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This Time Magazine article starts out by saying the problem's not just the companies, it's the cardholders.
There are piles of evidence that people are bad decision makers when it comes to how they use credit cards. Even when presented with full and fair information, they often make decisions that are not in their own economic best interest — a reality only partly taken into account by the new rules and pending legislation.
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In 2007, a group of Senators introduced a bill that would have required credit-card companies to state on each billing statement how long it would take a person to pay off his balance and how much it would cost in principal and interest should he make only the minimum required payment each month.
Hey Purple? rain? PR?...The above quote from that fine article just jumped out at me. Why in the world do we need a federal bill to be introduced in the Senate to keep us from spending more than we make???
The most idiot-proof way to handle CCs is to pay off the balance each and every month. Why do we need a bunch of politicians trying to come up with a solution that makes things more complicated when there is already a solution available at no cost?
Good point.
When I say we here, I mean some and not all cardholders. Because we're dumb? Because we have no self-control? Because we talked ourselves into taking that vacation and putting it on the plastic? Because we want to look as if we have more than we really do? Because we don't think of a credit card balance as a debt? Take your pick.
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We need politicians because 1) people need led by the hand to do the right thing sometimes and 2) companies won't do anything voluntarily that's going to eat into their profits.
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The new credit card legislation was sent to the President today by Congress and is expected to be signed on Friday according to the news. I think the new rule for an under 21 year old is good.
Banks, which oppose the legislation, will need to make up the cost somewhere, and cardholders who pay off their balance in full each month could see new annual fees and lucrative rewards programs canceled. Credit could become harder to come by too.
Some of the changes, including a requirement that cardholders receive 45-days notice before their rates are raised, are already on track to take effect in July 2010 under new regulations by the Federal Reserve. The legislation would put these changes into law and go farther in restricting when and how banks charge people and who could get a card.
For example, the bill would require people under 21 to prove first that they can repay the money or that a parent or guardian is willing to pay off their debt if they default.
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My parents are the first to tell you they did without credit almost all their lives. All they had was a mortgage and didn’t get credit cards until after my dad retired. The only reason they did then was they wanted to travel and it was for convenience and safety. With them, everything was cash. When they couldn’t afford it, they didn’t get it.
©2009
In 2007, a group of Senators introduced a bill that would have required credit-card companies to state on each billing statement how long it would take a person to pay off his balance and how much it would cost in principal and interest should he make only the minimum required payment each month.
Hey Purple? rain? PR?...The above quote from that fine article just jumped out at me. Why in the world do we need a federal bill to be introduced in the Senate to keep us from spending more than we make???
The most idiot-proof way to handle CCs is to pay off the balance each and every month. Why do we need a bunch of politicians trying to come up with a solution that makes things more complicated when there is already a solution available at no cost?