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March 04, 2005

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Kender

I have to agree that it seems unfair. The way that the credit card companies legally structure their rules punishes those that are unable to pay on time.

It also severely punishes those that are bad at math and those that can't understand how to live within their means.

In other words it punishes those that are greedy. If you are greedy and just can't live without that thousand dollar stereo system and go into debt up to your eyes to get it and then can't afford to pay it then you lose your stereo and your credit rating.

I propose that more dems, (those that are supposedly on the lower end of the wage scale and hence have less money) are more likely to get into CC debt by living beyond their means. I have seen this alot in college kids, which are overwhelmingly on the left side of the street.

Republicans are the ones that supposedly make more money on average, therefore they have less chance to go into CC debt.

By that thinking it is NOT those on the right side of the street that are the greedy ones now is it?

KraftyOne

People should be accountable for their own decisions. However, far too much very important information is allowed to be hidden in the very fine print. Very few people have the time to read the extremely extensive credit card contracts (or other contracts for that matter) and even fewer people have the legal know-how to understand and pick out the most important parts of it. The bold print giveth, the fine print taketh away! I think if there is any legislation it should be about making contracts more straightforward and understandable.

Or you can just have your lawyers read them for you like I do!

Abigail

Kender, Americans have been brainwashed by Madison Avenue into believing that happiness only comes from owning material possessions.

The upper middle class are also in debt up to their eyeballs, only their debt is more likely to be for a house that's a lot bigger than they need.

When the housing market crashes, like many predict, many homewoners will be in for a huge financial reckoning.

Kender

When the housing market crashes I will be salivating at the wealth that will come my way.

Like many smart investors, we live well within our means, and the money we make gets put into investments and other tools that will allow us, once the housing market crashes and foreclosure rates shoot up, to acquire more wealth by buying houses, (real property), and renting them out, (thereby having someone else pay the mortgages on them), until such time as we feel the need or desire to sell them at a good profit, (usually years down the line), all the while making our credit worthiness even better.

Is this a great country or what?

Kender

And K1, I agree with completely.

tomslick

This is a worthy topic. It reminds one of the poor coal miners who were practically enslaved by the company store.
The credit card companies are gougers and unscrupulous I would agree.
On one hand, I have seen friends lose everything due to credit because they lived far beyond their means.
I have also seen people get behind using credit because they needed a costly car repair in order to make it to work.
The first example is living under a bridge now. The latter is doing just fine.
I guess a little forsight goes a long way when dealing with the credit card companies, but I am leary about the gov't intervention on most things.
There will always be people who cannot manage a buck and want things now. And there will always be those who will give it to them for a fee of course.
Have you ever noticed why there is a loan shop (check advance) business on every block in poor neighborhoods? I guess because there are people who will keep them profitable.

KraftyOne

I wouldn't mind a bit of legislation to help force companies not to hide important details of a contract in the fine print since the unscrupulous seem to get away with a lot of what they do because of that fine print.
Also, the coal miners were not spending above their means, they just didn't make enough to actually feed themselves and their families. I'm not sure if this is the case though with most people who get into credit trouble.

Also, Kender, despite what you might personally stand to gain from a real estate crash, wouldn't it be better if we were helping people to avoid that situation rather than helping ever more people who can't afford their homes get into them? This is what the Bush camp is creating with their "ownership society" and helping people who could not afford a home ever before buy a home. They are creating a situation where the masses stand to lose a lot and the well-positioned few stand to gain a lot.

Phil

Kender, I don't know what you're investing in, but when the housing bubble pops there's a good chance it'll take down your investments with it. The economy as a whole may be too dependant on inflated home values and spending from refinanced mortgages.

There's a good frontline episode on the predatory nature of the credit card companies:
http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/

Kender

Phil...my wife works in the mortgage industry and has a top notch investment guy. She knows well what is tied into the housing market and where best to put the money....also, we have a huge surplus of liquid assets at all times....we keep twice the amount we need to totally get out of debt at a moments notice in the bank.

Credit card companies are evil. Live within your means and everything will be fine. Living beneath them is even better.

