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Credit Reform

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Re: Credit Reform

Postby GoIllini » Fri 02 Dec 2005, 18:16:37

$this->bbcode_second_pass_quote('ElijahJones', 'T')he credit card industries after this summers hurricanes and high energy prices are reporting the highest default rates ever. If you are one the unfortunate souls caught in the aftermath of Katrina, Rita, or Wilma you won't find any sympathy from the credit card companies. There's is an empire run by computer and based upon taking full advantage of their opportunity to make those who are in debt fund services for those who are not. When a rich person goes out and spends $7000 dollars on their Discover card at ten differnt shops and then pays off the balance before the due date incurring no interst charges, who picks up the transaction costs?

The merchant. When I sell stuff using PayPal, I incur a 2.9% transaction fee. While I think Visa, Discover, MC, and Amex usually negotiate these fees on a case-by-case basis, it's usually around 1.5%.

$this->bbcode_second_pass_quote('', 'W')ho pays the employees of such companies to answer phones day in and day out, its not the people who pay off their accounts its the rest of us poor saps who were foolish enough to get caught in the revolving credit doorway.

And the merchants.

$this->bbcode_second_pass_quote('', 'R')unaway credit products are not a boon to the economy they are a liability that must be dealt with at some point. Its time for credit reform! Real credit reform that forces companies to offer user friendly accounts with guaranteed credit protection insurance. Let me ask you, if you have made 45 of 48 payments on time with only one payment being more than 20 days late, should you be subject to a %100 percent interst rate hike? Are you really a high risk for default?

Apparently, that's how they calculate it. And these credit card companies really don't realize the huge margins most people think they do. I think that when I was looking at Capital One's balance sheet, their overall highest margin on various debts was around 8%. That is to say, the debt was netting them 12% after defaults, and they were paying 4% interest.

$this->bbcode_second_pass_quote('', 'A') man can only have so many causes in his life, becuase they all require time and effort, but this one of mine. How sad is it that we do not educate our people about credit cards and then allow predatory companies to offer then lines upto 3 times their yearly income, effectively locking them into a lifetime of minimum payments.

That is sad. What we should do is make it easier for families with earnings of up to, say, $100K/year, to declare bankruptcy, and at the same time, tie the minimum payment to the interest rate. That is, if you're paying $2 in interest, you should pay $2 in principal. That way, nobody ever pays more than twice the principal on their debt.

$this->bbcode_second_pass_quote('', 'T')his blatant usury must stop! Write your senators start a campaign for a fair shake in credit matters for guaranteed credit counseling without hidden trap doors. This is not just about money it's about humanity, tell your representatives to reign in these pigs before they sink us for good!

Why not just vote for Democrats? That makes things soo much easier.
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Re: Credit Reform

Postby clueless » Fri 02 Dec 2005, 19:13:57

ElijahJones,

Companies have a responsibilty and are supposed to be mandated by law to go through "due diligence" when it comes to loaning money. Sadly these days "due diligence" is very realitive. I was in the credit industry in the 80's and if one had a 30 day late and had a debt/income ratio of <30% he didn't get a loan.

Nowadays anyone can gat a loan or a credit card with no income verification. Debt poses a far bigger risk to us in the US than Peak Oil, and the sad part about it is the government can get away with printing more of it whereas the average person does not have that option.

Do not under any circumstances feel guilty for not being able to pay these loan sharks, and we as a nation need to stop these corrupt lending practices. Few realize this money is recycled dollars shipped out from our 1.75 billion dollars per day trade deficit.

Call your congressman ! it can make a difference.
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Re: Credit Reform

Postby jmacdaddio » Fri 02 Dec 2005, 22:39:21

Everyone who's interested in this thread should check out the Frontline episode titled the Secret History of the Credit Card. It's an amazing peek behind the rise of consumer credit for the masses.

If I had a year to kill on a project I'd examine what credit cards have done to Generation X and what they're doing to Generation Y. I'm 32 and so many of my friends have fallen into the credit card trap. Too many friends are earning 75 grand a year, but on a tight budget due to crushing debt loads.
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Re: Credit Reform

Postby cube » Sat 03 Dec 2005, 02:55:04

$this->bbcode_second_pass_quote('ElijahJones', '.')..
many of us preyed upon in college and with marketing touting the American Dream. Yes most of us were were foolish enough to get caught in the revolving credit doorway.
...
I remember my college days. Yes those people at the tables waving the credit cards were really nice people. But I was not "foolish enough" to get caught into a hole.

