Credit Cards and the Industry

Zharen · 12-13-2009, 02:22 AM

Found a very informative video about credit cards and the industry and how it ties in with today's economic mess.

FRONTLINE: the card game: watch the full program | PBS

For any American who holds a credit or debit card on this forum, I suggest watching this video. The more things change, the more they stay the same.

Sim Kid · 12-13-2009, 01:11 PM

1st National Bank must hate me....they've had to boost my credit limit three times because I've had such good credit rating.

***CaptHayfever*** · 12-13-2009, 02:24 PM

I'm on a soundless computer at the moment, so I can't do the video right now; is it saying that even responsible, minimal credit spending by somebody who pays off the full amount each month but just doesn't want to carry THAT much cash all the dang time is harmful?
'Cause unless it's saying that, it doesn't apply to me.

And remember, "I'm-a Luigi, number one!"

Zharen · 12-13-2009, 08:22 PM

Quote:

Originally Posted by CaptHayfever

I'm on a soundless computer at the moment, so I can't do the video right now; is it saying that even responsible, minimal credit spending by somebody who pays off the full amount each month but just doesn't want to carry THAT much cash all the dang time is harmful?
'Cause unless it's saying that, it doesn't apply to me.

And remember, "I'm-a Luigi, number one!"

It can still apply to you if you're late on any of your other payments: cars, mortgage, cell phone, etc. Apparently the cc companies can view your other bill payments and if they see that you're late on any of the others, can and will raise your interest rates up, regardless of if they were paid by card or not.

Lurch1982 · 12-15-2009, 10:52 PM

Quote:

Originally Posted by Zharen

It can still apply to you if you're late on any of your other payments: cars, mortgage, cell phone, etc. Apparently the cc companies can view your other bill payments and if they see that you're late on any of the others, can and will raise your interest rates up, regardless of if they were paid by card or not.

Universal Default. I think they also look at student loans in addition to CCs, mortgages and car notes.

Also, if you're between 18 and 21 and don't have a CC right now, you should probably get one before the CARD Act goes into effect early next year. Its going to become pretty much impossible to get one afterwards.

Kil'jaeden · 12-15-2009, 11:38 PM

I absolutely distrust the things. They're a scam and a trap. I know better than to mess with credit cards too much, from the example of my parents.

Eagle Eye · 12-16-2009, 12:10 AM

I don't have a CC and don't plan on getting one any time soon. I do have a debit card, but with online banking, I keep a constant monitoring on my account and never let it get under triple digits (which took a long time to get to, trust me).

Lurch1982 · 12-16-2009, 12:26 AM

They're a necessary evil if you plan on buying a house at any point or (more likely in the short term) getting financing on a vehicle. I got a student Mastercard at the end of my second year of college. I made payments and basically didn't screw it up, so I built up credit to the point where companies throw me insanely stupid offers. When I bought my car, I was able to get an insanely good interest rate on the note because of it. One of my friends has never used or applied for a CC. He went to buy a car after he landed a "real job" and found that nobody would lend him money because he had no credit. His car note had an interest rate a shade below 10%, which is insanely high. He also ran into problems renting a car or staying in hotels on the road because they either wouldn't accept cash/debit cards (car rental company) or they placed a massive hold on his debit card until the car and hotel stay were over (hotel and the fourth rental car place he tried). Traveling without a CC is borderline insane because of that type of garbage.

Not saying its a good idea to rush out and get a card with a stupidly high APR and max it out, but you need to establish credit at some point if you want to do anything involving a long term payment plan in the future (or not have a hotel jam your checking account with a hold equal to the bill + X per day for incidentals).

***CaptHayfever*** · 12-16-2009, 12:50 AM

Quote:

Originally Posted by Zharen

It can still apply to you if you're late on any of your other payments: cars, mortgage, cell phone, etc. Apparently the cc companies can view your other bill payments and if they see that you're late on any of the others, can and will raise your interest rates up, regardless of if they were paid by card or not.

But if I pay off the entire credit bill each month, there is no interest charge.
Also, I haven't been late on any other payments, nor do I expect to be anytime soon (only having one other payment right now--car--with sufficient income to easily maintain it).

And remember, "I'm-a Luigi, number one!"

