New Twist on the Credit Card Game
December 10, 2006 7:20 PM Subscribe
How can a credit card company fool you? Let me count the ways. When Brad Kehn received his first credit card from Capital One Financial in 2004, it took him only three months to exceed its $300 credit limit and get socked with a $35 over-limit fee. But what surprised the Plankinton, S.D., resident more was that Cap One then offered him another card, even though he was over the limit -- and then another and another.
"I owe these people that much damn money and they are willing to give me another credit card? This is nuts."
You owe them that much money and you will take another credit card? You are an idiot.
posted by tehloki at 7:37 PM on December 10, 2006
You owe them that much money and you will take another credit card? You are an idiot.
posted by tehloki at 7:37 PM on December 10, 2006
It's perfectly legal to play people for suckers.
posted by Brandon Blatcher at 7:38 PM on December 10, 2006
posted by Brandon Blatcher at 7:38 PM on December 10, 2006
In other news: Area fatty shocked McDonald's continues to sell him Big Macs.
posted by null terminated at 7:40 PM on December 10, 2006
posted by null terminated at 7:40 PM on December 10, 2006
It's pretty disingenuous for the company to not have the card just "decline" someone when they reach their limit. The over-limit fee is underhanded. Other than that, the guy is just a slightly dumber version the typical credit culture consumer.
posted by The God Complex at 7:41 PM on December 10, 2006
posted by The God Complex at 7:41 PM on December 10, 2006
*of
posted by The God Complex at 7:42 PM on December 10, 2006
posted by The God Complex at 7:42 PM on December 10, 2006
^^ It's not disengenuous, you sign a contract agreeing to all their ridiculous rules when you acquire a credit card, and you bring the penalties associated with overspending upon yourself by *gasp* overspending.
It's not the credit card companies that are being idiotic. They are just exploiting the niche market of "people who just couldn't bear not to spend money they don't have".
posted by tehloki at 7:43 PM on December 10, 2006
It's not the credit card companies that are being idiotic. They are just exploiting the niche market of "people who just couldn't bear not to spend money they don't have".
posted by tehloki at 7:43 PM on December 10, 2006
It's not so much "fooling" people as it is giving them enough rope to hang themselves...
posted by Operation Afterglow at 7:45 PM on December 10, 2006 [2 favorites]
posted by Operation Afterglow at 7:45 PM on December 10, 2006 [2 favorites]
Afterglow has it.
Part of the freedom of consumer culture is the freedom to consent to financial arserape.
posted by pompomtom at 7:47 PM on December 10, 2006
Part of the freedom of consumer culture is the freedom to consent to financial arserape.
posted by pompomtom at 7:47 PM on December 10, 2006
The "This is nuts." had me rolling on the floor. I can just imagine him saying 'Don't they realize I'll just end up owing them more money?'.
Hilarious.
posted by Alvy Ampersand at 7:47 PM on December 10, 2006
Hilarious.
posted by Alvy Ampersand at 7:47 PM on December 10, 2006
It's easy to make fun of this guy for getting in trouble, but I have several friends who've gotten deep into credit card debt in their lives. The credit card companies prey on people, it's how their business works. It's evil.
Why is 30% interest legal?
posted by Nelson at 7:52 PM on December 10, 2006 [1 favorite]
Why is 30% interest legal?
posted by Nelson at 7:52 PM on December 10, 2006 [1 favorite]
^^ It's not disengenuous, you sign a contract agreeing to all their ridiculous rules when you acquire a credit card, and you bring the penalties associated with overspending upon yourself by *gasp* overspending.
I disagree. Let's be honest: 90% of people don't go through their various contracts with a fine-tooth comb. People sign contracts for everything these days. And, historically, credit cards have always given the big "declined" when someone reaches their limit.
The only purpose of allowing someone to overspend is to reap the absurd--and unwarranted--"overspending fee". What other reason is there for not having the card simply decline like 99% of credit cards in the past two decades?
But, as I said, other than that he seems like a moron.
posted by The God Complex at 7:53 PM on December 10, 2006
I disagree. Let's be honest: 90% of people don't go through their various contracts with a fine-tooth comb. People sign contracts for everything these days. And, historically, credit cards have always given the big "declined" when someone reaches their limit.
The only purpose of allowing someone to overspend is to reap the absurd--and unwarranted--"overspending fee". What other reason is there for not having the card simply decline like 99% of credit cards in the past two decades?
But, as I said, other than that he seems like a moron.
posted by The God Complex at 7:53 PM on December 10, 2006
There's a saying to the effect that the credit industry are the only people that have the right to completely change their contract with you at any time for any reason without giving you any notice or explanation.
posted by clevershark at 7:53 PM on December 10, 2006
posted by clevershark at 7:53 PM on December 10, 2006
The "This is nuts." had me rolling on the floor. I can just imagine him saying 'Don't they realize I'll just end up owing them more money?'.
No kidding.
I disagree. Let's be honest: 90% of people don't go through their various contracts with a fine-tooth comb. People sign contracts for everything these days. And, historically, credit cards have always given the big "declined" when someone reaches their limit.
So what? An overlimit fee is an obvious part of any credit card contract. The card company isn't doing disingenuous here at all. The guy gets a credit card, spends a bunch of money on it, goes over the limit, and then gets another card, and does the same thing over and over again. This is all his doing. The card company is taking advantage of his stupidity, and that's probably wrong, but it's not dishonest. And it has nothing to do with the fine print.
posted by delmoi at 7:58 PM on December 10, 2006
No kidding.
I disagree. Let's be honest: 90% of people don't go through their various contracts with a fine-tooth comb. People sign contracts for everything these days. And, historically, credit cards have always given the big "declined" when someone reaches their limit.
So what? An overlimit fee is an obvious part of any credit card contract. The card company isn't doing disingenuous here at all. The guy gets a credit card, spends a bunch of money on it, goes over the limit, and then gets another card, and does the same thing over and over again. This is all his doing. The card company is taking advantage of his stupidity, and that's probably wrong, but it's not dishonest. And it has nothing to do with the fine print.
posted by delmoi at 7:58 PM on December 10, 2006
There's a saying to the effect that the credit industry are the only people that have the right to completely change their contract with you at any time for any reason without giving you any notice or explanation.
Do you have any evidence that that's true?
posted by delmoi at 7:58 PM on December 10, 2006
Do you have any evidence that that's true?
posted by delmoi at 7:58 PM on December 10, 2006
the article is about whether Cap One is misrepresenting itself to its shareholders and the people who issue its bonds, if anyone cares to read it, rather than just feeling smugly superior to the guy mentioned in the quoted bit.
posted by drjimmy11 at 7:59 PM on December 10, 2006
posted by drjimmy11 at 7:59 PM on December 10, 2006
Fool me once, shame on you
Fool me twice, can't get fooled again. Or something.
posted by unSane at 8:00 PM on December 10, 2006
Fool me twice, can't get fooled again. Or something.
posted by unSane at 8:00 PM on December 10, 2006
So what? An overlimit fee is an obvious part of any credit card contract. The card company isn't doing disingenuous here at all. The guy gets a credit card, spends a bunch of money on it, goes over the limit, and then gets another card, and does the same thing over and over again. This is all his doing. The card company is taking advantage of his stupidity, and that's probably wrong, but it's not dishonest. And it has nothing to do with the fine print.
Are you kidding? As I said, probably 99% of credit cards in history simply decline you when you reach your limit. Credit card companies and cell phone salesman are the 21st-century used car dealer.
posted by The God Complex at 8:02 PM on December 10, 2006 [1 favorite]
Are you kidding? As I said, probably 99% of credit cards in history simply decline you when you reach your limit. Credit card companies and cell phone salesman are the 21st-century used car dealer.
posted by The God Complex at 8:02 PM on December 10, 2006 [1 favorite]
Every day I get the mail, and am insulted to see how stupid lenders think those of us with, er, sub-prime credit ratings are. I get offered cards with, no kidding, $500 credit limits and $72 in annual fees, plus a $39 "program fee" to open the account. That annual fee would be billed in $6 monthly installments to maximize the possibility of late fees even on a zero balance, natch. I didn't pay my bills, therefore I got a lobotomy?
And yet, they stay in business.
How is this not usury?
posted by Methylviolet at 8:07 PM on December 10, 2006
And yet, they stay in business.
How is this not usury?
posted by Methylviolet at 8:07 PM on December 10, 2006
^^ It may surprise you that a large portion of people are, in fact, rather stupid.
posted by tehloki at 8:08 PM on December 10, 2006
posted by tehloki at 8:08 PM on December 10, 2006
clevershark : "There's a saying to the effect that the credit industry are the only people that have the right to completely change their contract with you at any time for any reason without giving you any notice or explanation."
I don't know if that's technically accurate, but I know it isn't practically accurate. I've done plenty of translations for product descriptions which include the phrase "specifications are subject to change without notice", for which companies are making purchase contracts. So, no, the contract says "You get product X for price Y", and that won't change, but the definition of Product X will change.
delmoi : "An overlimit fee is an obvious part of any credit card contract."
