Geithner Gets It Right on Credit Cards

Since my Portfolio story on Tim Geithner was not altogether favorable, I've been scratching around for something good to say about him. At last I've found it: Geithner today endorsed legislation in the House and Senate that would curtail unfair rate increases and fees.

When I described the menace of credit cards in a Parade Magazine article last August, the possibility of reform seemed remote. But with Obama in the White House and Democrats holding a nearly filibuster-proof majority, it seems that card reforms may finally be happening. Maybe. The banking lobby is going to fight hard to water down the card legislation. Stay tuned.

Comments

[Dave Wrixon:]

Well, good but not sure it is good enough.

Credit Card companies are the scum of the earth. I had to ring up Barclay Card just last night to get a £12 charge scrubbed, after a direct debit was rejected. Of course they sort of overlooked the fact that I had paid off the Account and asked for it to be closed. The reason the Direct Debit bounced was because it had been cancelled due to nothing being owed.

Personally, I would like to see a maximum rate enforceable in the court system. Feel free to charge more, just work out for yourselves how to recover the debt. I would suggest rate should never be more than Bank Reserve Rate plus CPI plus 2%.

Apr 30 07:36 AM

[john s. gordon:]

just remember that a bank is an institution that will borrow money from the govt @ 0.25 % and lend it to you @ 29% & happily pocket the difference.
> jack

Apr 30 08:24 AM

[Insiderman:]

Even worse, when banks have a non-performing account and jack the interest rates up to 29% (knowing they are unlikely to collect) they then write off the ridiculous interest that they charged. FREE MONEY to them in that there writeoff.

Apr 30 09:02 AM

[PapaG:]

Here is an idea: If you think credit cards are unfair, don't use them.

Apr 30 11:35 AM

[ValueInvestor:]

The problem is that the majority of Americans don't know how CC interest works in the first place. They don't know CC's are unfair. If we don't help the average man we'll be right back here with a CC problem just like the subprime problem albeit on a smaller scale.


On Apr 30 11:35 AM PapaG wrote:

> Here is an idea: If you think credit cards are unfair, don't use
> them.

Apr 30 01:15 PM

[PapaG:]

Then I guess we have a problem with our public education system. Seems like the schools should inject some basic classes in economics.


On Apr 30 01:15 PM ValueInvestor wrote:

> The problem is that the majority of Americans don't know how CC interest
> works in the first place. They don't know CC's are unfair. If we
> don't help the average man we'll be right back here with a CC problem
> just like the subprime problem albeit on a smaller scale.

Apr 30 02:07 PM

[ValueInvestor:]

I totally agree. There should be a personal finance course in grade 12 that teaches you exactly how to ballance a check book, how credit card's, mortgages, investments, etc all work.

Better health and eating info would be great too. We all learn the 5 basic food groups but we aren't' taught how to read a nutritional information chart on the side of a food product.

On Apr 30 02:07 PM PapaG wrote:

> Then I guess we have a problem with our public education system.
> Seems like the schools should inject some basic classes in economics.
>

Apr 30 02:15 PM

[henarl:]

If you use credit cards as a convenience so that you don't have to carry large amounts of cash or bother writing checks, and then you pay your account in full each month, then fine. If you use credit cards to borrow money, you are a fool!

Apr 30 03:39 PM

[American in...:]

Ah. And revert back to a cash economy ...

Can't buy airline tickets on the Web or reserve hotel rooms or ...

Get real ....


On Apr 30 11:35 AM PapaG wrote:

> Here is an idea: If you think credit cards are unfair, don't use
> them.

Apr 30 05:50 PM

[Moon Kil Woong:]

I think Geithner's support of this is moot. He was not a framer or major supporter in this process. It was largely driven by the House and Senate due to rampant abuses by some card issuers. Of course he supports something that is almost 100% to pass.

If he thinks this proves he's not in bed wit bankers over citizen's and consumers he's sadly wrong. All it proves is he remains cowardly and goes with the easiest path available, the winners.

As for people saying forego credit cards if you don't like them. This issue is about card issuers targeting people who they know can't afford it, raising interest rates at whim without notification, lowering your maximums without notice so you must pay more in hopes you'll not pay enough and they make fee charges, charging more in fees than interest, raising interest rates without notification, and other strange and nefarious ways to make money off of card holders. It is not just about capping interest rates.

I personally prefer paying most everything in cash and am pleased at the rise of debit cards as a viable substitute for some as a replacement for credit cards. However, those using or needing them deserve to be treated fairly, and banks need to stop cramming credit cards down people's throats starting at age 18. Maybe then their delinquency rates wouldn't be rising to above 10%.

Apr 30 10:33 PM