I want to tell you something about credit cards and "personal responsibili

[housewolf]

Another good one from DailyKos tonight...
Diary by Bink

I want to tell you something about credit cards and "personal responsibility."

Citizens of democratic countries do not have a limitless responsibility to pay off debts that they incur, whatever the reason. I know that this may come as a surprise to folks who have a strong belief in a culture of personal responsibility, but this is a fact.

I repeat: in a democracy, citizens do not have limitless responsibility to pay off debts that they incur. In a democracy, economics of all types -- whether they be household or national -- are subjected to limits created by the people that ensure that THE ECONOMY WORKS TO SERVE THE PEOPLE and PEOPLE DO NOT WORK TO SERVE THE ECONOMY.

<snip>

when lenders offer you that credit card, they are assuming a risk. This risk is that you will not be able to pay off the loan. In order to insure against this risk, they charge you interest. This interest is meant to lessen any harm that they might incur, should you not be able to repay the full amount of the loan.

<snip>

With this bankruptcy bill, the credit card companies are going way over the line. They are establishing themselves as, essentially, wealth-sucking leeches that are not operating under intent of the laws by which they are licensed to do business in this country.

Banks and credit card companies exist to provide a service to us. Not the other way around.

Read the whole diary:
http://www.dailykos.com/story/2005/3/9/122119/5895

[Kire]

1. wow, I needed to read that

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=14741&mesg_id=14741

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=14743&mesg_id=14743

[Bluebear]

2. Excellent post., nominated

"when lenders offer you that credit card, they are assuming a risk. This risk is that you will not be able to pay off the loan. In order to insure against this risk, they charge you interest. This interest is meant to lessen any harm that they might incur, should you not be able to repay the full amount of the loan."

They also need to assume some of the risk that their favorite Presidential donee's economy has wrought.

[jdj]

3. someone mentioned the other day about in the bible

they forgave debt every seven years or something like that.

[jdots]

4. kick this

they have gotten us so freaked,we have forgotten our rights.

[VPStoltz]

5. And don't even get me started on "credit scores..."

Credit cards are the easy way to borrow money - everyone I know needs a little extra ALL of the time now. But once you get a card, there is that nasty little secret most people don't know much about until they have a problem. Once you get a card, there is NO way for you to manage your own creditability. There is always something that Equifax, etc. will label you with to lower your score and thus increase your premiums and interest on other cards. It's insidious. The credit card companies are vicious, unreliable, unfair and immoral. And there is no way for you to correct things because the second you contact some agency about this, it reflects as a "derogatory" on your score. The credit card industry has us by the short and curlies.

[Donailin]

49. I don't think this is entirely true

I've been monitoring my credit for the last three years with equifax and TRW. A few times I've had to tell them to pull stuff off and they have.There's a seven year shelf life on all derogatories except for fed income taxes and child support. And as an aside, they don't determine what your interest rate you should pay, they only report what your payment history is on any credit you have been given. I used to live in fear of the credit score, but now I know exactly what I have to do in order to get it higher, and it has worked. I have a bankruptcy from 7 years ago and I'm at 682 which is in the range of "good" although I was as high as 820 before my divorce. The creidt card companies are the evildoers, there was a PBS special that everyone should watch about credit card companies, "Secret History of the Credit Card." I have credit cards to establish a payment history to have a score in the first place, but people really need to learn this one thing: don't spend what you don't earn. If you were going to buy an Ipod for two hundred on your new capital one, but otherwise wouldn't because you don't have the total amount as extra throwaway cash, then don't buy the IPOD. I just paid off all my credit cards, and cut up all but one for emergency purposes. I called up cap one and asked them to lower my apr because I have never been late or OTL. And they did. From 20.9 to 13.9.

[seabeyond]

6. i agree this bankruptcy thing is over line, but

i have been pissed at credit cards for years how the abuse people that abuse their cards. but this article is just too much. i wont condone the irresponsible that buy a number of things that they cant afford and that they dont need, but really really want and then say, they dont have to pay for it. this is just too much for how i was raised being responsible for my money.

their has to be some personal responsibility in life also. and i am not talking about the person that goes bankrupt because of an illness or out of work scenerio. i know lots and lots of people that spend money endlessly on things that just are not a big deal in life.

this article to me is absurd

i have one card. i pay off end of every month. i pay no fees no interest a once a year 65 dollar charge.

[Straight Shooter]

11. You're paying $65 per year annual fee? I'm paying zero annual fee.

I like my credit card company, except for one thing: they want payment "in time" to be credited by the due date, something like two or three days before it arrives. Also, they tend to send the statement so you have maybe 3 days to mail the payment and still rest easy that they'll get it in plenty of time. I get around that by going online after their cutoff date, usually by the 12th or 14th, and download my statement, print it, write a check for my balance and send it to them ASAP.