I think the guy's an idiot as well, but I don't think the "overlimit fee is obvious" thing is true. Or, at least, maybe it's obvious now, I dunno, I don't have a credit card. But when I had one, roughly 10 years ago, if you reached your limit, they just wouldn't lend you any more money. I never heard of an "overlimit fee". (Though, to be fair, I never reached my limit, so I don't know first-hand).
posted by Bugbread at 8:09 PM on December 10, 2006
I don't know if that's technically accurate, but I know it isn't practically accurate. I've done plenty of translations for product descriptions which include the phrase "specifications are subject to change without notice", for which companies are making purchase contracts. So, no, the contract says "You get product X for price Y", and that won't change, but the definition of Product X will change.
delmoi : "An overlimit fee is an obvious part of any credit card contract."
I think the guy's an idiot as well, but I don't think the "overlimit fee is obvious" thing is true. Or, at least, maybe it's obvious now, I dunno, I don't have a credit card. But when I had one, roughly 10 years ago, if you reached your limit, they just wouldn't lend you any more money. I never heard of an "overlimit fee". (Though, to be fair, I never reached my limit, so I don't know first-hand).
posted by Bugbread at 8:09 PM on December 10, 2006
I have one Visa check card and I can use it online or other times when I need a credit card (so far no problems anyway) and it is all I need or want.
I have no desire to have one for myself if for no other reason than I hate the entire industry and do not want to support them anymore than I have to. It is almost impossible to go without at least a Visa check card these days, unfortunately. One of the little area stores I used to frequent quit even stopped accepting cash. Too many counterfeit bills for a while and it was hurting them, so they said credit cards only.
posted by weretable and the undead chairs at 8:12 PM on December 10, 2006
I have no desire to have one for myself if for no other reason than I hate the entire industry and do not want to support them anymore than I have to. It is almost impossible to go without at least a Visa check card these days, unfortunately. One of the little area stores I used to frequent quit even stopped accepting cash. Too many counterfeit bills for a while and it was hurting them, so they said credit cards only.
posted by weretable and the undead chairs at 8:12 PM on December 10, 2006
Goddamn this is tiresome and stupid. Credit card companies ought not to try and take advantage of the mentally retarded, or the insane. Other than that, why do we care if some middle-class yokel gets ass-raped on fees because he wanted a flat panel TV and some bitchin new wardrobe?
posted by docpops at 8:13 PM on December 10, 2006
posted by docpops at 8:13 PM on December 10, 2006
It may surprise you that a large portion of people are, in fact, rather stupid.
It may be more than you realize—50 percent of Americans have below-average intelligence.
posted by grouse at 8:14 PM on December 10, 2006
It may be more than you realize—50 percent of Americans have below-average intelligence.
posted by grouse at 8:14 PM on December 10, 2006
That said, I knew someone several years ago who ran up a pretty good credit card bill when they missed work (injured) and had to pay bills on the credit card until they could get back to work. As soon as they had a decent balance, the credit card company sold their account to another company and the interest went up to like 45% or something. Thank god it was still easy to take bankruptcy then, that was the only option they were left with.
posted by weretable and the undead chairs at 8:14 PM on December 10, 2006
posted by weretable and the undead chairs at 8:14 PM on December 10, 2006
How is this not usury?
It is, but usury is only a crime in Church law, welcome to Capitalism.
posted by Pollomacho at 8:14 PM on December 10, 2006 [1 favorite]
It is, but usury is only a crime in Church law, welcome to Capitalism.
posted by Pollomacho at 8:14 PM on December 10, 2006 [1 favorite]
Credit card companies and cell phone salesman are the 21st-century used car dealer.
posted by The God Complex
It should be known that some of those cell phone salesman simply sit in the mall all day reading Metafilter and hoping no customers come up to ask them why their voicemail doesn't work.
Or, er, erm, so I've heard.
posted by haveanicesummer at 8:16 PM on December 10, 2006
posted by The God Complex
It should be known that some of those cell phone salesman simply sit in the mall all day reading Metafilter and hoping no customers come up to ask them why their voicemail doesn't work.
Or, er, erm, so I've heard.
posted by haveanicesummer at 8:16 PM on December 10, 2006
quote: 50 percent of Americans have below-average intelligence
Okay, let me rephrase that: the average person is surprisingly stupid.
posted by tehloki at 8:17 PM on December 10, 2006
Okay, let me rephrase that: the average person is surprisingly stupid.
posted by tehloki at 8:17 PM on December 10, 2006
It should be known that some of those cell phone salesman simply sit in the mall all day reading Metafilter and hoping no customers come up to ask them why their voicemail doesn't work.
Or, er, erm, so I've heard.
Haha. I don't mean to paint all cell-phone salesman with the same brush. But there are a surprising number of sleezy ones that like to take advantage of the unwitting customer.
posted by The God Complex at 8:20 PM on December 10, 2006
grouse : "It may be more than you realize—50 percent of Americans have below-average intelligence."
Pedant Power ON!
Not necessarily.
Take, for example, a group of 10 people, 9 of which have an IQ of 100, and one of which has an IQ of 10.
In that case, the average IQ is 91, but 90% of the people have above-average intelligence, and only 10% have below average.
Pedant Power OFF!
posted by Bugbread at 8:20 PM on December 10, 2006 [5 favorites]
Pedant Power ON!
Not necessarily.
Take, for example, a group of 10 people, 9 of which have an IQ of 100, and one of which has an IQ of 10.
In that case, the average IQ is 91, but 90% of the people have above-average intelligence, and only 10% have below average.
Pedant Power OFF!
posted by Bugbread at 8:20 PM on December 10, 2006 [5 favorites]
Credit is the business of taking advantage of people. It is inherently a predatory industry. Predators prey on the weak. There should be no surprises here.
Which is not to say I'm not grateful for the post. It helped to clarify and extend my understanding of the relative disreputability of the various major credit-offering banks, and for that I'm glad.
I'm with weretable: The only way to win is not to play. Recently and with great reluctance I added an overdraft line of credit to my checking account to deal with some one-time costs with known time of payback (namely, moving from college to my job) and now I'm going back to the serenity of no credit.
posted by eritain at 8:30 PM on December 10, 2006 [1 favorite]
Which is not to say I'm not grateful for the post. It helped to clarify and extend my understanding of the relative disreputability of the various major credit-offering banks, and for that I'm glad.
I'm with weretable: The only way to win is not to play. Recently and with great reluctance I added an overdraft line of credit to my checking account to deal with some one-time costs with known time of payback (namely, moving from college to my job) and now I'm going back to the serenity of no credit.
posted by eritain at 8:30 PM on December 10, 2006 [1 favorite]
I'm glad you used IQ for that example, since IQ is a normalized test, and the mean IQ is also the median IQ. Try again?
posted by grouse at 8:30 PM on December 10, 2006 [1 favorite]
posted by grouse at 8:30 PM on December 10, 2006 [1 favorite]
Quote: Credit is in the business of taking advantage of people.
Bingo. If everybody was fiscally responsible and had an ounce of common sense in them, credit card companies would go out of business. As it stands, we have no idea how to spend (or alternately, how not to spend) our money, and credit card companies simply exist to fill the logical niche that exists in the ecology of money. Want them to go away? Stop spending money you don't have.
posted by tehloki at 8:38 PM on December 10, 2006
Bingo. If everybody was fiscally responsible and had an ounce of common sense in them, credit card companies would go out of business. As it stands, we have no idea how to spend (or alternately, how not to spend) our money, and credit card companies simply exist to fill the logical niche that exists in the ecology of money. Want them to go away? Stop spending money you don't have.
posted by tehloki at 8:38 PM on December 10, 2006
I'm glad you used IQ for that example, since IQ is a normalized test, and the mean IQ is also the median IQ. Try again?
Not against some arbitrary group it isn't. If it were, any group of one person would have an IQ of 100.
But even if you were right, it sounds like you have the capability to apply the example to some other numbers on your own.
posted by mendel at 8:45 PM on December 10, 2006
Not against some arbitrary group it isn't. If it were, any group of one person would have an IQ of 100.
But even if you were right, it sounds like you have the capability to apply the example to some other numbers on your own.
posted by mendel at 8:45 PM on December 10, 2006
Stop spending money you don't have.
Makes it sorta hard to buy a house or car that way, eh?
posted by Pollomacho at 8:47 PM on December 10, 2006
Makes it sorta hard to buy a house or car that way, eh?
posted by Pollomacho at 8:47 PM on December 10, 2006
Why is 30% interest legal?
I dunno. Why is .5% interest legal? Who decides what is and isn't legal? How about the consumer? it's not like there isn't an active market in credit cards.
I have a very high rate credit card, something like 17.95%. If I shopped around I'm sure I could get a lower rate. And yet it doesn't bother me - because I'm not a freaking moron.
posted by wilful at 8:52 PM on December 10, 2006
I dunno. Why is .5% interest legal? Who decides what is and isn't legal? How about the consumer? it's not like there isn't an active market in credit cards.
