As I've written before, I hate credit card companies and they hate me. So I should have gathered some glee from this story: "Lawmakers grill credit card execs - Senators want issuers to do away with multiple fees and pegging rates to credit scores. Companies warn tighter policies would limit credit and raise prices."
The problem is that I believe in the free market and that, if you don't like your seller, you don't have to be a customer. The same is true for credit card companies which is why the example the senators used to showcase corporate "abuse" fell flat:
[Senator Carl] Levin highlighted the case of Janet Hard, a Discover Card customer who testified about her experience at Tuesday's hearing.Heartbreaking, except nearly every credit card issuer will offer a new card for a transferred balance at zero percent interest for six to twelve months. Shift your debt and cut up your Discover card. Janet seems to think that the credit card companies are good neighbors out to lend a hand; they're not, and they depend on the financially ignorant to prosper. Don't be so shocked.
"Janet pays her bills on time and has never exceeded her credit limit," Levin said. "In 2006, Discover Card raised her interest rate from 18 percent to 24 percent because her credit score had dropped but they didn't tell her why it had dropped."
With the higher rate, most of Hard's monthly payments went toward covering her finance charges instead of bringing down her principal debt.
"We paid our bills on time and never accrued a balance over our credit limit," said Hard, a registered nurse who is married with two children. "I thought the 24 percent rate was an error. But the company said they ran a spontaneous check that put us at a risk of defaulting on our payments. I feel sick. It's hard for me to get my mind around that."
3 comments:
Nanny-state to the rescue. Because we're all just a bunch of big, fat teenagers incapable of taking responsibility for anything.
Wow! It's really going to be a great country after the 08 elections, isn't it?
Want a big fancy house but can't afford it without an exotic mortgage? Don't feel like paying your mortgage? No problem! Bailout comin your way!. Get in a bit too deep in credit card debt? Free money to pay it off! Would you rather have a plasma TV and a BMW than save for retirement? Government 401k! Rather be an artist than get a job with health insurance? We got something for you too! Free care, baby! Just get in line and we'll get that right out to you.
Idiocracy (the movie), here we come.
Car loan and mortgage companies can't do what credit card companies can: raise your rates and fees because they feel like it or need to raise their income or because your payment is a day late. I believe in the free market but credit card companies are scum and looks like their own worst enemy. Loan sharks used to charge less interest than they do.
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