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[eznark]

None of the "problems" created by the credit card industry exist with responsible individuals who spend within their means and pay their cards on time, Deku. Discounting the rewards which you for some reason hate, the benefit of immediate liquidity is enough or a reward for the responsible user.

 

[Clockwork]

Accrued interest from after the last cycle date, but before you paid the card off. You were a dick over nothing.

*nods*

 

[Phoenix]

The CCs get a cut of every transaction. If the responsible users were losing money for the CCs, why wouldn't they just drop them?

Because they expect them to eventually become irresponsible users. They increase the limits, offer increased ways to spend the money with the expectation that they will transition to more lucrative customers. Just because a customer doesn't make you any money today, doesn't mean they won't make you a lot of money tomorrow. So long as they aren't COSTING you a lot of money, you keep them around and yes there are many people with $0 balances who get bumped out of the credit card business all the time because they aren't profitable at all.

 

[Phoenix]

I have no problem with pay day loans, no. If you sign your name to a document it is your responsibility to know what you are signing and what obligations come with that signature.

As others have said, the credit card companies do make money per transaction from the retailers, so to say that credit card companies weren't making any profit off the "deadbeats" seems tenuous. In fact, a consumer advocate quoted in the WSJ this morning (the online edition has been updated so I can't find the article right now) says that the credit card companies won't clamp down on "deadbeats" precisely because of the money they make from retailer fees.

The deadbeats will be clamped down on in ways that you simply won't notice such as call center routing. Every business knows how much you're worth to them expressed as the lifetime value of a customer. The responsible customers have a very low lifetime value of a customer. Some of the folks out there with $10k in debt are the 'good' customers for a credit card company. The responsible folks that collect benefits will eventually end up being cost centers. With certainty if you've called your credit card company or taken advantage of an extended warranty or receive some awards - you've probably cost the company far more than you've made them.

The credit card business LTV is based on a 15,20,30 year projection and as they reduce the amount of money that the irresponsible customers bring in you're nuts if you don't think that will result in a change in perks/benefits for the responsible customers with a lower LTV. The amount of money they make on transactional charges is trivial compared to what they make on interest from people carrying balances.

 

[Wraith]

The CC rewards programs are not that great, return pennies on the massive interest profit they earn to the consumers, and the 'points' 'miles' programs are subcontract out to third party benefits providers who also count on a large percentage of beneficiaries to never cash in their points. And like the balance you have left in your gift card, the CC company reserves the right to claw back your balance if you don't use it up fast enough.

to defend the industry because of the miniscule benefit a small portion of consumers may potentially get is really laughable.

To discount the money I and many others have made with absolutely 0 cost to us is really laughable.

Here's another thing CC companies rely on. Even the poor and highly levered consumer will try to pay the interest on their CC for as long as possible even if they cannot hope to pay down their principal. So the interest stream is far more stable than one might suspect.

Uh, I think everyone who has spent more than 15 seconds thinking about the matter understands this. People who don't read fine print and make poor decisions get into financial trouble. It's just a shame that the rest of us are forced to foot the bill in the form of increased taxes and social programs.

The securitization of such debt has also allowed CC companies to shift much of the default risk to unsuspecting investors buying pre-packaged financial instruments. With a portion of it sold of as AAA rated securties precisely because some interest payments can be counted on from even the very broke. How do you think the sub-prime mess started and how even a town in Norway managed to get sunk with the bad debts when they thought they invested their cash in a 'security'.

So now we have irresponsible investors in the mix who don't understand what they're buying. When you invest in something, there is always the possibility you're going to lose money on it. There is no free lunch and there is no such thing as a sure bet. This is the game you play when you invest. Want to keep your money? Hide it in the damn mattress.

Christ, I have never sounded so Republican. :lol For the record, I vote Democrat. I strongly believe that we shouldn't be rewarding stupidity, though. If you dig yourself into a hole with debt, alcohol, or drugs then it shouldn't be my responsibility to drag you back out.

 

[Stinkles]

No, the responsible users weren't providing profit AT ALL. Not sure why you think they were. It was the irresponsible users that provided the margin that got you your benefits. Sucks that you think that removing an exploitative business model is government hand holding. Did you agree with pay-day loans as well?

Responsible users were generating credit card transaction fees at vendor locations. There were other instruments being bought and sold that touched on responsible users too. I'm not sure why you think they weren't.