I have a very high rate credit card, something like 17.95%. If I shopped around I'm sure I could get a lower rate. And yet it doesn't bother me - because I'm not a freaking moron.
posted by wilful at 8:52 PM on December 10, 2006
Makes it sorta hard to buy a house or car that way, eh?
Even harder to start a business. Without loans, you'd have to issue stock on day one to get off the ground, provided you could find investors. And even then none of your suppliers would give you credit so you'd have to sell enough stock or have enough savings to pay for everything you sell or use up front. And once you're established you'd have no leverage on capital.
It would be also hard to make money outside of entrepreneurship without significant risk -- if there's no-one spending money they don't have, there's no more bonds. Banks themselves wouldn't be lending anymore, so there wouldn't be any more interest-bearing bank accounts; in fact, there wouldn't be much reason for banks to exist in the first place. There'd still be a stock market, but the risks there would increase too, because any company that didn't produce good results in a single month or quarter couldn't use credit to keep the business in operation until the black months.
And never mind getting an education instead of becoming an entrepreneur. The only doctors would be those who had a family fortune to spend on medical school. Those academic disciplines which didn't have the ROI that a medical degree had would be even harder to justify.
Not all credit is designed to be abused.
posted by mendel at 9:07 PM on December 10, 2006 [3 favorites]
Even harder to start a business. Without loans, you'd have to issue stock on day one to get off the ground, provided you could find investors. And even then none of your suppliers would give you credit so you'd have to sell enough stock or have enough savings to pay for everything you sell or use up front. And once you're established you'd have no leverage on capital.
It would be also hard to make money outside of entrepreneurship without significant risk -- if there's no-one spending money they don't have, there's no more bonds. Banks themselves wouldn't be lending anymore, so there wouldn't be any more interest-bearing bank accounts; in fact, there wouldn't be much reason for banks to exist in the first place. There'd still be a stock market, but the risks there would increase too, because any company that didn't produce good results in a single month or quarter couldn't use credit to keep the business in operation until the black months.
And never mind getting an education instead of becoming an entrepreneur. The only doctors would be those who had a family fortune to spend on medical school. Those academic disciplines which didn't have the ROI that a medical degree had would be even harder to justify.
Not all credit is designed to be abused.
posted by mendel at 9:07 PM on December 10, 2006 [3 favorites]
Pollomacho:
When was the last time you bought a house using a credit card, paying 45% interest?
posted by cheaily at 9:08 PM on December 10, 2006
When was the last time you bought a house using a credit card, paying 45% interest?
posted by cheaily at 9:08 PM on December 10, 2006
Why isn't it usury? Blame the Supreme Court of the United States, Citibank, the state of South Dakota. In a nutshell, Citibank notices a Supreme Court decision that makes it so that a bank is bound by the usury laws of the state in which it operates, no matter where its customers are located. They get South Dakota to eliminate their usury laws and then move their credit card operations to that state. And so it begins.
posted by zsazsa at 9:09 PM on December 10, 2006 [2 favorites]
posted by zsazsa at 9:09 PM on December 10, 2006 [2 favorites]
When was the last time you got a mortgage or car loan without a credit rating?
posted by Pollomacho at 9:17 PM on December 10, 2006
posted by Pollomacho at 9:17 PM on December 10, 2006
Quote: Not all credit is designed to be abused
Mendel, you and Pollomancho must either be ignoring me or selectively reading my posts. You may have read "credit is bad and for stupid people", but what I was trying to say was "Credit cards are for people wanting to live beyond their means."Starting a small business doesn't involve racking up 10000 dollars worth of purchases on a CREDIT CARD, it involves taking out a 10000 dollar small business loan (or some such large amount). Buying a house involves a mortgage with a bank, not a 200k overcharge on your plastic.
The type of systemic stupidity I'm talking about is people living just above the wire buying big screen TV's and expensive clothing on a credit card, and plunging themselves into useless debt.
posted by tehloki at 9:18 PM on December 10, 2006
Mendel, you and Pollomancho must either be ignoring me or selectively reading my posts. You may have read "credit is bad and for stupid people", but what I was trying to say was "Credit cards are for people wanting to live beyond their means."Starting a small business doesn't involve racking up 10000 dollars worth of purchases on a CREDIT CARD, it involves taking out a 10000 dollar small business loan (or some such large amount). Buying a house involves a mortgage with a bank, not a 200k overcharge on your plastic.
The type of systemic stupidity I'm talking about is people living just above the wire buying big screen TV's and expensive clothing on a credit card, and plunging themselves into useless debt.
posted by tehloki at 9:18 PM on December 10, 2006
On postview: Cheaily put it better and more concisely than I did. Credit is not an evil institution. The concept of living on a credit card and the nefarious "live in luxury, pay later" culture the companies perpetrate is.
posted by tehloki at 9:21 PM on December 10, 2006
posted by tehloki at 9:21 PM on December 10, 2006
Make that last word "perpetuate", and I'm done for the day.
posted by tehloki at 9:21 PM on December 10, 2006
posted by tehloki at 9:21 PM on December 10, 2006
If everybody was fiscally responsible and had an ounce of common sense in them, credit card companies would go out of business.
Some of them would, but the low interest loan industry for things such as student loans seems to be doing just fine.
Haha. I don't mean to paint all cell-phone salesman with the same brush. But there are a surprising number of sleezy ones that like to take advantage of the unwitting customer.
Oh, no, you're totally correct. I switched from one company to another just because this one pays hourly plus a small commission, so people are far less likely to rip off the customer. Commission only pay structures are the reason those people are sleaze-merchants (people who don't rip off customers quickly realize they aren't making any money and go get other jobs). The only reason I still have this job despite people saying "A cell phone salesman? Really?" and probably immediately thinking less of me is that it's so EASY. I've never seen an easier entry level position in my life.
posted by haveanicesummer at 9:24 PM on December 10, 2006
Some of them would, but the low interest loan industry for things such as student loans seems to be doing just fine.
Haha. I don't mean to paint all cell-phone salesman with the same brush. But there are a surprising number of sleezy ones that like to take advantage of the unwitting customer.
Oh, no, you're totally correct. I switched from one company to another just because this one pays hourly plus a small commission, so people are far less likely to rip off the customer. Commission only pay structures are the reason those people are sleaze-merchants (people who don't rip off customers quickly realize they aren't making any money and go get other jobs). The only reason I still have this job despite people saying "A cell phone salesman? Really?" and probably immediately thinking less of me is that it's so EASY. I've never seen an easier entry level position in my life.
posted by haveanicesummer at 9:24 PM on December 10, 2006
I'm not sure this is smart behavior on the part of Capital One... to paraphrase the old saying: if I owe the bank a little bit of money, I have a problem. If I owe the bank much more money than I have, the bank has a problem.
posted by ubernostrum at 9:32 PM on December 10, 2006
posted by ubernostrum at 9:32 PM on December 10, 2006
haveanicesummer: I didn't say "the low interest loan industry" would go out of business. I said credit cards would. You're the fourth person to assume I meant "every business having to do with credit" when I referred to high-interest predatory credit card companies.
posted by tehloki at 9:41 PM on December 10, 2006
posted by tehloki at 9:41 PM on December 10, 2006
Their credit line is $2100. They're paying (on top of, probably, the 18% interest) $420/mo in overcharge fees. Even if they wind up bankrupt, CapOne only needs them to go 4 months before they can afford to just write off the principal.
posted by swell at 9:50 PM on December 10, 2006
posted by swell at 9:50 PM on December 10, 2006
Starting a small business doesn't involve racking up 10000 dollars worth of purchases on a CREDIT CARD
Sometimes it does. My wife's (very low overhead, very low expense) business began with out-of-pocket funds and has operated for the last couple years via a Capital One business card. Similarly, some friends of mine just went into severe collective credit card debt (over $10,000) to record and promote their first album -- I think they'd have had a pretty hard time getting a small business loan to become entrepreneurs of rock.
posted by aaronetc at 9:53 PM on December 10, 2006
Sometimes it does. My wife's (very low overhead, very low expense) business began with out-of-pocket funds and has operated for the last couple years via a Capital One business card. Similarly, some friends of mine just went into severe collective credit card debt (over $10,000) to record and promote their first album -- I think they'd have had a pretty hard time getting a small business loan to become entrepreneurs of rock.
posted by aaronetc at 9:53 PM on December 10, 2006
You're the fourth person to assume I meant "every business having to do with credit" when I referred to high-interest predatory credit card companies.
Boy, a lot of people seem to ignore and selectively read your writing. Wonder what's up with that.
posted by mendel at 9:53 PM on December 10, 2006
Boy, a lot of people seem to ignore and selectively read your writing. Wonder what's up with that.
posted by mendel at 9:53 PM on December 10, 2006
I've read about another Capital One trick that impacts the credit of all their cardholders.
Virtually every bank that issues you a credit card tells the credit agencies what credit limit they've assigned you. But not Capital One. They claim that information is proprietary. Instead, they report only the highest balance you ever have. This is bad because others evaluate your credit by how much you're using ... and the way Capital One reports, you'll appear to be using a much higher proportion of your credit from them than you actually are.