Sim Kid · 12-17-2009, 09:21 PM

Lurch, my thoughts exactly...Because so many people have them (I think at least 70% of the people at Subway pay with credit or debit cards...some days <10 people actually pay with cash), you really seem to need at least a debit card if not an actual credit card...we've run into those exact kinds of problems but because mom has a dozen credit cards she shares with dad, she's managed to avert them, while at the same time one of her coworkers from India has had to bunk with another worker because they wouldn't accept cash at some hotels. (Though he does deserve credit for it being his first trip outside of the small town and Bangalore where he's lived his entire life, he thought a "Master Card" was a passport)

Though can you explain the CARD act to me? I've heard of it but I'm not fully aware of the details.

Lurch1982 · 12-18-2009, 12:39 AM

CARD Act pushes through a few changes over some of the crappier aspects of the industry.

They have to apply payments to the highest interest first instead of lowest interest first (Example: I transfer $500 from another card to a 2.99% rate on another. Normal charges are at 15%, and my balance there is $500. My minimums would now apply to the 15% charges, not the 2.99%. Prior to this, companies would pay off the lower interest charges (regardless on when they were charged) so the higher interest charges would remain on the account for a longer period of time.

They fell short of banning Universal Default situations (which pissed off everyone involved with Consumer Advocacy), but they did change how rate hikes worked. If my card company decided to change my rate (like they did last year), the rate applies to new and prior balances. Under CARD, they can't do this. Old balances stay under their old APRs. They can only change it if you're late 60 days and go into default.

They changed notice requirements. They're now required to give you 45 days notice to change any terms (instead of changing them and then giving you notice, or retroactively changing things).

They're making over the limit fees OPT IN. I think this applies to Debit Cards as well but don't quote me.

Age requirements are the huge ones (and I'm expecting this to get challenged). Currently, anyone 18 or over can get a card without a co-signer. Under CARD, you need a co-signer or you need to show a solid source of income and means to repay. There's also some provisions that will require them to verify income for every applicant. This is going to kill retail CC numbers (these are easy to get, but they have garbage APRs right now. This will effectively kill the instant decision since it requires affirmative verification).

There's a few other things, like solid billing cycles (21 days instead of 14 days), can't charge interest during grace, clarifies terms used in offers/bills, etc.

Sim Kid · 12-26-2009, 09:50 PM

Thank you Lurch.

I can definitely see why people would challenge age requirements or restrictions; I know too many people who wind up paying way more than they spent on their credit cards because they just put it off.

12-13-2009, 02:22 AM	#1
Zharen Senior Member Join Date: Mar 2001 Location: Modesto, CA U.S. Gender: Posts: 7,085 Thanks: 21 Thanked 71 Times in 35 Posts	Credit Cards and the Industry Found a very informative video about credit cards and the industry and how it ties in with today's economic mess. FRONTLINE: the card game: watch the full program \| PBS For any American who holds a credit or debit card on this forum, I suggest watching this video. The more things change, the more they stay the same.

12-13-2009, 01:11 PM	#2
Sim Kid Senior Member Join Date: Jul 2001 Location: The state of Denial Gender: Posts: 8,884 Thanks: 80 Thanked 198 Times in 122 Posts	1st National Bank must hate me....they've had to boost my credit limit three times because I've had such good credit rating.

12-13-2009, 02:24 PM	#3
*CaptHayfever* Smash SuperMod Join Date: Jul 2002 Location: (n) - the place where I am Gender: Posts: 27,661 Thanks: 1,991 Thanked 2,486 Times in 1,513 Posts	I'm on a soundless computer at the moment, so I can't do the video right now; is it saying that even responsible, minimal credit spending by somebody who pays off the full amount each month but just doesn't want to carry THAT much cash all the dang time is harmful? 'Cause unless it's saying that, it doesn't apply to me. And remember, "I'm-a Luigi, number one!"

12-15-2009, 11:38 PM	#6
Kil'jaeden Member Join Date: May 2003 Location: in your mind Gender: Posts: 2,134 Thanks: 21 Thanked 146 Times in 99 Posts	I absolutely distrust the things. They're a scam and a trap. I know better than to mess with credit cards too much, from the example of my parents.

12-16-2009, 12:10 AM	#7
Eagle Eye Diddy bops Join Date: Feb 2004 Location: Birmingham, AL Gender: Posts: 15,014 Thanks: 1,616 Thanked 1,084 Times in 597 Posts	I don't have a CC and don't plan on getting one any time soon. I do have a debit card, but with online banking, I keep a constant monitoring on my account and never let it get under triple digits (which took a long time to get to, trust me).

