Credit Card Company's Responsibility

[Lightning]

What do you believe credit card companies should do to encourage the financial success of their card holders?

Here are my thoughts based on comments I've read here and other bankruptcy forums.

Credit Limits
People have suggested credit limits are set too high. I've read several posts by people who lied on their applications and overstated their income. Should credit card companies perform an actual income check at your employer? If so, how often should such a check be performed?

Credit While Unemployed
If a credit card company checks your income regularly and discovers you're either unemployed or earning much less than the amount stated on your income, should they lower your limit or cancel the card entirely to prevent you from charging more than you can afford to repay?

Minimum Payments
If minimum payments are low, you'll pay much more interest and may never actually pay the balance before exceeding your limit. If minimum payments are raised, you can't afford to make them. How should minimum payments be calculated?

If you could own and operate a credit card company or dictate the terms of a card, what exactly would you do or demand? Keep in mind that if you own a company, you probably want to make money.

If you think credit cards should be eliminated completely, what would you use in case of emergency?

[newday]

My huge gripe about credit cards was that I had a blissfully low interest rate 4% due to my fantastic credit score. I had a rather large balance I was working off on another card and transferred it to this card ( I figured it was a smart choice as I'd be going from a 17% interest rate to 0% for the first year, then 4%) Things were going nicely for a couple months, I was making great progress on my balance. After a few months Bank of America bought out my credit card company and raised interest rates across the board. First to 18% which I called about since I had no late payments or balance overages on any account I had. They simply said it was due to BoFA taking over and changing terms. I put every penny I had towards the balance as I wanted it paid off fast! Then they raised my credit limit, I called and emailed them to lower it as I wasn't using the card at all. They raised it another 8k, I'm still not using the card despite the weekly "cheques" they send. I know the idea is to get me to put more on my balance. No thanks. Finally I see they raised my interest rate to 27%!!! I still had yet to make any late payments on ANY account, what gives? They claimed my credit to income ratio was too high! Not how much balance I had, but how much I could potentially have. They are the ones that raised my credit limit, despite me asking them to lower it and not utilizing it at all. **** them. I was never ever late on their account or any other account, they changed the terms without notifying me (they claimed to have sent me a notice but I never got it, the notice of course says use of the card implies agreement...I never used the card but they claim the interest rate as a "purchase" now so that makes it a charge authorized by me)

[Genenco]

What do you believe credit card companies should do to encourage the financial success of their card holders?

Here are my thoughts based on comments I've read here and other bankruptcy forums.

Credit Limits
People have suggested credit limits are set too high. I've read several posts by people who lied on their applications and overstated their income. Should credit card companies perform an actual income check at your employer? If so, how often should such a check be performed? ?

Every 6 months-1 year And I haven't read about anyone lieing on their credit apps..Can you point them out??

Credit While Unemployed
If a credit card company checks your income regularly and discovers you're either unemployed or earning much less than the amount stated on your income, should they lower your limit or cancel the card entirely to prevent you from charging more than you can afford to repay??

Maybe they should "Block" the account until you are re-employed and generating sufficent income to make regular payments..In the mean time, maybe "Interest Only" might be a way to keep the customer and show the CC does have a heart?

As for lying..Yes, shut the account...

Minimum Payments
If minimum payments are low, you'll pay much more interest and may never actually pay the balance before exceeding your limit. If minimum payments are raised, you can't afford to make them. How should minimum payments be calculated??

As far as I know, the average payment is 2%-4% of the total amount owed..But miss a payment and your interest jumps to 27% and I had one card (GM) which said "Due to your usage, we're now charging you 19% instead of my "Permanent 9% agreement"

I called, told them close the account NOW and I'll send them $500 and then never use them again...They changed their minds and kept the account open and at the interest rate..But yes, I fell behind and so up the interest rate went..Did I complain? Nope, fair is (ahem) fair.

If you could own and operate a credit card company or dictate the terms of a card, what exactly would you do or demand? Keep in mind that if you own a company, you probably want to make money.?

Of course they want to make money, they should! But it's not how much, but HOW they do it. Frankly, they are showing (With all the rules and regs) that you pretty much are at THEIR mercy! I get calls and try to work out an agreement with them "No! We want this much!" they say and won't "Negotiate" (And I'm not saying that I offered pennies on the dollar, but about 65% of amount owed over 3 years)

"No! No! No!" they respond..They want the entire amount and late fees included...Attitude makes on respond in a similar fashion..Always, always, always they should be polite..Too many times, they are let to rip on people as their employer wants and allows them to.

If you think credit cards should be eliminated completely, what would you use in case of emergency?

No, With proper usage, CC are the way to go..Frankly, we sure could use parents teaching their kids about using credit wisely, or maybe a 5 week course in schools, or even have the CC companies get together and have "Credit schools" which teach people what the best way to use credit.