I'm not suggesting they were making bank on those, but that's a small tax to pay for being legally enabled to run a vindictive form of usury.

 

[scorcho]

As others have said, the credit card companies do make money per transaction from the retailers, so to say that credit card companies weren't making any profit off the "deadbeats" seems tenuous.

The fact that we're called 'deadbeats' by the industry says enough. And it's obvious the profit they're generating from transaction fees is nowhere near enough to support their current model - hence them potentially curbing the generous reward benefits and low APR.

 

[Phoenix]

Responsible users were generating credit card transaction fees at vendor locations.

There is a reason why even American Express has mostly gotten out of the 'charge card' business and moved into the 'credit card' business. The amount of money they make from merchant transactions is 0.75-2% on average with the mean being closer to 1.1%. Go take all of the stuff you charged last year and take 1.1% of that. Hell even if you charged $20 grand that's $220. They aren't getting any interest from the responsible user, they aren't getting any annual service fee, etc. and on top of that they are giving you cash back or perks like free plane tickets/etc. And that's assuming that they are doing that at no cost to them at all.

No, they make their money off irresponsible users. An irresponsible user will pay that in a month - EASY.

 

[May16]

I see Bank of America on the short list. Welp, we had a good run, BoA. Goodbye~

 

[Cyan]

Because they expect them to eventually become irresponsible users.

Makes sense.

 

[loosus]

I wish we could get rid of the term "hidden fees." They're usually only "hidden" because you're too damn impatient to read your agreement. Read the fucking thing and stop complaining.

 

[mj1108]

My fucking Amex Clear dropped from $1700 credit limit to fucking $1300 last week.

I have a Target Visa which dropped from $1,300 to $500 the other day. I've been paying it off and now they're balance chasing me.

 

[VPhys]

http://finance.yahoo.com/banking-bu...ing-Payers?sec=topStories&pos=2&asset=&ccode=


:lol Guess what assholes, the second you do that is the same second 50 million people stop using your credit cards. The only reason people like me even use cards is for the rewards. We don't need them. We'll simply go back to using debit cards and all of those transaction fees you've been getting from the business that accept our cards will go *poof*

So go ahead dickheads, try us.

Pretty much.


I've been owning credit card companies since I was 18. I have probably made 1000s of dollars in rewards. Let any card out there try to charge me an annual fee and I will go back to using debit cards and cash immediately.

 

[Neil]

Hhmmm, interesting.
I have 2 credit cards (and 2 store cards), but I only have them to build up a credit history.
I would cancel my credit cards if there were going to be an annual fee.

 

[Raistlin]

Use your debit card.

Unfortunately, that doesn't work online.

 

[biggkidd32]

Unfortunately, that doesn't work online.

Um...most do. Does your debit card have Visa or Mastercard logo?

 

[Troidal]

If it weren't for its use in online shopping, I'd have said fuck you to credit card companies a long time ago.

 

[scorcho]

If it weren't for its use in online shopping, I'd have said fuck you to credit card companies a long time ago.

Same. Paging Newegg - add Paypal!

 

[xsarien]

If paying it off in full every month makes you a deadbeat, I'm surprised Amex hasn't paid off some guy in a parking lot to try and kill me. Between my penchant for charging damn near everything (it really DOES help you track your spending), paying it off in full, the fact that it's a JetBlue card and my occasional travel I get away with murder on their award system.

/Bring it on.

 

[Y2Kev]

I have a Target Visa which dropped from $1,300 to $500 the other day. I've been paying it off and now they're balance chasing me.

That's strange. I use my card rarely and Citi upped the limit from 2.5 to 3.5k for no reason at all.

 

[2 Minutes Turkish]

America doesn't get charged annual fees on credit card?

wow.

No wonder your banks got raped and kickstarted this global recession. You guys get free money everywhere you turn :lol

It's all the fees and charges that our banks in Australia have been charging us for YEARS that has helped shield our banks from all this bullshit.

The only way I avoided fees for as long as possible was to tell them I was a student. :lol

 

[Phoenix]

America doesn't get charged annual fees on credit card?

wow.

No wonder your banks got raped and kickstarted this global recession. You guys get free money everywhere you turn :lol

It's all the fees and charges that our banks in Australia have been charging us for YEARS that has helped shield our banks from all this bullshit.