What's in my wallet? Not a Capital One credit card, that's for sure.
posted by pmurray63 at 9:54 PM on December 10, 2006
Virtually every bank that issues you a credit card tells the credit agencies what credit limit they've assigned you. But not Capital One. They claim that information is proprietary. Instead, they report only the highest balance you ever have. This is bad because others evaluate your credit by how much you're using ... and the way Capital One reports, you'll appear to be using a much higher proportion of your credit from them than you actually are.
What's in my wallet? Not a Capital One credit card, that's for sure.
posted by pmurray63 at 9:54 PM on December 10, 2006
Old saying: if I owe the bank a little bit of money, I have a problem. If I owe the bank much more money than I have, the bank has a problem. Used to be, anyhow...
Credit card companies have been rewriting the laws to make it easier for them to take advantage of more and more people, and to charge higher and higher fees, and generally to be able to deprive more people of their money while avoiding any serious risk themselves.
Rewritten bankruptcy laws make it harder for individuals to declare bankruptcy, so that credit card companies no longer have to think twice before issuing a card. Whereas it was once a distinction to have the sort of credit that would prompt the issuance of a shiny new Master Charge card, now I see these companies handing out Visas to 18 year-olds, along with t-shirts and frisbees. Of course these kids have no clue how to manage their money, and these credit cards will end up fucking up a lot of these kids lives, but the legislative power of the credit industry has seen to it that it needs to exercise virtually no caution in extending credit to people, since those who foolishly acquire more debt than they can pay will watch their debt balloon and enter a life-long servitude, for which they will regarded by their fellow citizens not with sympathy, but with contempt.
This is an industry badly in need of regulation, and I'm surprised to see it find so many defenders here. An illuminating look at this racket is provided by Frontline's program on the credit industry from a few years back.
posted by washburn at 9:57 PM on December 10, 2006 [4 favorites]
Credit card companies have been rewriting the laws to make it easier for them to take advantage of more and more people, and to charge higher and higher fees, and generally to be able to deprive more people of their money while avoiding any serious risk themselves.
Rewritten bankruptcy laws make it harder for individuals to declare bankruptcy, so that credit card companies no longer have to think twice before issuing a card. Whereas it was once a distinction to have the sort of credit that would prompt the issuance of a shiny new Master Charge card, now I see these companies handing out Visas to 18 year-olds, along with t-shirts and frisbees. Of course these kids have no clue how to manage their money, and these credit cards will end up fucking up a lot of these kids lives, but the legislative power of the credit industry has seen to it that it needs to exercise virtually no caution in extending credit to people, since those who foolishly acquire more debt than they can pay will watch their debt balloon and enter a life-long servitude, for which they will regarded by their fellow citizens not with sympathy, but with contempt.
This is an industry badly in need of regulation, and I'm surprised to see it find so many defenders here. An illuminating look at this racket is provided by Frontline's program on the credit industry from a few years back.
posted by washburn at 9:57 PM on December 10, 2006 [4 favorites]
Most credit card companies are just legalized grifters.
If a large company screwed you for thousands with small print and changing practices it is legal. If a three card Monty shyster cons you out of $20 it's a crime.
posted by edgeways at 10:07 PM on December 10, 2006 [1 favorite]
If a large company screwed you for thousands with small print and changing practices it is legal. If a three card Monty shyster cons you out of $20 it's a crime.
posted by edgeways at 10:07 PM on December 10, 2006 [1 favorite]
Of course these kids have no clue how to manage their money, and these credit cards will end up fucking up a lot of these kids lives
Heh. We let them fuck, vote, join the Army, and drive cars, but we must protect them from credit.
posted by Kwantsar at 10:12 PM on December 10, 2006
Heh. We let them fuck, vote, join the Army, and drive cars, but we must protect them from credit.
posted by Kwantsar at 10:12 PM on December 10, 2006
Everyone should watch the Frontline episode on credit. Should be required viewing in schools.
posted by Pollomacho at 10:45 PM on December 10, 2006
posted by Pollomacho at 10:45 PM on December 10, 2006
My auto loan is through Cap One. You would not believe the lengths they go through to have me not pay the bill. I picked up a decent contract, so was able to pay a decent chunk off almost immediately. And then they stopped sending me invoices at all.
I called them, worried I was going to miss a payment, and they tell me they don't send bills at all unless I'm paying the absolute minimum. And that it's okay to pay late, they'll just call it a grace period of sorts, and slap on a charge. And there's no way to pay online, or check my balance, but they'll take a payment on the phone for another charge.
I have had the loan for 3 months now and have not received a single bill. I am continuing to pay, as quickly as I can, since I am not an idiot, but I shudder to think about the people who don't realize the charges and extra interest that accrues as their loans just sit there.
posted by astruc at 10:48 PM on December 10, 2006 [2 favorites]
I called them, worried I was going to miss a payment, and they tell me they don't send bills at all unless I'm paying the absolute minimum. And that it's okay to pay late, they'll just call it a grace period of sorts, and slap on a charge. And there's no way to pay online, or check my balance, but they'll take a payment on the phone for another charge.
I have had the loan for 3 months now and have not received a single bill. I am continuing to pay, as quickly as I can, since I am not an idiot, but I shudder to think about the people who don't realize the charges and extra interest that accrues as their loans just sit there.
posted by astruc at 10:48 PM on December 10, 2006 [2 favorites]
God, once again the internet disconnect from the working poor is amazing. This guy runs a fucking truck stop, y'know? He had a $300 credit limit. What kinda plasma TV are you getting for $300, tehloki? One that plugs into the idiotic snark outlet?
It's incredibly easy to slip into credit card debt, and these structures are set up to inflict the most damage possible on people who can least afford it. But hey, you've never had to put a doctor's visit and prescriptions onto a credit card, because a couple hundred is just walkin' around money. And while you ate ramen in college, you're pretty sure that your parents would bail you out if your piece of shit car suddenly died and you needed to either drop a couple hundred in repairs or find a new job (or a new car).
For a lot of people in America, just living means living beyond their means. And if you're lucky enough to not have that problem, try being gracious enough to not be a dick about it on the internet because you're so goddamned superior. I don't have a credit card because I know that they're a bad idea for me, but I can definitely say that there are plenty of times when I wish that I had one so that I could, say, afford to get glasses or get a cavity filled, or all sorts of other fairly normal, but (for my broke ass) higher ticket items. Instead, it becomes "boy, if I save for another two months, I'm pretty sure that I can afford to get my muffler fixed AND find out if that weird lump is anything dangerous!"
(And don't gimme a rash of shit about how I, or the people in the article, aren't as frugal as they could be. Even poor people deserve to have a chocolate bar every now and then.)
posted by klangklangston at 10:54 PM on December 10, 2006 [23 favorites]
It's incredibly easy to slip into credit card debt, and these structures are set up to inflict the most damage possible on people who can least afford it. But hey, you've never had to put a doctor's visit and prescriptions onto a credit card, because a couple hundred is just walkin' around money. And while you ate ramen in college, you're pretty sure that your parents would bail you out if your piece of shit car suddenly died and you needed to either drop a couple hundred in repairs or find a new job (or a new car).
For a lot of people in America, just living means living beyond their means. And if you're lucky enough to not have that problem, try being gracious enough to not be a dick about it on the internet because you're so goddamned superior. I don't have a credit card because I know that they're a bad idea for me, but I can definitely say that there are plenty of times when I wish that I had one so that I could, say, afford to get glasses or get a cavity filled, or all sorts of other fairly normal, but (for my broke ass) higher ticket items. Instead, it becomes "boy, if I save for another two months, I'm pretty sure that I can afford to get my muffler fixed AND find out if that weird lump is anything dangerous!"
(And don't gimme a rash of shit about how I, or the people in the article, aren't as frugal as they could be. Even poor people deserve to have a chocolate bar every now and then.)
posted by klangklangston at 10:54 PM on December 10, 2006 [23 favorites]
Heh. We let them fuck, vote, join the Army, and drive cars, but we must protect them from credit.
Ah yes . . .
"Trying to think of the most harmless thing. Something that I loved from my childhood. Something that would never ever possibly destroy us. . . . Credit!"
posted by washburn at 11:05 PM on December 10, 2006
Ah yes . . .
"Trying to think of the most harmless thing. Something that I loved from my childhood. Something that would never ever possibly destroy us. . . . Credit!"
posted by washburn at 11:05 PM on December 10, 2006
Whoever thought credit card companies were your pals is living in a dream world.
When I wanted to cancel my Discover card after paying it off, I had to demand that they cancel it nearly ten times. The woman kept trying to offer me lame ass incentives and credit limits and airline miles.
And it cost me more than $1200 to finally pay off a credit card with a $300 limit. Fucking sharks.
posted by fenriq at 11:27 PM on December 10, 2006
When I wanted to cancel my Discover card after paying it off, I had to demand that they cancel it nearly ten times. The woman kept trying to offer me lame ass incentives and credit limits and airline miles.
