Credit Card Reform? Ugh. Rant.

[OhThereYouAre]

What do you all think about this credit card reform that was shoved through back in May?

I must say I'm pretty ticked. I've just learned this week that, as a result of this legislation, 3 of my cards now levy annual fees ranging from $40 up to $100, and my Blue Cash reward card has lowered my cash back payout by 20%. This crappy legislation is going to cost me about $500 this coming year.

What really kills me is there's not much I can do about it. Try cancelling a card with a 15K limit and see what it does to your credit score.

Instead of fixing things, once again, our lovely government has spurred action in the way of the responsible subsidizing the irresponsible. Makes me want to puke.

What is happening now is people responsible with their credit are subsidizing the card company's inability to properly price based on risk. Which is pretty counter-intuitive....if you reduce a companies' ability to effectively apply risk based pricing, you are simply going to reduce, if not eliminate, credit available for those who need it most.

Figures.

[Texinator]

I have one card that I've had for ages and that never saw a credit limit increase. Ticked me off, cause I never miss a payment and I usually pay more than the minimum. People that I know weren't paying on time and had a million different cards had no problem getting higher limits meanwhile. It was almost like I was being punished because I wasn't giving the company a reason to jack up my rates or charge late fees.

Now times are bad and lots of folks have had their available credit reduced. I was just waiting for a letter telling me that this particular card now has an even lower limit. Well I finally got a notice from them..but it said my limit on that card has been..doubled? Weird stuff.

[WildChild]

The fees are a card company decision to keep their revenue up.

I've been dealing credit card companies for over 35 years, back to the days when every store had their own cards and serviced them, then they were a way to ensure store loyalty and keep you shopping there - rather than to make a huge profit on the credit itself.

I've had many times in the past that this sort of stuff has happened. Back in the late 70s or early 80s we went through a time when a bunch of companies were instituting yearly fees or memberships. I think that was when the whole thing with national or international cards was taking off. It didn't last because so many consumers wouldn't go for it.

I've never paid an annual or membership fee. There is one major credit company I was a charter card holder with, so I've had their card for 30 yrs or so. Over time they have pulled all sorts of nonsense, including attempts at annual fees - I called and told them "NO", they dropped it. They have tried jumping up my IR and I called and said, "I won't pay that much", they reset it - actually asked what I would like to pay. They've made "special offers" like, to serve me better they will give me a special rate of 7.3% + prime (my rate then was a flat 5.3%) I called and asked just how "special" they thought my math skills were? They've sent happy letters telling me they've doubled my limit ( "debt potential" can impact your credit score) I called and got it lowered.

The most recent nonsense was to up my IR to 29.9% because I made a late payment when I was sick with the flu last spring. That more than doubled the payment. I called got a gatekeeper who could do nothing, requested a supervisor and got all fees dropped and the rate restored.

The thing is, and you have to tell them this: Peoplein the company make the policies, no one came down from the mountain with them inscribed on stone, People can change the policy. If you are a good client - good history, reasonable credit score. Call them, tell them what you want and keep at it until you get it or exhaust yourself and all options. I've never not gotten what I wanted. Be calm, be pleasant, be very firm and persistant. When someone, "I'm sorry I can't do that ." Say, "fine, I'd like to talk with the supervisor" or "with someone who has the authority". Actually even if your history isn't that great you can probably get somewhere, a lower rate will make it more likely you will actually pay your bill - point that out to them!

Some of the S finally hit the fan but these companies have been dealing with some sort of alternative reality for years. They still don't get it. If you look at some of the stuff they've done and the salaries they've made even while the companies were sinking and some of the insane business choices they made (some of their international dealing have been truly insane) you can only shake your head in disbelief.

[OhThereYouAre]

If you are a good client - good history, reasonable credit score. Call them, tell them what you want and keep at it until you get it or exhaust yourself and all options. I've never not gotten what I wanted. Be calm, be pleasant, be very firm and persistant. When someone, "I'm sorry I can't do that ." Say, "fine, I'd like to talk with the supervisor" or "with someone who has the authority". Actually even if your history isn't that great you can probably get somewhere, a lower rate will make it more likely you will actually pay your bill - point that out to them!

I'm all of the above. And I've called and given them a bit of h&ll. They aren't budging.

And we've all the geniuses in congress to blame for this.

I'm going to stop before I get political.

[WildChild]

How persistant were you? You have to get past at least the first one or two people they put on the phone. Ask their name and their position. Ask what other options they have? They all have different types of accounts, they may have things structured so they won't do this with the account type you have but could with another type of account. At one point a company switched me from the Visa I'd had for may years to a Master Card for some reason of this type.

