose control of your spending, all it takes is a phone call or visit to the bank to close your collateral account and pay off the balance. Done. Over. No calls from collection agencies, no stress over how you're going to pay the bill, and no worries about how its going to affect your credit report.

If you have ANY history of spending more than you can afford, I highly recommend giving up unsecured debt entirely. Finance your home, finance a car (if you must), but do yourself a huge favor and swear off unsecured debt like an alcoholic gives up the booze. You will never regret it.