And it cost me more than $1200 to finally pay off a credit card with a $300 limit. Fucking sharks.
posted by fenriq at 11:27 PM on December 10, 2006
Virtually every bank that issues you a credit card tells the credit agencies what credit limit they've assigned you. But not Capital One. They claim that information is proprietary. Instead, they report only the highest balance you ever have.
This is not true now, and has not been true for some time.
posted by oaf at 11:41 PM on December 10, 2006
This is not true now, and has not been true for some time.
posted by oaf at 11:41 PM on December 10, 2006
Jeebus, Klang, if you aren't superior what are you doing here?
(Says this guy who makes OK money, but who has a fairly sizable CC balance as a legacy of two disastrous years for my business--where the CC debt I accrued helped keep the wolves at bay. Business picked up, and the debt is shrinking.)
posted by maxwelton at 11:53 PM on December 10, 2006
(Says this guy who makes OK money, but who has a fairly sizable CC balance as a legacy of two disastrous years for my business--where the CC debt I accrued helped keep the wolves at bay. Business picked up, and the debt is shrinking.)
posted by maxwelton at 11:53 PM on December 10, 2006
mendel : "Not against some arbitrary group it isn't. If it were, any group of one person would have an IQ of 100."
True, but I was in the wrong on this one, as I forgot that the IQ test was normalized. So, mea culpa, sorry grouse.
Pollomacho : "When was the last time you got a mortgage or car loan without a credit rating?"
Happens in Japan all the time.
(Yes, I realize we're talking about America, but I just wanted to point out that car loans and mortgages are possible without credit ratings...or rather, they are possible using credit ratings based on income, capital, and savings, and not on how one has used a credit card.")
posted by Bugbread at 11:56 PM on December 10, 2006
True, but I was in the wrong on this one, as I forgot that the IQ test was normalized. So, mea culpa, sorry grouse.
Pollomacho : "When was the last time you got a mortgage or car loan without a credit rating?"
Happens in Japan all the time.
(Yes, I realize we're talking about America, but I just wanted to point out that car loans and mortgages are possible without credit ratings...or rather, they are possible using credit ratings based on income, capital, and savings, and not on how one has used a credit card.")
posted by Bugbread at 11:56 PM on December 10, 2006
Yeah, some people pay cash, out right for cars and houses too. It happens all the time here in China.
For average Americans mortgages and car loans from reputable sources are difficult to come by without a decent credit rating.
Good credit, bad credit, no credit at all, we've got a car for you!
posted by Pollomacho at 12:01 AM on December 11, 2006
For average Americans mortgages and car loans from reputable sources are difficult to come by without a decent credit rating.
Good credit, bad credit, no credit at all, we've got a car for you!
posted by Pollomacho at 12:01 AM on December 11, 2006
It's interesting to see the different reaction to this problem in the UK.
posted by fullerine at 12:17 AM on December 11, 2006
posted by fullerine at 12:17 AM on December 11, 2006
What kinda plasma TV are you getting for $300
A Snarkovision King, with octophonic Disdain and proprietary SpittleTuner™ thrown in gratis*.
The MeFi Snarkovision: Because you deserve everything you get, sucker.
*: Call now and get one year of FOX News at no extra charge. Operators standing by!
posted by Blazecock Pileon at 12:26 AM on December 11, 2006
A Snarkovision King, with octophonic Disdain and proprietary SpittleTuner™ thrown in gratis*.
The MeFi Snarkovision: Because you deserve everything you get, sucker.
*: Call now and get one year of FOX News at no extra charge. Operators standing by!
posted by Blazecock Pileon at 12:26 AM on December 11, 2006
klangklangston: Well, it looks like you've got me pegged. I know nothing about living in such an unforgiving society, where a doctor's visit can plunge somebody deep into inescapable debt, or where postsecondary education is so unaffordable that a student would need to overcharge their credit card just so they can eat. Maybe if I had ever lived in the U.S., I wouldn't be so idiotically snarky.
posted by tehloki at 12:26 AM on December 11, 2006
posted by tehloki at 12:26 AM on December 11, 2006
By the way, I wasn't referring to this guy specifically in any of my comments, except the one about him being shocked the company kept offering him cards. I'm not stupid enough to think that one can live in luxury for 300 dollars a month.
posted by tehloki at 12:28 AM on December 11, 2006
posted by tehloki at 12:28 AM on December 11, 2006
I know nothing about living in such an unforgiving society, where a doctor's visit can plunge somebody deep into inescapable debt
Well, if you live somewhere where health problems can't drive you into deep debt, you don't live in Canada, either.
posted by oaf at 12:33 AM on December 11, 2006
Well, if you live somewhere where health problems can't drive you into deep debt, you don't live in Canada, either.
posted by oaf at 12:33 AM on December 11, 2006
oaf: (I live in Canada) I didn't say anything about a chronic health problem or major operation. I said a "doctor's visit". I'm covered when I go for a physical, and don't quote me on this, but I think surgery necessary to prevent my quick and untimely death is covered as well.
posted by tehloki at 12:44 AM on December 11, 2006
posted by tehloki at 12:44 AM on December 11, 2006
ah, here we go, looks like I won't have to be whipping out my plastic and praying for my next physical:
What health care services are insured by the provinces and territories?
Under the Canada Health Act, provincial and territorial health insurance plans are required to provide coverage to their residents for all medically necessary hospital and physician services.
From here.
posted by tehloki at 1:11 AM on December 11, 2006
What health care services are insured by the provinces and territories?
Under the Canada Health Act, provincial and territorial health insurance plans are required to provide coverage to their residents for all medically necessary hospital and physician services.
From here.
posted by tehloki at 1:11 AM on December 11, 2006
Isn't there some room here to both despise the credit card companies AND think people who overuse credit cards (but aren't you know, necessarily in the situation klangklangston described) are idiots?
Also incidentally I wish a couple hundred was "walking around money." Though I could probably just get Brad Kehn and his wife to carry me on a litter... ("and here I am, using my own legs, like a sucker!")
posted by haveanicesummer at 1:26 AM on December 11, 2006
Also incidentally I wish a couple hundred was "walking around money." Though I could probably just get Brad Kehn and his wife to carry me on a litter... ("and here I am, using my own legs, like a sucker!")
posted by haveanicesummer at 1:26 AM on December 11, 2006
With regard to the whole "why doesn't it just decline when he overspends" thing, sometimes what the card will do is not decline the charge, but later, when it goes through to the card, they will slap on the fee in addition to what the original charge was.
Yes, this is what I was responding to. That strikes me as being particularly underhanded. I certainly wouldn't want my card to do that--you could be buying a fifty dollar sweater and have a thirty-five dollar fee slapped on to it because you weren't aware that buying the sweater would put you three or four dollars over your limit. This sort of thing does happen. I know. I've had enough experience in the service industry to know, including breaking the "declined" news to people on dozens of occasions, especially this time of the year.
The fact is, today's advanced market cultures are increasingly debt-reliant. More often than not, that's the lesson taught to people in my age group when they attend university. Hell, tens of thousands of dollars of debt is damn near a rite of passage for getting into the "real world" these days. By that point people are already learning to live with debt and interest as a normal part of western life.
posted by The God Complex at 1:35 AM on December 11, 2006
Yes, this is what I was responding to. That strikes me as being particularly underhanded. I certainly wouldn't want my card to do that--you could be buying a fifty dollar sweater and have a thirty-five dollar fee slapped on to it because you weren't aware that buying the sweater would put you three or four dollars over your limit. This sort of thing does happen. I know. I've had enough experience in the service industry to know, including breaking the "declined" news to people on dozens of occasions, especially this time of the year.
The fact is, today's advanced market cultures are increasingly debt-reliant. More often than not, that's the lesson taught to people in my age group when they attend university. Hell, tens of thousands of dollars of debt is damn near a rite of passage for getting into the "real world" these days. By that point people are already learning to live with debt and interest as a normal part of western life.
posted by The God Complex at 1:35 AM on December 11, 2006
There's some kind of western irony associated with this, I just can't put my finger on ....
posted by strawberryviagra at 3:09 AM on December 11, 2006
posted by strawberryviagra at 3:09 AM on December 11, 2006
This sort of thing does happen.
And that's why some regulations are/would be a good thing.
In a parallel example I've been carrying a relatively modest CC debt for a while and had been making sporadic payments. Somewhere along the line in the last year they unilaterally changed the rules such that if I didn't make the minimum payment every month, a $30 fee is added - a new charge.
I inadvertently found this out because I paid a decent whack - $200 or so - one month and thought "fuck it, I'll take next month off" because I'd paid 3 or 4 months worth of minimum all at once. Next thing I find out that the rules had changed and it was completely irrelevant how much I had paid previously.
I don't think I'm particularly stupid but how can you anticipate such a charge? No doubt they'll say it was previously communicated in a junk mail insert with a monthly bill or the like.
Industries like phone and credit card companies who fuck with the citizenry with widespread and repeated underhanded tactics need legal restrictions - and not codes of conduct or industry policies or self monitoring (what a joke they always turns out to be) - placed on their activities.
posted by peacay at 3:36 AM on December 11, 2006
And that's why some regulations are/would be a good thing.