Except for the problem of timing, they've been great. Capital One was horrid, I won't even get into it. Right now I'm using Household Bank, and I won't switch to anyone else. (Unfortunately the card is MasterCard. Nobody's perfect.) If you want to check them out, it's at http://www.householdbank.com

It's absurb to charge responsible, trustworthy customers an annual fee, when people are being gouged left and right for interest and penalties.

[seabeyond]

14. but.......i get frequent flyer miles

and since we had so many accumulated, we bought a flat screen wide screen tv a month ago, lol. and we have a good two weeks before payment. but the same as you, have to have it in by that dead line or else

[cornermouse]

28. No, no, no, no, no.

They started sending me bills again about 6 months after I stopped using the card and had paid them off. I had to have legal help to get out of it. Whatever you do, don't go with Household bank.

[BanzaiBonnie]

13. Hey seabeyond

Do you know what credit card companies call people who pay their bills on time?

Deadbeats! I'm not kidding. They are just like those guys at Enron joking about ripping off little old grandmas

[seabeyond]

15. dead beat i am

i hear you. wouldnt do a credit card any other way. years ago, my first card, bad me. didnt get another for over a decade, til i matured

[baba]

45. I agree with you.

You borrow money, you pay it back.

[Cleita]

7. Usury was described as a sin in my catechism.

What it referred to was interest rates that the borrower couldn't pay his way out of in a lifetime. There was a song once by Tennessee Williams called "Sixteen Tons". It was about a coal miner who worked everyday but couldn't pay his debt out of the "company store".

I just ran into that. I paid off a credit card and got charged a $47 dollar fee on an empty balance. However, I was informed that between the time my check reached them and the pay off, I had accumulated that amount of interest. I told them if I had ever entertained the notion of keeping this card, it was over with, and they had better not charge me interest on the interest.

[hfojvt]

17. have you ever heard the story of Achilles and the tortoise?

They are racing. The tortoise has a ten meter head start and runs 1 meter per second. Achilles runs ten meters per second. It will take him 1 second to erase the original head start, but in that time the tortoise will have gone 1 meter. It will take Achilles 1/10 of a second to close that gap, but in that time the tortoise will have gone 1/10 of a meter. It will take Achilles 1/100 of a second to close that gap, but in that time the tortoise will have gone ... well, you get the picture. How does Achilles ever catch the tortoise?

Interest charges are like that. You accumulate interest on the debt in the time it takes to pay it. So you pay that interest, but you accumulate interest on the interest in the time it takes to pay that debt, and so on, and so on, so the debt never gets paid. It is the magic of daily interest.

[Cleita]

18. There used to be laws against this, once called usury laws.

I think it's time we made sure that those laws come back.

[Orsino]

34. And until the Democratic Party finds the courage...

..to protect the people, they will continue to resemble the thoroughly corrupted GOP.

[hfojvt]

43. have a long cool drink at the Liberal Oasis

http://www.liberaloasis.com/
Apparently Democrats defeated another "Clear Skies" initiative. So let's have a little appreciation for positive accomplishments instead of just gnashing our teeth about our Cowardly Lions.
"What makes a king out of a slave? Courage.
What puts the flag on the mast to wave? Courage
What makes the elephant charge his tusks
is the misty mists of the dusky dusk?
What makes the muskrat guard his musk? Courage.
What makes the sphinx the seventh wonder?
What makes the dawn rise like thunder? Courage
What makes the hottentot so hot?
What puts the ape in apricot?
Whatta they got that I ain't got?"
Who was the original Cowardly Lion?
William Jennings Bryan, Democrat.

[FlaGranny]

36. I remember back in my youth

hearing about a mafia-connected lender who was sent to prison for charging usurious fees on loans that amounted to 20% interest. How times have changed!

[hfojvt]

44. actually, as I studied it in Wisconsin

there was a Thorp financial place in the 1960s, which was the precursor to all of the American Payday Loans and Title Loan places. I wonder if they were more tightly regulated. Consider American Payday Loans. You write a check for $115 and they give you $100 and cash the check two weeks later. 15% interest in two weeks when it is compounded works out to an APR of 3,685% and people think credit card companies are bad. In a similar vein, I had a renter who usually paid $15 to get his paycheck cashed at the local grocery store. Not alot of money, but if you do it for every check it becomes $390 a year, enough to pay a month's rent and then some.