I don't think it's a matter of "educating" people. Some people have financial sense and some just DON'T. That's just the way life works. There will always be people out there with no common sense. They will dig their own holes.

Anyways if you think credit cards are evil you should take a look at those "cash advance" centers or whatever they're called. I've heard of loans that can go up to as high as 100%. You'll always find them in poor neighborhoods. I'm quite sure an interesting documentary can be written about those places.
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Re: Credit Reform

Postby Synergist » Sat 03 Dec 2005, 05:30:00

I happen to believe that higher education is a scam. It is inordinately expensive and rarely opens any doors anymore, given that all the doors have been outsourced.

An undergraduate degree is manageable if you have in-state tuition, parental help, you can work, you get scholarships. But advanced degrees strike me as little more than a lethal debt trap.

The problem is exacerbated by an utterly predatory credit card industry. They should be banned from college campuses and forbidden from marketing to 18 year olds.
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Re: Credit Reform

Postby cube » Sat 03 Dec 2005, 17:49:44

$this->bbcode_second_pass_quote('Synergist', 'I') happen to believe that higher education is a scam.
....
There is much truth to your statement. However --- Many companies automatically expect their employees to have a 4-year degree. If not, then the door gets slammed in front of your face and the only options available to you will be a "McJob".

Companies can do this because there is a ridiculous oversupply of college grads. Nevermind the fact that the job in question does not require a college degree, that's how the system works.

So remember kids stay in skool, and get an edumacation! Granted so maybe you'll waste a lot of money, time, and won't learn anything useful but if you go against the grain then the mighty hand of the "system" will smack you down.
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Re: Credit Reform

Postby strider3700 » Fri 16 Dec 2005, 15:31:06

I went to university getting student loans to go there and while there I picked up a credit card from one of those guys at a table.

I've never missed a payment on my cards, I've very rarely carried any balance over probably paying less then $200 in interest in the past 10 years.

I never missed a payment on my student loans and paid the 15 year loans off in 3 years.

I lived a spartan life in university and I had to carry that same lifestyle over for 5 years after I got out to pay everything off.

Take some responsibility for your actions and deal with them. Perhaps if anything the worst the government should do is make it harder to get credit but I'd much rather they just stay the hell out of the way.
shame on us, doomed from the start
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Re: Credit Reform

Postby emersonbiggins » Fri 16 Dec 2005, 15:50:07

$this->bbcode_second_pass_quote('cube', 'S')o remember kids stay in skool, and get an edumacation! Granted so maybe you'll waste a lot of money, time, and won't learn anything useful but if you go against the grain then the mighty hand of the "system" will smack you down.


College isn't a waste of time and money for everyone, you know. Those of us that weren't doing keg stands every other night of the week were probably actually, you know, learning stuff. Personally, I prefer the guy doing surgery on me or engineering the beams that I drive over to have some college experience, but that's me.

Now, if you want to argue that there isn't enough of an alternative to college, then I would agree. We need to bring back trade schools, where young men and women could learn things like the lost art of masonry (try finding one these days - $$$), trades we'll probably need and not have post-peak.
"It's called the American Dream because you'd have to be asleep to believe it."

George Carlin
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Re: Credit Reform

Postby pup55 » Fri 16 Dec 2005, 22:24:39

Thanks for this entertaining thread.

$this->bbcode_second_pass_quote('', 'T')here will always be people out there with no common sense. They will dig their own holes.


$this->bbcode_second_pass_quote('', 'T')ake some responsibility for your actions and deal with them


I'm with Strider and Cube on this one. No one is taking your hand and forcing you to sign the little slip of paper when you charge something.

Deferred consumption is a sign of maturity.

Now, to be sure, society is doing everything it can to get you to consume immediately, but your not doing so is what differentiates you from the beasts. Your parents should have told you this when you were little. If they did not, it's their bad.

As to this issue of college, my guess is that it depends entirely on what you study. I am pretty sure most engineers, chemists, biologists, are able to find a job at some level with a four-year degree, particularly if they interned somewhere, like kids do nowadays. If you take history, english, film production, computer graphics design, psychology, probably music, art, etc. and get a four year degree, I am pretty sure you will end up waiting on tables.

The reason the colleges admit so many students is that they have to fill up the seats and collect some tuition in order to keep the lights on. It's not necessarily their responsibility that you stay on track, and once you're done, it's pretty much up to you to find a job. Once again, the parents should be helpful in "encouraging" kids to get into fields of study that will lead them to some useful job, however, once again, the parents, typically boomers, are on the whole pretty hopeless in doing this. Also, if they did not sit on you in junior high and high school to get good grades and/or learn something in math and science, the choice was made for you inadvertently at that time.