In a parallel example I've been carrying a relatively modest CC debt for a while and had been making sporadic payments. Somewhere along the line in the last year they unilaterally changed the rules such that if I didn't make the minimum payment every month, a $30 fee is added - a new charge.
I inadvertently found this out because I paid a decent whack - $200 or so - one month and thought "fuck it, I'll take next month off" because I'd paid 3 or 4 months worth of minimum all at once. Next thing I find out that the rules had changed and it was completely irrelevant how much I had paid previously.
I don't think I'm particularly stupid but how can you anticipate such a charge? No doubt they'll say it was previously communicated in a junk mail insert with a monthly bill or the like.
Industries like phone and credit card companies who fuck with the citizenry with widespread and repeated underhanded tactics need legal restrictions - and not codes of conduct or industry policies or self monitoring (what a joke they always turns out to be) - placed on their activities.
posted by peacay at 3:36 AM on December 11, 2006
Heh. They need strict legislation with criminal penalties for credit card company money-wankery. As it stands, it's more like an unfunny Simpsons episode of late:
"Bart, you're grounded for a month!"
"Eh, I'll just pay the fine."
"D'oh! ... three dollars, please."
posted by tehloki at 3:40 AM on December 11, 2006
"Bart, you're grounded for a month!"
"Eh, I'll just pay the fine."
"D'oh! ... three dollars, please."
posted by tehloki at 3:40 AM on December 11, 2006
This won't answer all the points that need answering but just a few thoughts.
* The argument "as long as the offeree agrees, there's no problem" would justify things that advanced societies have been steadily rejecting, including slavery and working conditions that kill or cripple workers. I was a radical libertarian once, then matured and started seeing the many problems with that philosophy, to explain which would be too much of a digression here. A truly civilized culture places limits on what businesses can require in exchange for any product or service, at least when there are extreme differences in bargaining power.
* The supposed competition in credit cards is nonexistent. There are differences in realtively trivial things like interest rates and charges, but on fundamentals all the so-called "agreements" are alike. Show me one that disallows the bank to change the terms whenever it chooses, or which lets the customer opt out of binding arbitration.
* Banks write the laws, but the vast majority of individuals cannot even afford to lobby in the same way, and have no effective representation.
posted by jam_pony at 3:59 AM on December 11, 2006
* The argument "as long as the offeree agrees, there's no problem" would justify things that advanced societies have been steadily rejecting, including slavery and working conditions that kill or cripple workers. I was a radical libertarian once, then matured and started seeing the many problems with that philosophy, to explain which would be too much of a digression here. A truly civilized culture places limits on what businesses can require in exchange for any product or service, at least when there are extreme differences in bargaining power.
* The supposed competition in credit cards is nonexistent. There are differences in realtively trivial things like interest rates and charges, but on fundamentals all the so-called "agreements" are alike. Show me one that disallows the bank to change the terms whenever it chooses, or which lets the customer opt out of binding arbitration.
* Banks write the laws, but the vast majority of individuals cannot even afford to lobby in the same way, and have no effective representation.
posted by jam_pony at 3:59 AM on December 11, 2006
For what it's worth, people do seem to be slowly getting the idea:
Debit card growth:
In 2006, debit card usage outpaced credit card usage for the first time. According to the 2007 edition of the ATM&Debit News EFT Data Book, debit purchases will total 26.6 billion transactions at the point of sale this year while credit card transactions -- through American Express, Discover, MasterCard and Visa -- were projected to be 24.4 billion. This means more people are paying as they go now instead of buying now, paying later. -- Bankrate.com
posted by jfuller at 4:39 AM on December 11, 2006
Debit card growth:
In 2006, debit card usage outpaced credit card usage for the first time. According to the 2007 edition of the ATM&Debit News EFT Data Book, debit purchases will total 26.6 billion transactions at the point of sale this year while credit card transactions -- through American Express, Discover, MasterCard and Visa -- were projected to be 24.4 billion. This means more people are paying as they go now instead of buying now, paying later. -- Bankrate.com
posted by jfuller at 4:39 AM on December 11, 2006
Can anyone explain what the possible macro effects of this readily available personal credit are? Has overall private debt increased because of it? Has it pushed up inflation?
posted by Ritchie at 4:49 AM on December 11, 2006
posted by Ritchie at 4:49 AM on December 11, 2006
Rule of thumb for you college-age MeFi'ers looking at getting your first card:
If you're not pretty sure you can pay off the balance within 30 days, you want to be REALLY judicious about using the card. Not having it in the first place -- using it responsibly and appropriately.
Having some small balances > 30 days and paying them off will build some good chakra credit-wise, but you can't go running your personal finances the way the US government does. You will suffer more immediate and focused consequences than the US will.
That is all; carry on. And get off my damn lawn!
posted by pax digita at 5:24 AM on December 11, 2006
If you're not pretty sure you can pay off the balance within 30 days, you want to be REALLY judicious about using the card. Not having it in the first place -- using it responsibly and appropriately.
Having some small balances > 30 days and paying them off will build some good chakra credit-wise, but you can't go running your personal finances the way the US government does. You will suffer more immediate and focused consequences than the US will.
That is all; carry on. And get off my damn lawn!
posted by pax digita at 5:24 AM on December 11, 2006
I'm not sure most college students could earn their degree by borrowing trillions of dollars from China :P
posted by tehloki at 5:38 AM on December 11, 2006
posted by tehloki at 5:38 AM on December 11, 2006
...if I owe the bank a little bit of money, I have a problem. If I owe the bank much more money than I have, the bank has a problem...
Generally speaking, that's true. Unfortunately,
recent changes to bankruptcy law that have made their way through Congress make it less of a problem for banks--and make it less likely that people who are burdened with debt will be able to find a way out.
Why isn't it usury? Blame the Supreme Court of the United States, Citibank, the state of South Dakota.
Exactly. I remember when most Twin Cities card issuers--including some department stores--started sending bills with a Sioux Falls return address.
posted by gimonca at 5:44 AM on December 11, 2006
Generally speaking, that's true. Unfortunately,
recent changes to bankruptcy law that have made their way through Congress make it less of a problem for banks--and make it less likely that people who are burdened with debt will be able to find a way out.
Why isn't it usury? Blame the Supreme Court of the United States, Citibank, the state of South Dakota.
Exactly. I remember when most Twin Cities card issuers--including some department stores--started sending bills with a Sioux Falls return address.
posted by gimonca at 5:44 AM on December 11, 2006
jfuller: The problem with Debit cards is that if there is an error in the accounting, the onus is on you to prove it. The bank has no motivation to pursue or correct it, because they already have your money!
posted by DesbaratsDays at 6:15 AM on December 11, 2006
posted by DesbaratsDays at 6:15 AM on December 11, 2006
Their credit line is $2100. They're paying (on top of, probably, the 18% interest) $420/mo in overcharge fees. Even if they wind up bankrupt, CapOne only needs them to go 4 months before they can afford to just write off the principal. -Swell
That' their business model. They'll make a profit even if the debtor never touches the principal, and they'll make that profit faster, too, than if they had to wait around all day for 22% interest, continually compounded, to add up.
posted by Mister_A at 6:59 AM on December 11, 2006
That' their business model. They'll make a profit even if the debtor never touches the principal, and they'll make that profit faster, too, than if they had to wait around all day for 22% interest, continually compounded, to add up.
posted by Mister_A at 6:59 AM on December 11, 2006
*Confessor reads the article*
They fool 'ya once, I'll have sympathy for you.
They fool 'ya twice, I'll still retain a bit of sympathy.
They fool 'ya six times, I'll write you off as a frickin' masochist.
posted by The Confessor at 7:07 AM on December 11, 2006
They fool 'ya once, I'll have sympathy for you.
They fool 'ya twice, I'll still retain a bit of sympathy.
They fool 'ya six times, I'll write you off as a frickin' masochist.
posted by The Confessor at 7:07 AM on December 11, 2006
You may have read "credit is bad and for stupid people", but what I was trying to say was "Credit cards are for people wanting to live beyond their means.
Maybe you should just say that, then. It's certainly a less reckless and unqualified statement than "credit is for stupid people."
klangklangston: Well, it looks like you've got me pegged. I know nothing about living in such an unforgiving society
And then maybe you shouldn't be surprised or defensive when people like klang get a bit upset at you for weilding a rather broad brush.
Yes, credit, especially a credit card, is obviously a deal with the devil these days, and yes, that does make it dumb to use it for casual consumption. But that doesn't make it any less true or less worrisome that its dealers are behaving badly, to say the least, and many people who turn to credit ain't doin' it just to buy the sexiest piece of consumer electronics they just saw.
And yes, it's obvious Kehn should have been looking somewhere else for credit if he had to have it. It's also equally obvious that if Capitol One were acting in anything at all like good gaith, they would at least have just given him a higher limit on the account they'd issued rather than offering him another card. And when you're an official big-timer here in the good ol' civilized world, it's not too much to ask that you do your business in good faith.
posted by namespan at 7:23 AM on December 11, 2006
Maybe you should just say that, then. It's certainly a less reckless and unqualified statement than "credit is for stupid people."
klangklangston: Well, it looks like you've got me pegged. I know nothing about living in such an unforgiving society
And then maybe you shouldn't be surprised or defensive when people like klang get a bit upset at you for weilding a rather broad brush.
