Sunday, November 1, 2009

Bull Anyone?

Well, well, well, we knew it, didn't we? We knew that the banks would pull some magic out of their hats before the credit card reform laws take effect. A few provisions went into effect in August, but the lion share of the provisions are not scheduled to start until February 2010 (I'm hearing that Congress is working on a bill to move the effective date up to December 1, 2009 but I'm not sure if or when that will pass). Mind you, this credit card reform act was signed into law in May 2009 - why the long wait before it's enacted, beats me ... perhaps I need to brush up on my legislative knowledge. Anywho, a few of the new laws are:
  • Raising Rates: Banks have to give 45 day notice before raising a consumer's rate (unless you're on a variable rate card which most of the banks have begun switching customers to)
  • Penalty Fees: Banks can't charge over-limit fees unless the consumer has asked for this additional credit.
  • Youth Marketing: Banks can't extend credit cards to people under 21 without verifying their ability to pay (i.e., proof of income) or obtaining parental permission.
  • Unfair Billing: The practices of universal default and double-cycle billing are no longer allowed.
  • Disclosures: Banks must clearly disclose how long it will take to pay off the balance if only the minimum payment is made.

Because the banks have long since made a boat load of money off of their fees, they have gone back to the drawing board to find new ways to assess fees on their beloved or hated customers. For example, BOA is "experimenting" with charging customers an annual fee of $29 - $99. Other banks such as JP Morgan and Citigroup are implementing similar practices. There are even talks that we may see additional fees on other traditional banking products like checking accounts.

Are these not the same banks that taxpayers bailed out less than a year ago? This is absolutely ridiculous. You have our tax dollars, we saved your tushes, and this is how you thank us? I only have one credit card that I use solely for online purchases and travel. If my card issuer (Citi) comes to me with an unsavory offer of bull crap, aka, an annual fee, I'll glady return the favor by asking them to close my account ... immediately ... with the quickness ... like do it right now! I don't care how many rewards and incentives a credit card offers, I am not going to pay annual fees to use their card, period.


Money Funk said...

Ya, I was just telling jpkittie that I haven't received my BofA letter yet telling me of my annual fee. But I think I better nix the $1800 balance ASAP.

Our JCPenney card recently raised their rate on our card. That is PIF'd. Yeah. And now that I think of it, our Wells Fargo card got raised. And we owe a hefty $7800. We considered the option of closing the card - and you can still make payments on it. I wonder how that would impact the credit score w/ still having a balance on it and it's closed. Hmmmm....

Stupid me for having cards. Oh ya, I don't have any in my wallet anymore (again). Just me and my BFF the debit card. :)

The Lost Goat said...

I don't know if you remember, but it used to be impossible to find a credit card without a fee. This was when only the most credit-worthy could get one.

After a while, the credit card business model was to entice everyone to get a credit card, then make their money off those that did not use them wisely (carried a balance, overdrew their account, missed payments, etc.)

With that business model taken away, the companies have to find some other way to make a profit, and they are taking a long, hard look at those of us who give them only the income they receive per card transaction. It is unfortunate for us. By the time the terms on my current cards run out, I expect that I will either have to pay a fee or use a credit card with no perks whatsoever.

It might be worth it if I thought that credit cards unconscionably enticed people into debt, and so the habits of the poor users of credit would get better. As I don't believe this, I see it as one more example of the government "saving" me from my self to my greater expense and inconvenience.

Yum Yucky said...

Oh gosh. I don't even know what "universal default and double-cycle billing" is! Yikes!

So I've got real decent credit, but is that enough anymore to stay out of trouble? I'll be back here often to school myself and keep up so I don't screw up.

I love what you're doing. :D

Ms. MoneyChat said...

Christine - not having any in your wallet is definitely a plus. don't worry, your credit card balances are only temporary.

Lost Goat - yep, some of this definitely has a hint of the nanny state scent. i definitely see your point. i wish i had the answer but i don't. it seems like both consumers and businesses have proven that they require some sort of oversight - but who's qualified to do that? the gov't is just as out of control financially.

Josie - i'm sorry to be the bearer of bad news, but nope, good credit is no longer a savior. you'd be surprised to know that if you're a really good consumer and pay your credit cards off in full each month, you're considered a deadbeat by the industry! yep, a deadbeat! they don't make as much money off of you so you're a deadbeat to them. how about that for a little customer appreciation. turds!!