credit cards

Banksters ready to side-step new credit card rules

This is interesting on two levels. First, the obvious level that the banks which issue credit cards are, as dakinikat writes, "taking steps to ensure we continue our indentured servant status." But the second level I want to point out is how discipline is imposed within the economics profession to ensure the continued apologia for the banksters and their financialization of the economy.

The Fed proposes new credit card rules

The Federal Reserve is proposing new rules (large pdf), on credit cards.

This is a second stage of rules, to go into effect on February 22, 2010.

One of the best things is banning the credit card industry from applying payments to your lower interest rate first.

Ya know, you have a balance and you get an offer which says "2.99% on new purchases for 6 months", which you accept.

Well, your payment goes to pay off any purchases under that 2.99% interest rate and not that huge balance you have that is accruing at 17.99%!

That interest rate fake out game will be gone!

Another goodie is banks must not only disclosure exorbitant over the limit fees, but get acknowledgment from the card holder such fees are ok.

The rules also ban that lovely technique of offering you a low rate and then magically raising it in the first year you have the card.

1 out of 10 cannot make their credit card payments, unemployment increases

The headline is misleading for a charge off means the credit card company has determined they ain't ever seeing the money. So the number of Americans unable to actually make their payments is probably higher. This news is two days old but significant considering unemployment is skyrocketing past estimates. Credit card charge-off rate nears 10% -Moody's:

The Moody's Credit Card Index's charge-off rate -- debts that card issuers believe they will never collect -- rose to nearly 10 percent in April, the highest level in the index's more than 20-year history, the report said.

This pace of rising charge-offs is unprecedented as year-over-year changes continue to surpass the magnitude of either increases or decreases experienced during any previous period

Credit Card Companies Retaliate

With even a watered down bill trying to stop the most brazen loan shark practices of credit card companies, the industry is now planning to retaliate. From the New York Times:

to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

The article goes on trying to claim those predatory practices are only those riskier borrowers but all of America knows that's not the case.

Note most companies saying this are TARP recipients.

These same companies are expected to rake in $20 billion dollars on late fees and penalties this year.

Loan Sharks in Three-Piece Suits - Sen. Bernie Sanders, Limit Credit Card Interest Rates

Rely on Senator Bernie Sanders to state the obvious and someone, finally introduces legislation to stop these predatory loan practices:

Sanders Press release Loan Sharks in Three-Piece Suits:

Sen. Bernie Sanders will introduce legislation this week to cap interest rates charged by credit card companies that now slap consumers with rates of up to 30 percent. "This is money that comes right out of their hides and it hurts," Sanders told The Burlington Free Press. His legislation would impose 15 percent interest rate ceiling. It also would limit fees. “We are going to introduce a national usury law which will prohibit any financial institution from charging these outrageous rates,” he told Thom Hartmann’s nationally-syndicated radio show. “These loan sharks wear three-piece suits, but they’re not much different than those guys who break people’s knee caps.”

Report Says Banks to Slash Credit Card Limits by $2 Trillion

No more charge it now when you don't got it?

Credit card companies may slash credit limits on credit cards by $2 trillion dollars.

Whitney, an analyst and managing director at Oppenheimer & Co. who predicted the current financial-services industry meltdown, now says credit-card issuers will eliminate more than $2 trillion in available credit over the next 18 months.

I'm not sure if they can lower credit limits when one has already used it, but for all of those who are losing their jobs and probably credit cards will be the last option, this is not good news.

Federal Reserve Commits another $800 Billion

It's pouring money. Today the Federal Reserve committed $800 Billion more:

The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.

The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a program of $200 billion to support consumer and small-business loans, the Fed said in statements today in Washington.

$200B is partially aimed at credit card debt. They want consumers to use more credit cards.

Great! Nothing on predatory lending, excessive fees...
yet another $800 Billion, just like that.

Paulson Now Going to Give Bail Out Money to "Consumer Finance"

Told one thing, get another or more aptly titled: What is Behind that TARP?

Paulson to Focus on Consumer Finance:

[Paulson] has shelved the original plan to buy troubled mortgage assets while turning his attention to nonbank financial institutions and consumer finance.

Purchasing these so-called "toxic" assets was once the cornerstone of the rescue plan for financial markets and was almost the entire focus of Congress when the package was being debated before its enactment. But almost as soon as Treasury received the money, it decided that giving capital to banks in return for preferred stock was a better use of the funds.