Let us be honest about it. Credit card company practices are designed to blindside consumers. Get them in debt. Get then paying minimum payments or close to it. Then lower the boom in fees and higher interest rates and quicker payment terms and how the money is applied. It is in short a game of gotcha with serious ramifications for many American families.
Now, in the defense of credit card companies (if you can call it that), they are not the only ones that seek to blindside their customers. Banks and how the manage their bank accounts and mortgage companies in how they have handled ARMs and and balloons and escrow accounts just to name a couple, do it as well But, I think we can all agree that credit card companies are the most egregious.
I just hate it when I get that tiny booklet in the mail, in the 6 point print, on onion skin paper, stating all of the changes that are happening to my account in some non-understandable fashion. I cannot read it and, besides, I did not have the rules under which I was operating in which to compare these changes. There is nothing to sign. You just toss it and hope for the best. But, I can assure you that what is in there is probably no good for you.
During the fight over bankruptcy reform consumer experts pleaded with Congress to at least add consumer protections in regard to the wanton acts of credit card companies. It fell on deaf ears because the credit card companies, and other creditors, had already greased the Republican Congress and the president.
Since that time, however, we have experience an economic meltdown in which the complicated Wall Street antilogarithms have come into conflict with a Main Street common sense understanding. You cannot get blood from a turnip. Credit card companies can change the rules in the middle of the game. They can blindside the consumer or trap them in any unpleasant situation desired, but if the consumer cannot pay the surprising higher price they did not expect, they cannot pay it. Period. For some unknown reason, through bankruptcy reform and the collapsing economy, lenders, and credit card companies in particular, thought they could simply contract their way to safety from consumer defaults.
This is something that has seemed to have been lost on creditors, Wall Street, the rich and the GOP controlled institutions for much too long. Just because you contract it to be so, and you legislated it to be so, and you close the doors to the emergency room known as bankruptcy, and you end all reasonable regulator oversight so you can pretend you do not know what is happening, does not mean consumers are going to be able to comply with what you want.
Maybe there is some awakening in this regard. As reported by Reuters, the credit card industry may face some reckoning for its evil ways.
Where Congress dare not tread, the Federal Reserve will vote on credit card reforms that hopefully bring some degree of relief to customers.
For one, credit card users will see easier-to-read tables in their monthly statements if the changes are enacted.
For another, the new Rules are expected to prohibit credit card companies from increasing rates at will, with some exceptions such as those that apply to people who fail to pay a bill within 30 days; so-called universal default, which permits changing card terms if the borrower defaults on another bill such as utilities or a gym membership, also is expected to be banned; and, double-cycle billing, in which card companies reach back to earlier billing cycles to help calculate interest charged in the current cycle, also is expected to be eliminated.
The changes, in part, are a result of Democrats strengthening their control of the next Congress, which is resulting in credit card companies that resisted many changes in the past to accepted them as inevitable.
Reform is necessary if for no other reason American consumers used an estimated 694.4 billion credit Visa, MasterCard, American Express and Discover cards in 2007 alone.
The new rules total some 1,000 pages. The rules must be approved not only by the Federal Reserve but the Office of Thrift Supervision and the National Credit Union Administration as well. But, all are expected to act soon on these new rules.
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