Yes, credit, especially a credit card, is obviously a deal with the devil these days, and yes, that does make it dumb to use it for casual consumption. But that doesn't make it any less true or less worrisome that its dealers are behaving badly, to say the least, and many people who turn to credit ain't doin' it just to buy the sexiest piece of consumer electronics they just saw.
And yes, it's obvious Kehn should have been looking somewhere else for credit if he had to have it. It's also equally obvious that if Capitol One were acting in anything at all like good gaith, they would at least have just given him a higher limit on the account they'd issued rather than offering him another card. And when you're an official big-timer here in the good ol' civilized world, it's not too much to ask that you do your business in good faith.
posted by namespan at 7:23 AM on December 11, 2006
I use the Visa card for almost everything. I've paid it of completely every month for years. They keep sending me Visa checks in the mail hoping I'll use them. I chuckle when I feed them to the shredder.
posted by CynicalKnight at 7:34 AM on December 11, 2006
posted by CynicalKnight at 7:34 AM on December 11, 2006
Yeah, I've been painting with a rather broad brush myself. My main beef is with credit card companies' predatory tactics and the latest wave of "buy stuff now, pay through the ass later" marketing. I have a lot of sympathy for people who just happen to be dabbling in credit and get in way over their heads without a chance to make things right quickly; they are victims of shitty policy. However, I have no soft spot for people who buy into the lifestyle wholesale, fully knowing what credit card debt entails, and then suddenly have no idea why they are getting drilled to death with bills.
posted by tehloki at 7:39 AM on December 11, 2006
posted by tehloki at 7:39 AM on December 11, 2006
Okay, my experience with a certain credit card company. First of all, I have had two credit cards with them. I didn't take out one of them, my other bank sold my credit card contract to them.
Second, they have regularly changed their policies on me. I have been told that they have sent me the policy changes, I doubt it.
Third, they raised my interest from 5.99% to 30%. They told me they had warned me, but I suspect they sent the warning to the wrong address.
Fourth, they regularly send their bills to the wrong place. I saved one of mine they sent to Poland that managed to get forwarded to me.
Fifth, I complained about the 30% interest rate (on repeated occasions) because I was told you can reason with these people. The service person admitted they were vampires and said they could do nothing about it.
Sixth, I've paid off one of their credit cards and cancelled it. I still get monthly balances of zero in spite of this.
Seventh, I'm trying to pay off the other.
Eighth, I do not have a history of bad credit, I do owe a lot on several credit cards, but I have always paid my loans.
And for those of you who still like to judge, I am not particularly extravagant.
posted by dances_with_sneetches at 8:40 AM on December 11, 2006
Second, they have regularly changed their policies on me. I have been told that they have sent me the policy changes, I doubt it.
Third, they raised my interest from 5.99% to 30%. They told me they had warned me, but I suspect they sent the warning to the wrong address.
Fourth, they regularly send their bills to the wrong place. I saved one of mine they sent to Poland that managed to get forwarded to me.
Fifth, I complained about the 30% interest rate (on repeated occasions) because I was told you can reason with these people. The service person admitted they were vampires and said they could do nothing about it.
Sixth, I've paid off one of their credit cards and cancelled it. I still get monthly balances of zero in spite of this.
Seventh, I'm trying to pay off the other.
Eighth, I do not have a history of bad credit, I do owe a lot on several credit cards, but I have always paid my loans.
And for those of you who still like to judge, I am not particularly extravagant.
posted by dances_with_sneetches at 8:40 AM on December 11, 2006
Man. my credit must be really bad. I don't even get junk mail from Capitol One, much less actual credit cards.
Maybe I'm lucky.
posted by drstein at 9:27 AM on December 11, 2006
Maybe I'm lucky.
posted by drstein at 9:27 AM on December 11, 2006
Just this year I got credit-free for the first time in a decade. I was horrible about paying on-time and my credit just kept ballooning like... a balloon. But this past year, thanks to some extra income and vigilant payments I was able to get out from under that heavy... balloon. I went back and figured out (roughly) how much money I spent on interest, fees, and penalties and will never go back to CC debt again if I can at all avoid it.
posted by papercake at 9:46 AM on December 11, 2006
posted by papercake at 9:46 AM on December 11, 2006
Yeah, those in"convenience checks" should be banned unless specifically requested.
posted by grouse at 10:24 AM on December 11, 2006
posted by grouse at 10:24 AM on December 11, 2006
It took me twenty years to finally pay off my credit card debt, and ironically, we're not talking about a really large sum, here (well at least compared to what people put themselves into debt for a house for). I also never went spend crazy etc. It was all the little stuff that accumulated over the years that it was always easy to kinda blow off month by month, "Meh I'll deal with it next time." That will kill ya.
Was it the credit card company's fault, hell no. It was me being an idiot. However, the policies and practices of those companies actively promote overspending and defaulting on monthly payments. Then they are secretive to the point of conspiratorally keeping you in the dark of the effects of such behavior on your credit rating. At the same time they penalize you for NOT paying on time, they will gleefully offer all kinds of other services (additional fees apply) so you can continue to do it.
And when you finally get around, as I did, to paying off the cards for good and trying to cancel them - you know, starting over, making sure you dont fall into the trap - they are ruthless in their zeal to get you to stay, even to the point of threatening you with a massive hit to your credit score if you do. "Just a few more months.."
Now, some of that is true (your credit score is higher the more credit you have to some degree) but the sheer mercantile visciousness of credit card companies is unmatched. They are vampires.
If anything the post and the comments should illustrate is the need to educate yourself and others of how the whole system works, and how not to let yourself fall into the abyss that so many of us have experienced.
posted by elendil71 at 11:06 AM on December 11, 2006
Was it the credit card company's fault, hell no. It was me being an idiot. However, the policies and practices of those companies actively promote overspending and defaulting on monthly payments. Then they are secretive to the point of conspiratorally keeping you in the dark of the effects of such behavior on your credit rating. At the same time they penalize you for NOT paying on time, they will gleefully offer all kinds of other services (additional fees apply) so you can continue to do it.
And when you finally get around, as I did, to paying off the cards for good and trying to cancel them - you know, starting over, making sure you dont fall into the trap - they are ruthless in their zeal to get you to stay, even to the point of threatening you with a massive hit to your credit score if you do. "Just a few more months.."
Now, some of that is true (your credit score is higher the more credit you have to some degree) but the sheer mercantile visciousness of credit card companies is unmatched. They are vampires.
If anything the post and the comments should illustrate is the need to educate yourself and others of how the whole system works, and how not to let yourself fall into the abyss that so many of us have experienced.
posted by elendil71 at 11:06 AM on December 11, 2006
Virtually every bank that issues you a credit card tells the credit agencies what credit limit they've assigned you. But not Capital One. They claim that information is proprietary.
Um, I have a capital one card, and I can see exactly what my limit is...
posted by delmoi at 11:26 AM on December 11, 2006
I have a Cap 1 card and keep getting offers for a second and for a platinum upgrade. Meanwhile, prefatory to going thru a divorce, I find that my eventually-to-be-ex has been late enough with writing some rather crucial checks that she's caused me to be refused an AmEx card.
I'm thinking of photocopying the explanation from AmEx and sending it to Cap 1 along with a politely worded request that they stop wasting their time.
posted by pax digita at 11:55 AM on December 11, 2006
I'm thinking of photocopying the explanation from AmEx and sending it to Cap 1 along with a politely worded request that they stop wasting their time.
posted by pax digita at 11:55 AM on December 11, 2006
jfuller: The problem with Debit cards is that if there is an error in the accounting, the onus is on you to prove it. The bank has no motivation to pursue or correct it, because they already have your money!
Eh, most banks will clear it up for you and you see a lot of check cards marketed as "$0 cash liability" and so on.
posted by delmoi at 11:56 AM on December 11, 2006
Eh, most banks will clear it up for you and you see a lot of check cards marketed as "$0 cash liability" and so on.
posted by delmoi at 11:56 AM on December 11, 2006
Indeed Delmoi; my wife had her wallet stolen out of her handbag at a coffee shop; we eventually (in about 3-4 weeks) received the funds that had been stolen from our checking account via the debit card, but naturally we had to fill out several forms.
The most enjoyable part of the investigation was looking at what she (the thief) bought and where - turns out she shops at all the finest hoochie momma boutiques in Philly.
posted by Mister_A at 12:46 PM on December 11, 2006
The most enjoyable part of the investigation was looking at what she (the thief) bought and where - turns out she shops at all the finest hoochie momma boutiques in Philly.
posted by Mister_A at 12:46 PM on December 11, 2006
We let them fuck, vote, join the Army, and drive cars, but we must protect them from credit.
