Feds Deliver Tough Love to Credit Card Consumers

You’ve no doubt heard that the Feds will rule this week on new sweeping changes to the credit card industry.  

http://www.consumeraffairs.com/news04/2008/12/credit_cards_fed.html

 

Part of their proposal is that credit card companies will not be permitted to raise the interest rate on existing balances.  While many seem to be thrilled with this prospect and feel that justice will be served, some are oblivious to the backlash that will inevitably occur, namely the elimination of several credit card companies due to their inability of maintaining profitability without the use of such monstrous tactics, and the elimination of credit cards being issued to anyone with less-than-perfect credit profiles.

 

Over 65,000 consumers have sent in feedback to the Feds on this topic along with stories of the aggressive tactics that credit card companies have taken to maintain profits, and to collect on delinquent debt.  Many submitted lengthy stories as well, stories which showed that even a perfect payment history did not protect someone from “unfair” treatment at the hands of the credit card companies.  There are an abundance of consumers in all aspects of society who feel they have been mistreated by the credit card companies.  So it’s no wonder that this is the most involved consumers have been on any issue with the Feds.

 

While I agree with the premise of most of the proposals on this matter, there are obviously going to be some privileges that will be revoked with such regulations.  One of which being the elimination of small credit card balance issuers who typically issue credit to high credit risk consumers.   Many economists are attempting to sway the Feds due to this “downside” but personally, I think it’s GREAT. 

 

This is the first time in a long time that I would find myself able to say this, but I think that both the proactive steps as well as the reactive scenarios are excellent for our economy.  While the pill will be hard to swallow on both sides, we have become a society dangerously dependent on credit cards.  At what point did we as consumers think that we needed so much more than we could actually pay for?  In my opinion, those who are in tough financial times, thus possessing low credit scores, do not truly need the temptation of a credit card—at any rate or any available balance.  Whether one is wealthy, middle-class, or poor, one does not truly need a credit card. As a society we have given away too much of our freedom and helped build these credit card companies to the flesh-eating monsters that they are. WE have created this monster.  We only have ourselves to blame.  I firmly believe that a dose of “tough love”  will aid in eliminating some credit card companies and their high credit risk junkies, and that is a very good start.

Copyright 2009 Kellene Bishop. All rights reserved. You are welcome to repost this information so long as it is credited to Kellene Bishop.

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You Can’t Fix Stupid

Yup. You may not be able to fix stupid, but in this case, I think it’s perfectly legal to kill it.

Wow! I thought the majority of discrimination had been eliminated nowadays. Clearly I’m wrong and somewhat naïve though. Can you believe it? American Express is now openly admitting that they are lowering their credit exposure to individuals based on whether or not they have a loan with a mortgage lender that ALSO lends to sub-prime candidates and if the client has the audacity to shop at stores where low income individuals also shop. And apparently they aren’t the only ones to enact such insulting practices in the credit card industry.

Wells Fargo used to be one of the most aggressive sub-prime lenders in the nation. They are soon to be poised as one of the largest banks with their takeover of Wachovia, even if only receiving a portion of the assets of that bank. And yet someone who qualifies for an “A Paper, Roll Out the Red Carpet loan” from Wells Fargo could be targeted with less favorable terms because of Wells Fargo’s subprime division.

Countrywide was very aggressive in the subprime market as well. And as you know, Countrywide has bit the dust. Regardless of the fact that A paper, reputable, and financially strong banks have purchased Countrywide’s mortgage assets, you could still be financially penalized because you have a loan with them. Ironic isn’t it? You can pay perfectly on your loan with absolutely no hiccups, but because the company you make your check out to every month has made questionable decisions in their lending practice, your access to credit is compromised?

Is it just me, or is this absolutely ridiculous? (Warning: Sarcastic tirade up ahead) Let’s compound the suffering of the American people by penalizing them for the actions of others yet one more way. And when they try to react to the economic crisis by shopping at Target or Wal-Mart to make their dollars stretch that much more, let’s assume that they should be treated as a trailer trash drug addict and credit derelicts and minimize their accessibility to credit. After all, drug addicts have to shop somewhere, right? And if you’re dumb enough to shop where the financially struggling do, then your access to credit should be minimized, if not taken away all together! And while were at it, we should also be take preemptive measures and round up and put to death anyone who has the name of Charles or Manson or Oswald- just to be safe, you know.

Yup. The dumb keep getting dumber folks. This outlandish decision has three Code Red ailments.

1. It holds the potential to increase the gap of distance between the wealthy and the other classes. Such a gap can foster a surge in pride and snobbery.
2. If affects the spending ability of the wealthy. And I’m telling you… the wealthy do not like to be told what to do with their money. The wealthy now have reason to literally FEAR shopping at Target or Wal-Mart. Even if they pronounce either store with a French accent, they could lose their access to credit as a result. Just in case you didn’t know, the wealthy have experienced an inflation ratio of 12% over the last few years which is as much as double or triple what the other classes have been subjected to for the goods and services they buy. Thus the wealthy are now bound to experience an even bigger inflation ratio as they will now be required to buy their everyday goods from more upscale stores, or risk the fate of lowered credit access. With this asinine decision, the wealthy are less likely to change their inflation rate any time soon.
3. And folks, like it or not, the wealthy provide jobs. That’s the 3rd ailment. So not only does this Nazi-styled discrimination practice harm the middle class in their ability to grow their businesses, it has the ability to affect the lower class as well, in their dependence on the wealthy for employment.

My vote? I choose to stop rewarding stupidity right now by eliminating all of my credit card access. Will it be challenging at first? You betcha! It’s ingrained in me to perform my business transactions this way. But I’ll be darned if I let the Plastic Prince tell where I can or can’t shop. I look at it this way. Benjamin Franklin was one of the wealthiest and most successful business people in history. He did so without the Melamine Methodology, and dog gone it, so will I.

Credit Cards. May they melt in peace.

Copyright 2009 Kellene Bishop. All rights reserved.

You are welcome to repost this information so long as it is credited to Kellene Bishop.

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