My theory on the general incompetence of the Boomer generation as parents is that they rebelled from their military-influenced "greatest generation" by not instilling discipline in themselves, or their own kids. This has done the kids a great disservice, on the whole. An entire generation has grown up with maximized "self esteem" and "everybody gets a trophy" and is confused about the way the world works. This whole credit thing is just an extension of this. Naturally the government itself is guilty of this as well. No wonder they're such a bad example.

I apologize for my fellow boomers who have done this to you. Put them on here and I will chew them out.
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Re: Credit Reform

Postby strider3700 » Sat 17 Dec 2005, 05:59:24

$this->bbcode_second_pass_quote('ElijahJones', 'S')trider.

You are an outlier in many ways. The issue with easy credit is much like the issue with cigarettes and both of these are just like the old snake oil salesman who used to sell people petroleum to drink claiming it would cure all their ills.


snale oil salesmen intentionally mislead people to sell a product they knew didn't work.

Cigarette manufacturers used to mislead their customers and hid the dangers of their products.

Both of these acts are illegal and your government does/did punish them for doing it.

These days cigarette manufactures are are very upfront about how dangerous their products are. If you continue to smoke after being told that it's dangerous you deserve whatever you get.

Credit card companies have always been very upfront about their product. You borrow X and we'll charge you Y for as long as it takes you to pay it back. If I charge $100 to the card I pay $18/year in interest. I know this because it was on the papers that I signed when I applied for the card. This is not in the least bit misleading.

$this->bbcode_second_pass_quote('ElijahJones', '
') Human beings in general are not so disciplined as to avoid perils that exist beyond their short term abilities to reason.

I'm well aware that many people fail to perceive the results of their actions before being slapped in the face with them. It used to bother me a lot that most do not think through their actions, these days I've just come to expect. There is a reason I'm a PeakOil doomer after all.

$this->bbcode_second_pass_quote('ElijahJones', '
') In the same way that one knows not to leave toddlers alone in a tub full of water, the people of America expect that the government will protect them from the threats of bad products, whether organic or financial.

No the first example is common sense. The second is expecting to be babysat through out your life. For the two to be equivalent would require either someone taking care of the baby and researching and using common sense about products or the government watching to make sure you don't leave your child in a tub of water while it's watching out for bad products.
You seem to be for more government babysitting where as I'm more for personal responsibility but we already knew we disagreed.

$this->bbcode_second_pass_quote('ElijahJones', '
') I could go into details about our situation but the truth is we are faithfully paying and intend to honor our obligations. It has caused us to learn a painful lesson that we may not have learned any other way. But some of the things we have experienced have been plainly unjust and unethical, and inhumane. I have from the mouths of bankers stories of peoples credit being trashed for a 2$ late fee that they never knew had happened and then having to jump through loop after loop to restore their good name.

Credit is not a right it is a privilege. I personally never loan money out but some companies do loan money out under strict conditions. If you fail to meet those conditions either through your own fault or someone else's fault is not the companies problem. They can decide not to do business with you if they fell like it. You're not happy with the agreement then stop using the service.

$this->bbcode_second_pass_quote('ElijahJones', '
') The issue at stake is whether unethical contracts should be honored by an ethical nation. It is plainly unethical to raise someone's interest rate by 1000% permanently because they were late on 3 of 50 payments.

The contract was clearly spelled out and you signed it. Your other option was to just not take the credit. You made your choice.

$this->bbcode_second_pass_quote('ElijahJones', '
')Your spartan attitude is not atypical among a certain demographic, but the 'I made myself what I am' mindset is an illusion. You did not accomplish what you havet except by learning from others and having a society around you that provided opportunity.

I entirely made myself what I am. And yes I did use some of what I learned from others and I did take advantage of some of the opportunities that I saw.
Everyone is free to learn from others and everyone is free to use opportunities when they come up. The fact that most people learn from the wrong people and take the wrong opportunities is not my fault. Don't think that I haven't made my mistakes the same as others.

$this->bbcode_second_pass_quote('ElijahJones', '
') For most people below the median income (thats half of all Americans and 96% of all human beings) the idea that 0% means 'We are waiting for you to screw up so we can turn you into a lifetime source of employee incentive packages' does not seem honest or kind.

I'm lost on this comment.