[Blue_Tires]

38. wouldn't Achilles overtake the tortoise

well before the clock hit ten secs? (by then, he has gone 100 meters while the turtle has gone 10---factoring in the lead, Achilles still outpaces him by 80)

[hfojvt]

42. of course he catches him after 10/9 ths of a second

decimally, that is 1.111111111111111... with an infinite number of 1's. Since there are an infinite number of 1's, you can never reach the last one and move on to the next number 1.11111111111.....1112. So how can Achilles ever catch that tortoise?

[lonestarnot]

8. THis BILL IS UNCONSTITUTIONAL! Another Corporate Rip OFFFFFF!

You are so right thanks for the post!

[laylah]

30. Is there legal recourse?

Can this be fought all the way to * SCOTUS?

Jenn

[nadinbrzezinski]

9. Two words: Missery Index

what happens when all them SUV driving, gun toating (Yep using them stereotypes ok) red states have nothing else to loose?

But the power structure does nto realize taht it is setting the seeds of its own destruction... greed will be their undoing.. I mean sooner or later even Jo back at the farm in the mythical red state will get it... and that anger will be something to behold

[BlueEyedSon]

10. Exactly right: if the CC Co's risk is less, so should their interest rate.

But after their actuaries crunch the numbers, you think the consumer will see the benefit of reduced risk "trickle down"? Not a chance!

[The Doctor.]

12. So how about a bill which limits government borrowing?

When the government wants more money, they raise the debt ceiling.

Why not let private borrowers do the same thing?

"I owe $10,000 to the lending company? Well, I'll just raise my own debt limit."

(yeah - I know, we do that already.)

[hfojvt]

19. actually so do I

I owe one credit card company $2800 and I owe anther $1050. I just got a new card with a 0% rate until June 2006 and I transferred $2000 of my former debt to that card. By getting another card, I effectively raised my debt ceiling so I will postpone paying the debt. Who knows, if I keep getting offers for new cards with 0% rates, I may not pay the debt until 2010. I use credit cards for everything I can and they all seem to want my $6000 of annual business.

[The Doctor.]

52. I've seen that model in action...

It's brilliant.

Keep the debt literally bouncing between lenders and one can extend one's credit limit indefinitely.

If you want to make an experiment out of it, I'd be happy to document or at least notate your machinations.
Could be fun!

"Hexonxonx your black hearts make me sick - no one in power taking blame." - Skinny Puppy

[WillowTree]

16. One small part of this is incorrect.

"This interest is meant to lessen any harm that they might incur, should you not be able to repay the full amount of the loan."

Not really. The primary reason why credit card companies charge interest is that that's their fee to the consumer for allowing said consumer the use of their (the CC company's) money beyond the next due date on the account. The consumer who uses his card and pays the balance on time at the end of the month every month pays no interest because of the brevity of the use of the credit card company's money.

The place where the CC company's risk comes into play with regard to interest is in the case of the consumer who does not have an exemplary credit record. In that case, a higher rate of interest, presumably in proportion to the higher risk of non-payment represented by the degree of "badness" represented by the credit score involved, is charged by the CC company for the increased risk that the CC company is assuming.

Of course, a lot of the CC companies will try to foist their cards with a 23% interest rate off even on people with outstanding credit histories. Fortunately,most people who are both sufficiently financially secure and sufficiently smart to have outstanding credit histories are savvy enough to shred those "offers" and get on with their day.

[housewolf]

22. The credit card companies....

have been touting that the bankruptcy bill will lead to lower interest rates because the risk is reduced.

What you say sounds reasonable, though.

[Orsino]

33. Yes.

Credit-card companies charge interest in order to pay their own bills and ensure some sort of profit. I don't doubt that interest rates can be higher in accordance with greater perceived risk, but we should pick this nit: companies must charge some interest in order to stay in business.

Otherwise this is a great article.

The lower interest rates the companies promise in exchange for our lowering their risk will no doubt turn out like the lower insurance premiums we were also promised.

[nashville_brook]

20. amen! time for corporations to BE responsible for change.

[oasis]

21. Makes plenty sense to me. (eom)

[flygal]

23. Here in Germany debt is not taken lightly

It can actually be passed on when you die - not like in the US. Because of this people are pretty scared of consumer debt and use cash or debit cards. There are very few places over here that take cc's - usually only tourist shops. There are even 4 star restaurants you have to pay cash.

I think my problem - as much as I HATE this bill - is there has been a neglect by a great many consumers with regards to cc's. I was one of them 15 years ago and I paid mine off and learned my lesson. I have sympathy for those with medical debt, but that should not be used with cc's. My hospital had a payment plan.