I admit to being one of those "Idiots" you've heard about, but never have I lied about my income and now the rules have changed, but sadly, the "Heartless" CC's won't work with me, refuse to "Negotiate" and generally are a PITA and soooo...Remember what I said about "Attitude"

[Genenco]

Oh, one thing..I don't mind the jump in interest, I consider that like a "Spank", but I'd like to see a sort of "OK, now if you want to have a good rate, do this"..Like say 3 on time and above min payments would be a 5% reduction..And then keep that going till they return to normal, but should they miss a payment, then the cycle starts over again.

Easily programmable..But the CC companies won't do it..Why? Maybe when they get a real heart, they would....

[Minnymouth]

LIGHTENING - MY MAN - I'm "real proud" of you!!!!

This thread is what the BK Forum is all about -
Good Opinions, good suggestions, good questions, good answers.

You can offer much to this forum if your threads follow like above.....

Treat all of us with respect - we will do the same with you and your opinion also.

Good Thread,

Very interesting concept.

Good response - Genenco

Minny

[StaciMM]

Credit Limits (& getting credit in general)...

We like instant gratification but it doesn't always like us quite so much. Perhaps creditors should require a copy of a check stub before opening an account-this would also help w/ identity fraud.

NO credit limit increases unless you re-apply, recheck income, etc. If situation hasn't changed, neither should credit limit.


Minimum Payments

I agree change is needed, but drastic change can do more harm than good. Increase the minimums to 4% on new accounts, but increase existing customers gradually-such as .5% per year. And, for someone who can't make the increased %, allow them to close their account and make level payments of whatever their last minimum was. (Paying a constant payment w/ no new charges will be more effective that paying the minimum, as minimum usually goes down as the balance goes down.)

Creditor responsibility, in general

Shouldn't target students... If you have no income-credit is not a good idea. A minimum income of $700-800/mo wouldn't be uncalled for.

Should not raise APR for fear that customer may get behind. Instead, if payment history is good but credit profile raises a concern-notify customer that the account will be on hold for new charges temporarily (6 mo-1 year perhaps). Raising the interest rate just makes customer more likely to default.

For customers that are serious about getting their accounts paid off, allow customers to close the accounts-stop fees if they're past due or overlimit-and reduce interest to something reasonable while keeping payment level. (0-9% for long time customers, the creditor has made plenty of money off them, 10-15% for newer customers) ***This would also do away with the need for credit counseling/debt management programs. Since customers pay them a fee and creditors usually contribute to them as well, it would mean more money for both the consumer and creditor

[Minnymouth]

Good Concept, - very interesing ideas and solutions.......

Minny

[Genenco]

Staci, maybe you might write and suggest some of these things to the CC companies

Damn good suggestions!

[hhou812hh]

One issue I wonder about that I've seen on several threads on this forum is where ch13 filers said that some of their creditors haven't filed their claims that they have the right to. I thought the whole pupose of the new law was to force debtors with disposable income into a ch13 and yet they sometimes don't even get paid due to not filing a claim. It just sends a message to me and others that they sometimes don't even care about getting paid which is why I am usually very hard on them.

[Genenco]

Yes, this does puzzle me too.

One issue I wonder about that I've seen on several threads on this forum is where ch13 filers said that some of their creditors haven't filed their claims that they have the right to. I thought the whole pupose of the new law was to force debtors with disposable income into a ch13 and yet they sometimes don't even get paid due to not filing a claim. It just sends a message to me and others that they sometimes don't even care about getting paid which is why I am usually very hard on them.

I too am sort of puzzled by some of the "Inaction" by the CC companies. I mean if I'm going to go BK, they lose a bundle and I also take a hit..But if say they called me up and said "We'll call the account paid in full, if you pay 20-50% of total debt and close account"

Hell, I'd go for that, if they'd make it in payments...

[smallchange]

Credit card companies are irresponsible in that thier only goal is make as much money as they can. Many people foolishly fall into thier well planned traps. They always have and always will make money,they will start making even more money after 10/17/2005. They will give credit to almost anyone putting people into a situation of beg,borrow,steal or file bk. Have many cc's given to people who should never have qualified( college students) have been paid off by parents,relatives,etc. How much savings and retirement funds have gone to these predatory deadbeats? They are run by people who don:t want to work but rather leech off the working man. If you want to know how they should issue credit just look to the credit unions they do it right.How many times have you or someone you know been denied credit by a credit union only to turn around and be gleefully granted credit by one of the lecherous credit factories? It happens every day yet they both use the same information to decide if you can handle more credit. The differnce is credit unions care whether you can handle more debt and the cc's care only about making more money. Funny thing is the big banks and cc companies went crying to congress trying to limit who can and cannot join credit unions the 2 faced jackasses are robbing people and paying congress to help them. If credit unions can issue credit responsibly then why not the big cc's? Because the don't want to,believe me they are running a racket. I don't care about them THEY REAP WHAT THE SOW!!!!