The only way I avoided fees for as long as possible was to tell them I was a student. :lol

Charging fees discourages people from getting cards and they were making up the lost money pretty much within the 1st 30 days. The first thing most people do when they receive a new card is go somewhere and spend money (usually food). So in the US it made more sense to remove one of the barriers to entry to get more people spending on cards. I know when I got my Amex Gold, the biggest barrier for me was paying a few hundred bucks a year for the privilege of using the card.

 

[2 Minutes Turkish]

Charging fees discourages people from getting cards and they were making up the lost money pretty much within the 1st 30 days. The first thing most people do when they receive a new card is go somewhere and spend money (usually food). So in the US it made more sense to remove one of the barriers to entry to get more people spending on cards. I know when I got my Amex Gold, the biggest barrier for me was paying a few hundred bucks a year for the privilege of using the card.

So take a card with lower fees.

I have 2 cards.

One charges me $45 a year. The other charges $80. It honestly doesn't bother me that much. Having those cards gives me the freedom to manage my money better than I EVER could without them.

But having NO fees just encourages idiots to get 10 credit cards, and pay off one with another until they drown in debt. That's how a rec....oh.

 

[maharg]

"Those that manage their credit well will in some degree subsidize those that have credit problems."

Hm. When it's the bad credit people subsidizing the good credit people, that's great. Turn it around and then it's OMGNOWTF.

Whining that a predatory almost-pyramid scheme has been foiled and oh no you won't get free airfare off the backs of other people seems a little ridiculous to me.

 

[hey_monkey]

Husband and I were talking about this today. We've carried a balance once in six years, when we bought some appliances and just said fuck it. We'll be among the people canceling our cards. We just use cc for convenience anyway, but screw them if we're going to have to pay interest for our "convenience."

 

[Phoenix]

So take a card with lower fees.

I have 2 cards.

One charges me $45 a year. The other charges $80. It honestly doesn't bother me that much. Having those cards gives me the freedom to manage my money better than I EVER could without them.

But having NO fees just encourages idiots to get 10 credit cards, and pay off one with another until they drown in debt. That's how a rec....oh.

High spending limits are what cause people to drown in debt. Nobody is going to say "well I can get 10 cards each with a $25/yr fee and get $25,000k in credit. I mean people will just get cash advances to pay for the fees

 

[Loki]

There is a reason why even American Express has mostly gotten out of the 'charge card' business and moved into the 'credit card' business. The amount of money they make from merchant transactions is 0.75-2% on average with the mean being closer to 1.1%.

Are you sure about that? I've worked in management at a couple of places and dealt with the books at a consulting company, and most cards' % was usually 2.5-3.5%. AmEx was generally on the high end of that spectrum, higher than all other cards from my recollection.

 

[Cyan]

Are you sure about that? I've worked in management at a couple of places and dealt with the books at a consulting company, and most cards' % was usually 2.5-3.5%. AmEx was generally on the high end of that spectrum, higher than all other cards from my recollection.

Same here (well, I worked in accounting, not management ). But I don't think the CC company gets that entire amount. I'm pretty sure I've had this conversation with Phoenix before.

 

[Raistlin]

Um...most do. Does your debit card have Visa or Mastercard logo?

>_<

I must have been having a seizure or something when I posted that ... because I have no fucking clue what I was thinking :lol


Regardless, this still sucks.

 

[Raistlin]

I will say that after I get my house, I'm going to drop some of the credit cards I haven't used in some time.

No reason to keep them anymore ... and if my credit rating drops a bit from closing them, who cares ... I'll already have secured my mortgage.

 

[Docpan]

I pay off in full every month-- I hardly ever pay interest.

If they try and pull this automatic-interest bullshit, I'm going to start paying for all my shit with straight-up cash.

 

[chase]

Come on. These guys (like all corporations) have our best interests at heart. Don't like it? Start your own credit card company!

 

[Zhuk]

Time for Congress to bury these suckers with real legislation that stops the usury that is going on.

 

[arstal]

I imagine they'll cull the "no-balance for x number of months" people first. Go buy a video game with you credit card and then pay it off immediately.

This shows youu how screwed up our system is, thanks to how credit scores are calculated being not that well-correlated with risk in some cases. It's like you have to charge in order to keep your flexibility up.