People with good credit and a good history are their bread and butter and in banking they will do some really jaw dropping stuff. My ex and I had a situation where we had a mortgage with a feature to help people who had poor credit to repair that by making their payments through autopay, after two years they could get a half or full point off their interest rate because their credit was better. We had good credit and didn't "qualify" for that but when the rates dropped we were offered an opportunity for a $200 or $300 processing fee, to have the rate on the loan significantly reduced (not a refi -same loan). The whole thing bogged down and took forever. Some questoning and poking around finally revealed that we weren't supposed to have been given that offer. Why? Because our credit was so good and we were such good risks that we would pay the loan, so they left those at the higher rates to make the REITS and the loan portfolios better. Only people with OK credit rather that excellent were supposed to have gotten the reduction offer, to keep them from slipping into a bad situation. We were being essentially punished for being good clients, who had inititially qualified for a "good" IR based on that - except someone slipped up and sent the reduction offer to about 200 they weren't supposed to. They honored it but made us go through a re-fi which they picked up the cost on. I chatted up the guy some more and learned that some of the 200 who hadn't followed through ended up not getting the better deal.

You have to stay on this if you are really serious. They are game players. They make up the rules as they go along. The government didn't make them do this, this is their chosen response to a change. They've made and continue to make poor choices in lending practices, extending credit where they shouldn't have. 30 years ago a lot of people who have stacks of credit cards now wouldn't have qualified for credit or certainly not for so much. Greed created this situation of lending where they shouldn't have, going after the fast buck. I worked in credit back in the 70s and the approval process was a lot different then. Often, if you qualified all you got was enough credit to purchase a particular item - say a washing machine. You had to pay that off before you could get credit to buy something else. Once you proved yourself, you could qualify for a revolving credit account that allowed you to make random purchases. Changes made in the Regan era opened the door to changing this and the increasing the abuses and risk taking behavior of the lenders. Unfortunately the public didn't rein themselves in. Once the fruitflies are out, putting them back in the box isn't easy. That's essentially what we are trying to do.

[OhThereYouAre]

How persistant were you? You have to get past at least the first one or two people they put on the phone. Ask their name and their position. Ask what other options they have? They all have different types of accounts, they may have things structured so they won't do this with the account type you have but could with another type of account. At one point a company switched me from the Visa I'd had for may years to a Master Card for some reason of this type.

How persistant was I? To give you an idea of how persistant I was, here is what I charged and paid on my Blue Cash last year. And I'm not switching from this card....this card has arguably the best cash back reward program of any out there.



I'm sure you can understand why i'm ticked. I also have their platinum card which I spent almost as much with. After years of them waiving their $495 annual for that card, I'm getting the feeling that that is the next fee they are going to hit me with.

They've made and continue to make poor choices in lending practices, extending credit where they shouldn't have. 30 years ago a lot of people who have stacks of credit cards now wouldn't have qualified for credit or certainly not for so much.

What you seem to be forgetting is that it was government policy, i.e. Carter's and Clinton's Community Reinvestment Act that FORCED banks to lend to subprime consumers. Banks faced strict penalties, as did Citi and Chase for example, for not meeting subprime quotas. Since the banks didn't have conventional loan programs that would allow these people qualify for loans, they made all types of exotic products so these folks keep indeed get mortgages. The white house deserves as much, if not more blame than wall street here.

[WildChild]

I can see why you are frustrated. It's a mess no matter how you slice it. I haven't had a AmEx card in years because they used to always charge a fee. That was before they started doing all these incentives. I don't know what all the options are with it but I have a Costco Exec Membership, they have a partnership with AmEx, members have no annual fee for the credit card. The basic account doesn't have as good a rebate but the info seems to imply that there are some other options. Maybe worth looking at? I don't know what kind of fee they are talking about for AmEx but it could be that losing the fee would make up for a little lower rebate?

My Costco membership is often virtually free because I get a rebate on that.

[OhThereYouAre]

I can see why you are frustrated. It's a mess no matter how you slice it. I haven't had a AmEx card in years because they used to always charge a fee. That was before they started doing all these incentives. I don't know what all the options are with it but I have a Costco Exec Membership, they have a partnership with AmEx, members have no annual fee for the credit card. The basic account doesn't have as good a rebate but the info seems to imply that there are some other options. Maybe worth looking at? I don't know what kind of fee they are talking about for AmEx but it could be that losing the fee would make up for a little lower rebate?

My Costco membership is often virtually free because I get a rebate on that.

No fee on the amex blue cash....at least for now....i'm more ticked about the reduction in the cash reward payout.

Just needed to vent, I saw some of this stuff on cnn this am and made a call to confirm it indeed was true.

They hit me with a $495 fee for the plat card, it's out of my wallet.

[WildChild]

That's insane.

[Texasred]

What you seem to be forgetting is that it was government policy, i.e. Carter's and Clinton's Community Reinvestment Act that FORCED banks to lend to subprime consumers. Banks faced strict penalties, as did Citi and Chase for example, for not meeting subprime quotas. Since the banks didn't have conventional loan programs that would allow these people qualify for loans, they made all types of exotic products so these folks keep indeed get mortgages. The white house deserves as much, if not more blame than wall street here.

Perfect!
I love seeing that people "get it!"

But let's give credit where credit is due (to make a really ironic pun): Bawney Fwank is the primary instigator behind these unsustainable loan practices, well, him and Chris Dodd, and THEY are the ones who got huge campaign donations not only from Countrywide Mortgage, but also from the "community organizers" (i.e., ACORN and certain Chicago politicians...) who "administer" these "Community reinvestment" programs while taking a fat fee off the top.