Phil

good advice.

susan

Kender,
Sure good advice. If you wife is in mortgages you no doubt have been making huge money for the last couple of years while the rest of the country struggles with the recession. I too am in mortgage and I see how in certain places just owning a home is not within people's means so maybe they should rent but that is keeping your wife and I employed when they choose to buy. So while I am glad for you, not everyone has the same circumstances. Personal responsibility is key, but when someone is laid off after 20 years or a spouse or child is sick and dying - the savings would go faster than you think.
And the crazy fees and stuff racked up by the credit card companies just force you deeper into a hole. And they can change the terms when they like. Just be careful with your scorn- it really isn't always irresponsible people that the companies take advantage of. One day it could be you.

John Thacker

The credit card companies try to make as much money as they can. The more likely that people are to default and not pay, the more they raise the rates. They always recover their risk that way.

What this means, of course, is that the easier it is to file for bankruptcy, the higher the rates will be for everybody else. Of course, people go into bankruptcy due to bad luck, and you don't want debtors' prison.

But credit card companies don't lose money when people declare bankruptcy. Oh no. They merely raise rates for everybody else and pass the cost on. It's all about pricing the risk.

armchair genius

I agree that something needs to be done about credit card companies and second mortgage companies. And I also agree that hidden fees, etc. are a problem.

But more than that I think their business model is a problem. They intentionally target sub prime customers - customers they know will not be able to pay off the principal balance. They do this so they can bleed that customer, in theory forever, off the outrageous interest accumulation.

It is really a despicable practice that should be outlawed.

Pepper

We were quite close to helping people understand how credit cards work during all the hubbub over the bankruptcy bill. According to the AP, "the Senate defeated a Democratic proposal to require that credit card statements show how long it would take the consumer to pay off his or her debt by making only the minimum monthly payment."

If the bankruptcy bill is designed to stop people from defaulting on their payments by making bankruptcy more punitive, wouldn't it be a good idea to discourage people from paying only the minimum?

It's funny how all the rhetoric surrounding the bill says it is increasing "personal responsibility," but "personal responsibility" is the last thing the credit card companies and our economy - which is driven by consumer spending and the resulting debt - want.

SP

Kender is disgusting. He is a perfect example of the silver lining in catastophic illness. Some people deserve it.

Joe

As a moderate, the fact that they defeated an amendment requiring a couple lines on your bill explaining to people how only paying the minimum hurts them...

...It's just disgusting.


I'm wary of government intervention, too. But I'm *more* wary of a society where people feel no duty whatsoever to one another, where the number one motive is "I got mine", where every time that there are genuinely predatory practices in the marketplace, it's rationalized to simply show that the victims (which are usually the poor - hello, vicious cycle of poverty!) are "getting what they deserve".

It's the same silly reason we teach everyone that investing in the stock market is *such* the smart thing to do, when in reality average individual returns amount to about the same as T-Bill. My father handles his investments (and soon, mine) quite well, because he has an advanced background in statistical mathematics and has spent the past fifteen years or so doing all the work necessary to create his own predictive models for how the market will go.

But what a lot of his experience has taught him is that so much of what's peddled, on the financial shows, in the financial press, as advice for the anxious middle-classer who doesn't really understand the stock market but has it in his head that investing is the 'wise thing to do' -- it's bullshit. Plain and simple.

I'm a firm believer in capitalism. I'm a firm believer in the value of the market to society and to humanity and to progress (when properly regulated). But that doesn't mean I, or other moderates like me, have to stand up for vile, predatory behavior.

Poor people are working two and three jobs to make ends meet. They don't have the time to master the intricacies of a credit card contract.

They vote for elected representatives to help them not get taken advantage of, not get swindled -- and that's what the industry is offering, at this point, a swindle. I'm not necessarily a theist, but what they do is the kind of thing where, if the mid-level management of the credit card companies died tomorrow and were tossed before God and told, "Hey -- justify your life", they'd be left twiddling their thumbs with lame rationalizations about how the people they hurt were hurt indirectly, or it was really their own fault, ad nauseum.


As disheartening as it was that a number of Democrats went along with this -- including Lieberman, who I oftentimes admire depending on the circumstance -- it solidifies the battle lines.


At this point in history, the Democrats are, for all their ineptitude, for all their bumbling, for all their muddle-headedness on this issue or that... the party of the little guy.


The Republicans, right now, are the party of "I got mine."

Henry

I have large medical bills due to a transplant. This bill will really hurt me. An it will hurt others like me. I wish they could stop this bill from passing. This is what happens when one party has all the power.

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