It's just a stupid system.

 

[gcubed]

I will say that after I get my house, I'm going to drop some of the credit cards I haven't used in some time.

No reason to keep them anymore ... and if my credit rating drops a bit from closing them, who cares ... I'll already have secured my mortgage.

to be honest, unless its costing you money to keep it open (or you have a whole crap of them), there is no benefit in closing it, just cut it up

 

[eznark]

Hm. When it's the bad credit people subsidizing the good credit people, that's great. Turn it around and then it's OMGNOWTF.

Whining that a predatory almost-pyramid scheme has been foiled and oh no you won't get free airfare off the backs of other people seems a little ridiculous to me.

I have no problem with the responsible benefiting from the irresponsible.

Bryan Caplan (rad economist and Myth of the Rational Voter author) agrees with you guys and thinks I am dumb. However, he also thinks you won't be happy with the results of this legislation:

Wrong, wrong, wrong. When you make lending to high-risk people less attractive, the result is not worse terms for low-risk people who have been profitable all along. The result is that high-risk people get less credit. They used to be able to get credit despite their credit-unworthiness by paying extra; if the law forbids this, why lend to them?

This article is as crazy as a story about the minimum wage claiming that highly-skilled workers suffer the most because employers need to "make up the difference somewhere." The correct retort, of course, is "Yea, they make up the difference by buying less of the labor that now costs more."

But who am I to question the wisdom of leading members of the credit card industry? The answer, I strongly suspect, is that the industry leaders don't believe their own argument. They're demagoging. The sensible objection that, "Credit card regs that protect high-risk consumers will make it harder for them to get credit," is almost impossible to sell. The ridiculous objection that, "Low-risk consumers will pay the price," is, alas, a far easier sell.

To extrapolate the prediction further, in five years Congress will be lambasting the credit card industry for its racist policies that don't do enough to get low income minorities credit.

He links to this housing study in the quote, which didn't cut and paste:http://www.gmu.edu/departments/economics/bcaplan/e103/micro5.htm

 

[jonnybryce]

My fucking Amex Clear dropped from $1700 credit limit to fucking $1300 last week.

I have a Target Visa which dropped from $1,300 to $500 the other day. I've been paying it off and now they're balance chasing me.

That's odd, my limit is still 5k despite a lot of people I know (and just see on the internet) getting their limit cut.

 

[Javaman]

Yeah, as much as I understand how many credit card applications college students get, there are people who actually start in the real world at 18.

And as usual, if you can serve in the army and die for your country, you ought to be able to do everything else (drink, rent a car, have auto insurance that isn't ageist, etc.) at 18.

I have no issues with the new law. People can still get CCs without parental consent as long as they show means to pay.

 

[Diatribe1974]

http://finance.yahoo.com/banking-bu...ing-Payers?sec=topStories&pos=2&asset=&ccode=


:lol Guess what assholes, the second you do that is the same second 50 million people stop using your credit cards. The only reason people like me even use cards is for the rewards. We don't need them. We'll simply go back to using debit cards and all of those transaction fees you've been getting from the business that accept our cards will go *poof*

So go ahead dickheads, try us.

Are you f*cking retarded? You're saying how "50 million people are going to stop using those credit cards...." when it was those 50 million people who went "29.99% interest rate and a 1000$ limit, but no annual fee? SIGN ME UP!" You're trying to make it sound like the average person thinks before whipping out the plastic other than "Do I have enough room left on the card?" rather than "Should I even buy it?" let alone thinking "Should I even get another credit card?"

 

[skrew]

I'm in the process of switching to USAA completely for all financial needs, they offer me the best rates, lowest insurance and first class customer service. When I deploy, I make one call to USAA (with no waiting) and they lower all my interest rates, and change my full coverage insurance to storage, with no hassle or paperwork and check every accounts I have with them to see if they can offer me any other perks. They also insure me when I'm home on R&R leave, without me having to call them, free of charge. Unlike every other company, USAA will bend over backwards to do everything they can possibly do for you.

 

[jmdajr]

Unfortunately, that doesn't work online.

says who?

I've been using mine for YEARS

 

[A Human Becoming]

Maybe this will make Americans save more...