People need to learn to cook, shop wisely, do without so much CRAP! When I got married we had a borrowed tv on a milk crate and used sofas. All our friends had new SUV's, new furniture, big screen tvs - and since we were in the service they made the same amount of money as us. After they had kids they bitched b/c their spouse had to work b/c of cc's. They still ate out at Outback, ordered pizza. It is hard to stop that lifestyle but it can be done and it's not that bad not having cable tv :)

[Caria]

25. Sometimes the CC seems to be the only way to get medical treatment

I once had to turn over a credit card to get emergency medical treatment because I had the misfortune to need it while I was away from home & out of my insurance company's service area.

Maybe there was another way, but no one volunteered the information and I was too sick & scared to ask much of anything anyway.

After almost a year of outright denials, appeals, and red tape (some of it truly absurd!), I was reimbursed for most of the hospital bill - but not the finance charges on my credit card!

I know what you mean about people overspending on luxuries though. And it is really creepy to see how hard the cc companies work to hook kids in as soon as they turn 18.

[Kinkistyle]

24. What if everyone just STOPPED BORROWING.

I wonder how the banks and lending companies would like it if everybody in the country just stopped borrowing. Either because it becomes too risky or too difficult.

The "free market" cuts both ways

[tubbacheez]

26. Actually, I think this bill won't matter in the long run.

This bill is crap, of course, as many of us have said. But it's crap because it doesn't do anything long term. I see it is as a very short-term boost for the credit-card-issuing banks.

Yes, some individuals are likely to get royally screwed by this in the immediate years ahead. But I don't think everyone is at risk forever. This is because people in general adapt to new conditions.

After a certain number of people get reamed by this law, consumers will get spooked enough to reduce their usage of credit cards.

This isn't about becoming "more" responsible. This entire industry is about judging risk. Banks take on downside risk of losing money when they extend a loan. Consumers take on risk of financial penalties if they default.

The upside risk is that banks could potentially earn a profit on the interest, and that consumers could potentially do more with immediate money than they could with the same money saved up over time.

If consumers perceive a heavy increase in downside risk for incurring debt, they'll collectively begin to incur less debt. The comfort level changes.

If the banks are ok with this, we all reach a new equilibrium, and the nation will save somewhat more and borrow somewhat less.

If banks are not ok with this, they will need to sweeten the deal in order to compete for consumer business, (unless they engage in rate-fixing, which would then violate anti-trust laws).

Something will give. Interest rates. Fees. Penalties. Bonuses. Something.

Banks tighten the screws on us when they have the upper hand. They'll lose that upper hand if they overdo it.



The individuals who get nailed will be seriously bummed, though. And for them, I wrote my Senators to oppose this bill.

[BuyingThyme]

27. If you think you get a lot of CC applications in the mail NOW,

just wait.

But look at the bright side: Identity thieves will have an easier time of it.

[madmark]

29. Debt discharge and state exemption laws provide a macroeconomic

benefit to the country by enabling people to continue to operate productively in the economy despite an occurence of insolvency. Its not about charity; its about what's good for the greater economy.

[markus]

31. The economy must work to serve the people

and not the people to serve the economy.

I can't think of a better slogan to wrap ourselve in.

[Vinca]

32. "when lenders offer you that credit card, they are assuming a risk"

Several years ago my now deceased cat, Ruby, got a credit card offer in the mail. I kid you not. Now I wished I'd signed her up and bought her a big screen tv and a mink cat bed. Credit card companies will give a card to anyone (or, apparently, anyTHING)with a pulse and that's not right. I'm worried that when this bill passes everyone's rate will go through the roof because the credit card companies have nothing to lose.

[ProfessorGAC]

35. You All Know I'm A Liberal, But I Can't Buy This

When you borrow you DO have a responsibility to pay it back. It's not a donation, it's a loan. If they were the same thing, we wouldn't have two different words with totally different definitions.

The economy does not exist to serve us. That's preposterous. The "economy" is a strictly man-made construct to keep score of what's going on. The total contributions by all people serve to create it, so without contributing to it, there is no economy. The idea that the economy serves us is not supportable by the way it was created, the reason it was created and how it's sustained.

All that being said, i'm foursquare AGAINST the new BKO laws. Bankruptcy is a necessary option in a capitalist economy. We have to leave open that opportunity to give folks a fresh start, many of whom need it due to extrinsic events beyond their control.