12-16-2009, 12:26 AM	#8
Lurch1982 Senior Member Join Date: May 2000 Location: DenCo Gender: Posts: 9,850 Thanks: 127 Thanked 365 Times in 192 Posts	They're a necessary evil if you plan on buying a house at any point or (more likely in the short term) getting financing on a vehicle. I got a student Mastercard at the end of my second year of college. I made payments and basically didn't screw it up, so I built up credit to the point where companies throw me insanely stupid offers. When I bought my car, I was able to get an insanely good interest rate on the note because of it. One of my friends has never used or applied for a CC. He went to buy a car after he landed a "real job" and found that nobody would lend him money because he had no credit. His car note had an interest rate a shade below 10%, which is insanely high. He also ran into problems renting a car or staying in hotels on the road because they either wouldn't accept cash/debit cards (car rental company) or they placed a massive hold on his debit card until the car and hotel stay were over (hotel and the fourth rental car place he tried). Traveling without a CC is borderline insane because of that type of garbage. Not saying its a good idea to rush out and get a card with a stupidly high APR and max it out, but you need to establish credit at some point if you want to do anything involving a long term payment plan in the future (or not have a hotel jam your checking account with a hold equal to the bill + X per day for incidentals).

12-17-2009, 09:21 PM	#10
Sim Kid Senior Member Join Date: Jul 2001 Location: The state of Denial Gender: Posts: 8,884 Thanks: 80 Thanked 198 Times in 122 Posts	Lurch, my thoughts exactly...Because so many people have them (I think at least 70% of the people at Subway pay with credit or debit cards...some days <10 people actually pay with cash), you really seem to need at least a debit card if not an actual credit card...we've run into those exact kinds of problems but because mom has a dozen credit cards she shares with dad, she's managed to avert them, while at the same time one of her coworkers from India has had to bunk with another worker because they wouldn't accept cash at some hotels. (Though he does deserve credit for it being his first trip outside of the small town and Bangalore where he's lived his entire life, he thought a "Master Card" was a passport) Though can you explain the CARD act to me? I've heard of it but I'm not fully aware of the details.

12-18-2009, 12:39 AM	#11
Lurch1982 Senior Member Join Date: May 2000 Location: DenCo Gender: Posts: 9,850 Thanks: 127 Thanked 365 Times in 192 Posts	CARD Act pushes through a few changes over some of the crappier aspects of the industry. They have to apply payments to the highest interest first instead of lowest interest first (Example: I transfer $500 from another card to a 2.99% rate on another. Normal charges are at 15%, and my balance there is $500. My minimums would now apply to the 15% charges, not the 2.99%. Prior to this, companies would pay off the lower interest charges (regardless on when they were charged) so the higher interest charges would remain on the account for a longer period of time. They fell short of banning Universal Default situations (which pissed off everyone involved with Consumer Advocacy), but they did change how rate hikes worked. If my card company decided to change my rate (like they did last year), the rate applies to new and prior balances. Under CARD, they can't do this. Old balances stay under their old APRs. They can only change it if you're late 60 days and go into default. They changed notice requirements. They're now required to give you 45 days notice to change any terms (instead of changing them and then giving you notice, or retroactively changing things). They're making over the limit fees OPT IN. I think this applies to Debit Cards as well but don't quote me. Age requirements are the huge ones (and I'm expecting this to get challenged). Currently, anyone 18 or over can get a card without a co-signer. Under CARD, you need a co-signer or you need to show a solid source of income and means to repay. There's also some provisions that will require them to verify income for every applicant. This is going to kill retail CC numbers (these are easy to get, but they have garbage APRs right now. This will effectively kill the instant decision since it requires affirmative verification). There's a few other things, like solid billing cycles (21 days instead of 14 days), can't charge interest during grace, clarifies terms used in offers/bills, etc.

12-26-2009, 09:50 PM	#12
Sim Kid Senior Member Join Date: Jul 2001 Location: The state of Denial Gender: Posts: 8,884 Thanks: 80 Thanked 198 Times in 122 Posts	Thank you Lurch. I can definitely see why people would challenge age requirements or restrictions; I know too many people who wind up paying way more than they spent on their credit cards because they just put it off.