 

[Wraith]

Are you f*cking retarded? You're saying how "50 million people are going to stop using those credit cards...." when it was those 50 million people who went "29.99% interest rate and a 1000$ limit, but no annual fee? SIGN ME UP!" You're trying to make it sound like the average person thinks before whipping out the plastic other than "Do I have enough room left on the card?" rather than "Should I even buy it?" let alone thinking "Should I even get another credit card?"

Uh, I think you misread.

"Despite all the terrible things that have been said, you're making out like a bandit," he said. "That's a third of credit card customers, 50 million people who have gotten a great deal."

So there are 50 million responsible people who DO pay attention and will stop using their cards as soon as it's no longer profitable. The other 100 million people are the ones you are talking about, I think.

 

[gcubed]

I have no problem with the responsible benefiting from the irresponsible.

Bryan Caplan (rad economist and Myth of the Rational Voter author) agrees with you guys and thinks I am dumb. However, he also thinks you won't be happy with the results of this legislation:



To extrapolate the prediction further, in five years Congress will be lambasting the credit card industry for its racist policies that don't do enough to get low income minorities credit.

He links to this housing study in the quote, which didn't cut and paste:http://www.gmu.edu/departments/economics/bcaplan/e103/micro5.htm

glad to hear i'm not the only one who thinks this entire thing is just foot stomping and tears flowing from an industry that isnt getting its way

call me when some bad shit starts happening to responsible borrowers (free money and flights going away does not qualify as "bad shit"), then i'll give a fuck... i'll bet that I never see this topic again after it fades away

 

[Argyle]

I'm in the process of switching to USAA completely for all financial needs, they offer me the best rates, lowest insurance and first class customer service. When I deploy, I make one call to USAA (with no waiting) and they lower all my interest rates, and change my full coverage insurance to storage, with no hassle or paperwork and check every accounts I have with them to see if they can offer me any other perks. They also insure me when I'm home on R&R leave, without me having to call them, free of charge. Unlike every other company, USAA will bend over backwards to do everything they can possibly do for you.

This, assuming you can sign up with USAA - I think you have to be in the military or a dependent of someone in the military (my dad was in the Navy, so I got hooked up). Never had a problem with them on anything - credit card, car insurance, car loan...

 

[eznark]

glad to hear i'm not the only one who thinks this entire thing is just foot stomping and tears flowing from an industry that isnt getting its way

call me when some bad shit starts happening to responsible borrowers (free money and flights going away does not qualify as "bad shit"), then i'll give a fuck... i'll bet that I never see this topic again after it fades away

I think Caplan's point is that this is going to be bad for irresponsible and responsible borrowers on the whole. Less access to credit and higher rates etcetera.

 

[Phoenix]

Are you sure about that? I've worked in management at a couple of places and dealt with the books at a consulting company, and most cards' % was usually 2.5-3.5%. AmEx was generally on the high end of that spectrum, higher than all other cards from my recollection.

You can actually pull down the rates from any of the portals for payment services. I deal with Visa processing and while it may be different for me because we're a big brand - the rates are a lot lower now than they were even 4 years ago. The published fees are 2-3%, but unless you are a small business you aren't paying that.

 

[scorcho]

I think Caplan's point is that this is going to be bad for irresponsible and responsible borrowers on the whole. Less access to credit and higher rates etcetera.

Which I don't necessarily see as a problem either - our economy was driven into the ground in part due to cheap credit and mounting consumer debt.

I do find it odd that you're arguing on the side of the (likely poor) irresponsible borrower not getting credit though, since you've stated your desire to further reduce the minimum wage.

 

[eznark]

Which I don't necessarily see as a problem either - our economy was driven into the ground in part due to cheap credit and mounting consumer debt.

I do find it odd that you're arguing on the side of the (likely poor) irresponsible borrower not getting credit though, since you've stated your desire to further reduce the minimum wage.

When at any point in time have I ever argued on the side of the irresponsible borrower?? They may see some net benefit as a result of my opinions but by no means is that the intent. It's up to the individual to limit their debt burden. If you can't afford something and you still buy it, you're the idiot, not the lender.

Also, I do not support reducing the minimum wage, I support abolishing the minimum wage.

 

[scorcho]

Thought you were sympathetic to the previous link that argued that this would dry up credit to irresponsible borrowers.

Abolishing the minimum wage?!

[backs away slowly]