$this->bbcode_second_pass_quote('ElijahJones', '
')The old bullshit that you spout about how everyone should drag themselves up by their bootstraps only goes so far.

I didn't say everyone should drag themselves up. I really don't care if you start with a trust fund. You have to take responsibility for your actions and what you have. If you're born with $50,000,000 and you blow it on gambling and women thats your choice. Just don't whine when it's gone.

$this->bbcode_second_pass_quote('ElijahJones', '
') I doubt not that even you oh great Spartan, if you were forced to face the real world would quickly wither away and die without the comforting arms of your society quietly providing food, shelter and medical care through the efforts of the tens of million of people who you think should quietly sit by and allow themselves to be enslaved by the credit card industry.


The credit card industry doesn't go around in the middle of the night stealing kids and turning them into slaves. You don't one day accidentally get caught in a net and then get branded as their property. You literally have to sign up.

And remember I'm a PO doomer. I fully expect that we'll all have to face the real world without that society quietly providing food, shelter and medical care. Here's where that long term ability to reason we talked about comes in. I'm prepairing and planning. Hell there is a whole forum on it here and you'll notice that I'm relatively active in it. What are you doing besides complaining that society isn't taking care of you enough?

$this->bbcode_second_pass_quote('ElijahJones', '
') An industry I might ad that is as heartless and soulless as a rattlesnake waiting for its prey.

Being that an industry is not a person I'm not at all shocked that it doesn't have a heart or a soul. Expecting it to act like a human being is asking it to change what it is. Caring for you is not at all required.

$this->bbcode_second_pass_quote('ElijahJones', '
')The callousness of your heart makes me sick!

perhaps I am a little callous these days. I fail to see how that changes this discussion in the least.

$this->bbcode_second_pass_quote('ElijahJones', ' ')You are an outlier just as your weak argument about how everyone who struggles with credit card debt is a deadbeat is an outlying distortion of the truth.


I never said that everyone that struggles with credit card debt is a deadbeat. I implied that everyone with credit card debt made their own choice and should live with that fact.

$this->bbcode_second_pass_quote('ElijahJones', '
') I would not be surprised if you actually work for a credit card company.

Actaully I'm a computer programmer in the forest industry. My only connections to credit card companies would be the fact that I have their cards and I pay my bills.

$this->bbcode_second_pass_quote('ElijahJones', '
')Boston Legal recently did a show on credit card loan sharking, I think you boys should take notice. Your days of screwing everything that breaths are over. Its time for a little plastic bonfire!

This is a brilliant plan. I think I can see how you got yourself into credit trouble in the first place.
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Re: Credit Reform

Postby jmacdaddio » Sat 17 Dec 2005, 11:30:47

The Frontline episode aired this week on public tv in the NYC area. Credit cards started off innocent enough, but there are two major issues I have:

1. An industry consultant advised that the montly minimum get lowered to 2% of balance instead of 4% in order to make more money in interest plus allow consumers to charge up more. They took advantage of lousy education in the US (people here can't do math) and they will fight any attempt to display how long the balance will take to pay on the monthly statement.
2. They can put you into penalty interest even if you have one late payment to another creditor. The industry's explanation is that a credit card is a loan made to an individual based on information the person supplied about his or her credit history, and if the cardholder does something to change that history, the card issuer has the right to change the terms of the loan. Changing the interest for future purchases is ok, but changing interest rates for existing balances reeks of loansharking and we should all write congress about it.

Here's the really interesting part (read more at www.demos.org): We all have an image of the person who's 30 grand in credit cards as someone who just had to have everything right now, driving a Corvette, watching a big screen plasma TV, cool clothes, etc. While we all know someone like that, the truth is that most Americans in credit-card doo doo have gotten themselves in trouble by using consumer credit to survive. Plastic has become a safety net for cases of a job loss, medical emergency, natural disaster, etc. That's how the credit industry was able to push through bankruptcy "reform": nobody feels sorry for someone who had to have a Corvette and a big screen TV right now, but a family charging diapers because Mom lost her $8 an hour job at the chicken processing plant would elicit some sympathy. Most middle and upper income people (note the use of "income" instead of "class" since they are not the same) can handle the debt load of their consumer debt, believe it or not, barring inforeseen economic meltdown or personal crisis. As usual, it's the poor who suffer the most.
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Re: Credit Reform

Postby jaws » Thu 22 Dec 2005, 22:56:41

Unless you can buy more golf trips than the banking industry, forget about making any difference in government. These people have all been bought and paid for (with your payments).
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