But, the idea that we are not obligated to repay what we borrow because the economy owes us something is too convenient by half.
The Professor

[FlaGranny]

37. Professor,

The companies themselves are causing the bankruptcies by making it IMPOSSIBLE for people to pay off their credit cards. Methinks that laws should be written curbing their enthusiasm for sending credit cards to people who can't afford them and curbing their enthusiasm to charge usurious interest rates on top of it. They are trapping people. When people realize they can't get out, it is too late.

[ProfessorGAC]

39. No Argument On That Point

I am on the Board of Directors of a small bank who stood against(!) the idea of extended payday loans. I consider that loan sharking and i wouldn't support it. As one of the more educated and vocal members, the idea died a deserved death.

However, being trapped by debt is a two-way transaction. If one can't afford it, one needs to lower there expectations and wants, until they can afford it.

Like i said, i'm against the new BKO law. I'm against the banks being able to charge 30+% interest on credit cards. I'm against payday loan schemes. But, the gist of the OP was that the economy owes us something, is there to serve us, and we have no obligations to fulfill our promise to repay.

I completely agree the CC companies are a problem, but the solution isn't to pretend we really don't have to pay back the money we borrow.
The Professor

[Donailin]

50. You're both correct

but the bottomm line is this: know what the terms are before you sign into a credit card. Some things are obvious: if you pay late or go over the limit, it's going to be a bad thing, you will be penalized. If you pay off the total amount every month, it's going to be good. they are going to keep upping your limit until they can get you to pay only partial amount or min. due. Never let that happen. They want to make money off you either way, but you can manipulate them.

If you are savvy enough, you can get your apr down and you can get your limit up. Credit scores reflect the total amount of credit and how much of that you have used. When you are under fifty percent balance of total credit limit, it refelcts well. When you are over that, it reflects poorly. Knowledge (and self discipline) is power.

[annabanana]

46. you are right..

If your circumstances have been so reduced by, say, a medical emergency, or overseas deployment, or the loss of a job that you don't have grocery money, you can just go eat at someone else's house until you're back on your feet. It would be irresponsible to charge your credit card for something as ephemeral as groceries. :eyes:

[kohodog]

48. But you must agree that 30% plus interest fees are a bit over the top.

Fuck em. I cut up my cards today. I'll pay them off as soon as I can, but I won't feed the Beast any longer.

[movie_girl99]

40. my cc debt is due to medical bills

i had my appendix out 2 years ago ($1,500 after insurance) and then that same year my daughter was in the hospital for 5 days with what they thought was a brain tumor but turned out to be something a little less serious. my ex's insurance is shit because he's self employed so there's a $12,000 out of pocket max. We split the bills so my half was 6 grand. I had no other way to pay except to put it on a CC. Now were looking at brain surgery for her in June and again the same crappy insurance so it will be another $6,000. We tried to change insurance companies to put her on mine or my husbands (her step dad) but because of the pre-exhisitng clause we couldn't. So my debt is not because i want big tv's or like to eat out or am irresponsible....We have one car, one cell phone. Its the simple fact that i make $28,000 a year and get paid monthly and couldn't come up with that kind of cash.

[Senior citizen]

41. I don't qualify for 0% interest.

But I just transferred my MBNA debt to two other companies, cutting the interest rate in half. I phoned MBNA to get the pay-off amount so there wouldn't be any surprises. I finished the transfer yesterday, and it has to be posted by the 16th to avoid further interest, so I think I'm okay--I was told it takes 3 business days to post.

It will still take me 3 to 4 years to finish paying off my credit card debts. For the past two years I spent half my (low) income on credit card payments, a quarter on rent, and the rest on necessities. But I got an ulcer from simply not eating enough, so I had to cut back on payments to spend more on food. But I've reduced my debt considerably and cut my monthly interest payments from $75.00 a month to $35.00 a month. Still outrageous, but getting better.

I'm on Social Security. If anything happens to Social Security, the credit card companies are going to lose a LOT of money. I hope they realize that, as they are powerful enough to stop Bushler's plan.

[FULL_METAL_HAT]

47. Personal Credit/Debt Laws (how about bring back Usuary Laws?!)

It occurs to me having seen the amazing PBS Frontline documentary "The Secret History of the Credit Card", the main problem with "Bankruptcy Reform" is if it wants to "return to the olden days" where there are less protections from the downside of too much credit, that the laws on the other side of the coin should ALSO return to the "old days" where there were EXTENSIVE usuary laws protecting people from CREDITORS!

The wholesale change of society comes from SELECTIVE REGRESSION of laws.

Conservative my ass...

[98geoduck]

51. Krugman on Daily Show tonight. People just don't get it, and probably

never will, unless they have a medical emergency and are forced into a situation where they lose everything. Blindsided by propaganda.