Thursday, December 18, 2008

Credit Card Crackdown? Ahhhh, yeah...

where's a good old fashioned Rebellion when you need one?

Yes, these provisions are a step in the right direction, but...

The banking industry managed to turn the bankruptcy laws completely in their favor and lately have been taking advantage of the fact that they have debtors by their you-know-whats. People can no longer discharge all their unsecured debt in the bankruptcy process, they must work out a repayment plan. That has unwittingly hurt the banks as people caught in a job loss or medical situation, for example, will simply abandon their secured asset first, their home. When that happens the loss to the bank is far greater.

Credit card companies have been ABUSING people for far too long. Funny, but people in this country seem to have forgotten the concept of USURY. There used to be laws against that! For example, in Washington State the usury law prohibited the charging of interest greater than 12%. Of course all that changed in the mid 80’s when the government itself was forced to raise rates to near 20%. That’s the evil of inflation. Now 12% almost seems quaint when discussing credit card debt.

Note that these new rules don’t take affect until 2010. Why not now? Who makes the laws? Uh, huh, that’s what I thought. And does this really accomplish that much? No. And before you go off me for slamming the “free market” industry, you better think again. I don’t see anything free market about it. The credit rating agencies and credit card industry are going to face a true rebellion soon. Can’t wait…

Here's the CNN article:

Fed OKs credit card crackdown
Regulators approve a number of key protections for credit card customers.

By Jessica Dickler, staff writer
Last Updated: December 18, 2008: 5:29 PM ET

NEW YORK ( -- Cash-strapped consumers got some welcome news on Thursday when regulators voted to rein in controversial credit card practices. But they'll have to wait another year and a half to get relief - the new rules won't take effect until July 1, 2010.
The Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration approved the regulation, which prohibits banks from certain practices like applying interest payments in ways that maximize penalties, and forces lenders to be more transparent about their billing practices.

"These protections will allow consumers to access credit on terms that are fair and more easily understood," Federal Reserve Chairman Ben Bernanke said in a statement.
The regulations mark an end to double-cycle billing, which averages out the balance from two previous bills. That means that consumers who carry a balance will no longer get hit with retroactive interest on their previous month's bill. And credit card companies will no longer be able to raise the interest rates on pre-existing credit card balances unless a payment is over 30 days late.
Consumers will also be given a reasonable amount of time to make payments, and payments will be applied to higher-rate balances first, to reduce interest penalties and fees.
Credit card statements will clearly list the time of day that a payment is due, and any changes to accounts will be in bold or listed separately.
And, finally, no more universal defaults - a policy that allowed credit card issuers to increase the interest rate on one card if a customer missed a payment on another card.