[hhou812hh]

Credit card companies are irresponsible in that thier only goal is make as much money as they can. Many people foolishly fall into thier well planned traps. They always have and always will make money,they will start making even more money after 10/17/2005. They will give credit to almost anyone putting people into a situation of beg,borrow,steal or file bk. Have many cc's given to people who should never have qualified( college students) have been paid off by parents,relatives,etc. How much savings and retirement funds have gone to these predatory deadbeats? They are run by people who don:t want to work but rather leech off the working man. If you want to know how they should issue credit just look to the credit unions they do it right.How many times have you or someone you know been denied credit by a credit union only to turn around and be gleefully granted credit by one of the lecherous credit factories? It happens every day yet they both use the same information to decide if you can handle more credit. The differnce is credit unions care whether you can handle more debt and the cc's care only about making more money. Funny thing is the big banks and cc companies went crying to congress trying to limit who can and cannot join credit unions the 2 faced jackasses are robbing people and paying congress to help them. If credit unions can issue credit responsibly then why not the big cc's? Because the don't want to,believe me they are running a racket. I don't care about them THEY REAP WHAT THE SOW!!!!

You're so right! Credit unions are like the old 1930's style "Baily Building & Loan". They take cust's deposits and re loan it out to credit worthy people backed by security or issue low balance/low interest credit cards and are strict in how large your balance will be.
I can never understand why Lightning and people like him/her can't seem to link the record bank profits with the current bk system. Banks issue anyone high balance, high interest cards, they make plenty off of merchants fees, then all of our interest and when 1.5million people file for bk that's pretty small in a country of almost 100 million plus people with credit cards.
With everything I read that the new BK laws are so tough it's a wonder anyone will ever use a large bank card ever again. With the media saying that the new laws are tough for debtors and people realizing they won't have the current liberal law to fall back on in hard times they won't use much credit anymore. Now the banks won't get all the merchants fees, interest payments, etc. True bk filers will pay back more of their debt, but millions less will use the cards. That's how I think the banks will lose.

[Pinktiger]

Credit Cards and How they became Dangerous to Consumers

For the document I am quoting, please go to this link:

http://www.demos-usa.org/pub125.cfm

Here's the highlights:

In a nutshell, credit cards used to be heavily regulated by laws and were limited on what they could charge and how they could market their products.

That is no longer the case.

Before 1978, 37 states had usury laws that capped interest rates on credit cards to 18 percent. Two Supreme Court cases effectively removed these laws, one in 1978 and another in 1996.

The 1978 Marquette case allowed banks to charge the highest interest rate allowed in the state where they were based, and many banks moved their bases to states like Delaware and South Dakota, two states where NO CEILINGS on rates are applied.

The 1996 case changed the fees schedule, allowing bank credit card issuers to charge late fees at the state level. These have now doubled, more or less, but industry practices have changed the way banks raise interest rates on consumers, so much that in 1996 late fee revenue was $1.7 billion. Today that figure is more like 7.3 billion. ALL FEES have more or less tripled bank's income on fees, from $8.3 billion in 1996 to about $24 billion today.

Aggressive marketing has increased credit card debt by Americans from $777 billion in 1993 to almost 3 trillion today.

"All of these practices, along with increased economic insecurity among households, have translated into hyper-profitability for the credit card industry. In 2004, credit card lenders took in over $30 billion in profits."

So with all this in mind, the most prudent thing any of us can do is NOT use credit cards at all. I plan to only use a debit card in the future, and very carefully.

The rest of the time I plan to use cash.

[quest42]

Anybody see the TV ads from citi lately? They claim NO LATE CHARGE as long as you have a new charge on the account... now, there is a lot of rope (to hang the debtor with!) Sounds like they are baiting the trap, now that the BK rules are in their favor!

[Genenco]

For the document I am quoting, please go to this link:

http://www.demos-usa.org/pub125.cfm

Here's the highlights:

The rest of the time I plan to use cash.

And not to mention, this little gem which has cost millions of people extra $$$ and not to mention, made BILLIONS for the banks...Bastards one and all!

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3. "Bait and Switch" / Universal Default Policies
Card issuers now routinely check their cardholders' credit reports and will raise the interest rate on the card if there has been a change in the consumer's score.

For example, if a Bank One Visa cardholder is late on their MBNA MasterCard, Bank One will now raise the cardholder's interest rate-- even if that cardholder has never missed a payment with them. Interest rate increases can also be triggered when a cardholder's profile has changed due to the addition of new loans, such as a mortgage, car loan or other type of credit.

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Given time, the home/car loans will follow suit..I just know it.