Credit Cards
Feb. 28th, 2005 08:37 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
pecuniumThe lenders are, once again (still) asking Congress to protect them from themselves, at the expense of the people.
Baseball did this for a while (the Reserve Clause was defended on the basis that without it, the owners would start bidding wars and so offer too much money to the players... which is to say they needed to be protected from themselves, which kept the players from getting a fair share of the profits they were generating).
The argument goes like this: People take out debt. They take out too much. They can't pay it. They file for Ch. 7 bankruptcy (which kills debt, cold); they accept that they will have damn near zero credit for at least 7 years.
On one level I appreciate the credit card companies dilemma. They lent money. If they get told to pound sand, they lose the money. Not good business.
On another level, it's bunk. I get not less than 25 petitions a year asking me to take out a credit card. Some of these with credit lines of $10,000. I can't afford that kind of debt. Certainly not at the rates they charge. Which is where the argument of the creditors falls apart. Despite the bankruptcies they posted something like $30 billion in profit last year. Not revenue, profit.
Maia has no real income (her father is paying her tuition, and her bills). She does work in theatres, and (when we were in L.A. wrangles bugs for film... sadly she had to give up $1,200 this week, because it required being in L.A. for a couple of days. A pity because ants are easy to work) but that's spotty. On the other hand, she has $10,000 in credit. If she were at that limit, she'd be hard pressed to make more than the monthly payments. Which means the creditors are raking in free money, the principle would be barely nibbled.
That's bad enough. But now we have agressive interest adjustment. They offer a low rate, to get you to move the debt to their card. They then monitor your credit score, if you have a problem (late payment, even a day) with someone else they raise your rate with them. Bad enough (you've not failed to meet your obligation with them, what cause have they?).
But worse, some of them make that rate increase retroactive. One can find that they moved from 18 percent interest, to 21 percent. They moved to the other card, and made damned sure they met the payment dates, so they could remove some of that debt. They may have made the mistake (some mistake) of overpaying a bit, and so having a delay in the cell-phone bill, and they get punished, in spades.
Cynical bastard that I am, I suspect the credit card companies of targetting people. Of looking to give credit to people who have a track record of payments which are a little late. Not that they don't pay, but they can be a day, or so, behind. It shows an unwillingness to not meet debts. It means they will struggle until all other options are exhausted to pay the bills.
And they know they can sucker such people into a hole they can't get out of, without declaring bankruptcy (which most people are loathe to do). Now they want to play "whack-a-mole" when people try to dig their way out.
Baseball did this for a while (the Reserve Clause was defended on the basis that without it, the owners would start bidding wars and so offer too much money to the players... which is to say they needed to be protected from themselves, which kept the players from getting a fair share of the profits they were generating).
The argument goes like this: People take out debt. They take out too much. They can't pay it. They file for Ch. 7 bankruptcy (which kills debt, cold); they accept that they will have damn near zero credit for at least 7 years.
On one level I appreciate the credit card companies dilemma. They lent money. If they get told to pound sand, they lose the money. Not good business.
On another level, it's bunk. I get not less than 25 petitions a year asking me to take out a credit card. Some of these with credit lines of $10,000. I can't afford that kind of debt. Certainly not at the rates they charge. Which is where the argument of the creditors falls apart. Despite the bankruptcies they posted something like $30 billion in profit last year. Not revenue, profit.
Maia has no real income (her father is paying her tuition, and her bills). She does work in theatres, and (when we were in L.A. wrangles bugs for film... sadly she had to give up $1,200 this week, because it required being in L.A. for a couple of days. A pity because ants are easy to work) but that's spotty. On the other hand, she has $10,000 in credit. If she were at that limit, she'd be hard pressed to make more than the monthly payments. Which means the creditors are raking in free money, the principle would be barely nibbled.
That's bad enough. But now we have agressive interest adjustment. They offer a low rate, to get you to move the debt to their card. They then monitor your credit score, if you have a problem (late payment, even a day) with someone else they raise your rate with them. Bad enough (you've not failed to meet your obligation with them, what cause have they?).
But worse, some of them make that rate increase retroactive. One can find that they moved from 18 percent interest, to 21 percent. They moved to the other card, and made damned sure they met the payment dates, so they could remove some of that debt. They may have made the mistake (some mistake) of overpaying a bit, and so having a delay in the cell-phone bill, and they get punished, in spades.
Cynical bastard that I am, I suspect the credit card companies of targetting people. Of looking to give credit to people who have a track record of payments which are a little late. Not that they don't pay, but they can be a day, or so, behind. It shows an unwillingness to not meet debts. It means they will struggle until all other options are exhausted to pay the bills.
And they know they can sucker such people into a hole they can't get out of, without declaring bankruptcy (which most people are loathe to do). Now they want to play "whack-a-mole" when people try to dig their way out.
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Date: 2005-02-28 05:26 pm (UTC)If you really want to spike your blood pressure, go watch Frontline's The Secret History of the Credit Card. It's available to watch online, and is worth your time. These credit companies are jerking us around like you wouldn't believe, and we can't even do something like 'freeze' our credit to keep them out of our lives. It's criminal.
I am waiting for the backlash. I will be part of it.
no subject
Date: 2005-02-28 05:30 pm (UTC)no subject
Date: 2005-02-28 06:01 pm (UTC)TK
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Date: 2005-02-28 06:32 pm (UTC)no subject
Date: 2005-02-28 05:44 pm (UTC)no subject
Date: 2005-02-28 05:47 pm (UTC)no subject
Date: 2005-02-28 06:25 pm (UTC)We have such horrid credit, we can't get credit cards. Buying a house is going to be -- difficult.
But I am glad we don't have credit cards, this past year would have ended on a bad note, the year of low income, we probably would have had to dip into his annuity or something, which is never a good thing, now you have to pay it back within a year when you do that.
And the whole credit card CULTURE is difficult. It is not easy to do without one. (We can't get a bank account either because of our credit!) Thank goodness for prepaid credit cards. Some of them, to me, are a ripoff, but the one we have is decent. Even then, the fees are nowhere near what we would pay in interest or other fees. Once we have some money put away, time for the secured card, and we will move up from there.
Why doesn't Congress listen when the people ask for help with things? Bah. :(