And if we were living up to our ethical obligation to educate our children adequately about the realities of the world in which they live, the perils that they face from each of those activities would be significantly lessened. Most college freshmen have no idea what the prime rate is, or a FICO score, why either are important over the long term, or what happens when you pay only the minimum payment on a credit card month after month after month. Hell, most adults couldn't explain most of them adequately.
posted by Dreama at 3:44 PM on December 11, 2006 [1 favorite]
And if we were living up to our ethical obligation to educate our children adequately about the realities of the world in which they live, the perils that they face from each of those activities would be significantly lessened. Most college freshmen have no idea what the prime rate is, or a FICO score, why either are important over the long term, or what happens when you pay only the minimum payment on a credit card month after month after month. Hell, most adults couldn't explain most of them adequately.
posted by Dreama at 3:44 PM on December 11, 2006 [1 favorite]
“If anything the post and the comments should illustrate is the need to educate yourself and others of how the whole system works, and how not to let yourself fall into the abyss that so many of us have experienced.” - elendil71
Agreed. But that’s the thing, from Joe Sixpack’s POV it is a huge pain in the ass to deal with the wolfpack upshot of this environment. You might fend off one or two things, but then there’s something else nipping at your hamstring.
‘Buyer beware’ certainly, but we seem to be creating a jungle (yes that’s a Sinclair reference) for ourselves in terms of simply living day to day. Some schools teach home economics, perhaps how to balance a check book, but few teach real world money management. (+what Dreama sed) That might be something you should be taught by mom and dad, but when are they supposed to do that? After they both get home from work?
Even then, consider the amount of scams being run - just to prevent you from modifying or fixing your own stuff (the iPod battery thing comes to mind, but there are plenty of examples from say the auto industry). And you lose all kinds of time dealing with these companies from hunger with goofy contracts and conditions and they “misplace” your paperwork (Bally’s is probably the worst) or misroute your bill. A while back a (then virgina based) credit card company was pulling the same scam on me, sending my bills to the wrong place, etc. I said I’d like to come discuss the matter in person, they said they were in Virgina, I said well, I’m in Quantico, I’ll come right over. Then all the bills stopped. I got some federal assistance, but state’s attorney’s general office generally is a big help. But the law should have already otherwise dealt with that crap and my tax money shouldn’t have to be spent looking after these idiots trying to round corners. Just recently I’ve had to tell a landscaping company to f’off three times now. The last time the guy said “we have you scheduled for service next season, thank you” or some such. And when you call they keep asking why you want to leave. All that takes up time and energy better spent elsewhere. They are indeed vampires. But their effect on the environment is worse than just some schlub getting gulled by them.
posted by Smedleyman at 4:36 PM on December 11, 2006
Agreed. But that’s the thing, from Joe Sixpack’s POV it is a huge pain in the ass to deal with the wolfpack upshot of this environment. You might fend off one or two things, but then there’s something else nipping at your hamstring.
‘Buyer beware’ certainly, but we seem to be creating a jungle (yes that’s a Sinclair reference) for ourselves in terms of simply living day to day. Some schools teach home economics, perhaps how to balance a check book, but few teach real world money management. (+what Dreama sed) That might be something you should be taught by mom and dad, but when are they supposed to do that? After they both get home from work?
Even then, consider the amount of scams being run - just to prevent you from modifying or fixing your own stuff (the iPod battery thing comes to mind, but there are plenty of examples from say the auto industry). And you lose all kinds of time dealing with these companies from hunger with goofy contracts and conditions and they “misplace” your paperwork (Bally’s is probably the worst) or misroute your bill. A while back a (then virgina based) credit card company was pulling the same scam on me, sending my bills to the wrong place, etc. I said I’d like to come discuss the matter in person, they said they were in Virgina, I said well, I’m in Quantico, I’ll come right over. Then all the bills stopped. I got some federal assistance, but state’s attorney’s general office generally is a big help. But the law should have already otherwise dealt with that crap and my tax money shouldn’t have to be spent looking after these idiots trying to round corners. Just recently I’ve had to tell a landscaping company to f’off three times now. The last time the guy said “we have you scheduled for service next season, thank you” or some such. And when you call they keep asking why you want to leave. All that takes up time and energy better spent elsewhere. They are indeed vampires. But their effect on the environment is worse than just some schlub getting gulled by them.
posted by Smedleyman at 4:36 PM on December 11, 2006
wow. its always "their problem". any kind of intervention is "protecting people" from something innocuous.
sometimes i wonder if some of you need to look up the definition of "society"? or if you grumbled as hard when LTCM got bailed out using our tax $? or if you realize how much you are bought into the precisely the same borrowing behavior on a macro scale (i.e. both the US government / financial system are propped up much the same way)?
posted by mano at 5:51 PM on December 11, 2006
sometimes i wonder if some of you need to look up the definition of "society"? or if you grumbled as hard when LTCM got bailed out using our tax $? or if you realize how much you are bought into the precisely the same borrowing behavior on a macro scale (i.e. both the US government / financial system are propped up much the same way)?
posted by mano at 5:51 PM on December 11, 2006
i also wonder if many of you realize what goes on on the other side of these loans? what about the people lending the money?
if these stupid springer-show deadbeat types are so messed up to be digging themselves into this financial hole, what about the moron credit card companies lending them the money. by extension, shouldnt they be screwed? where is the $ coming from and why is it being lent? whose left holding the bag? after all -- if i lend my deadbeat cousin $400 in january, and every month he comes back to me and i loan him another $400, really, in the end, which one of us is the stupid one?
well, in case you dont already know the answer, rest assured it isnt *just* the subprime lenders who get screwed. in fact, if they do things right, by the time people give up on that loan they have their money back. lenders repackage these loans as securities and sell them back into the debt markets.
so who buys them? all sorts of people, including you -- if you are invested in anything (you probably are), at some level, you have a financial interest in these people not destroying themselves financially, because guess who lent them the money? you.
and even if you keep your nose clean, when financial institutions fail, who bails them out? who insures your bank accounts to the tune of $100,000? the government. with your tax money.
etc. and there are other repercussions. the "fun" thing is we are about to see what happens when people are massively fiscally irresponsible... first hand... as the housing market collapses. by the end of it, most of you grumbly libertarians and rugged individualists will prolly be singing a different tune on letting financial companies do as they please.
posted by mano at 6:12 PM on December 11, 2006
if these stupid springer-show deadbeat types are so messed up to be digging themselves into this financial hole, what about the moron credit card companies lending them the money. by extension, shouldnt they be screwed? where is the $ coming from and why is it being lent? whose left holding the bag? after all -- if i lend my deadbeat cousin $400 in january, and every month he comes back to me and i loan him another $400, really, in the end, which one of us is the stupid one?
well, in case you dont already know the answer, rest assured it isnt *just* the subprime lenders who get screwed. in fact, if they do things right, by the time people give up on that loan they have their money back. lenders repackage these loans as securities and sell them back into the debt markets.
so who buys them? all sorts of people, including you -- if you are invested in anything (you probably are), at some level, you have a financial interest in these people not destroying themselves financially, because guess who lent them the money? you.
and even if you keep your nose clean, when financial institutions fail, who bails them out? who insures your bank accounts to the tune of $100,000? the government. with your tax money.
etc. and there are other repercussions. the "fun" thing is we are about to see what happens when people are massively fiscally irresponsible... first hand... as the housing market collapses. by the end of it, most of you grumbly libertarians and rugged individualists will prolly be singing a different tune on letting financial companies do as they please.
posted by mano at 6:12 PM on December 11, 2006
"How is this not usury?"
It is. What's difficult to understand?
Usury is when an entity lends another entity money, and expects to profit from the transaction.
posted by Sukiari at 10:43 PM on December 11, 2006
It is. What's difficult to understand?
Usury is when an entity lends another entity money, and expects to profit from the transaction.
posted by Sukiari at 10:43 PM on December 11, 2006
Actually, there are two definitions for usury: lending money with interest, and lending money with excessive interest. The latter definition is probably more common now, although it's far more vague.
posted by Bugbread at 3:29 AM on December 12, 2006
posted by Bugbread at 3:29 AM on December 12, 2006
Wow. Calling "Usury! Foul play!" on a company who's only business is lending.. sure, they exploit people with shitty policies and misinformation, but if they didn't charge interest, how would they even exist?
posted by tehloki at 7:56 AM on December 12, 2006
posted by tehloki at 7:56 AM on December 12, 2006
And when you're an official big-timer here in the good ol' civilized world, it's not too much to ask that you do your business in good faith.
I don't know what civilized world you live in (can I come there with you please?), but in the one I'm trapped in, good faith is just a pipe dream. If there's a buck to be made by screwing the customer, rest assured it will be done. And if it's not, then the corporation is subject to shareholder lawsuits for not maximizing share value.
Seriously, good faith is for people who might encounter each other again. Faceless corporations don't give a shit about you, there's always another sucker to milk money out of. And they might care about screwing you a hair's breadth less than their competitors if it will improve their bottom line, but only to that degree and only for that reason.
Sometimes I get sad at the downfall that's coming, but when I see what's happened to the concept of honesty and fair play, I realize that we as a society deserve everything we get. Then again how strong were they in the past, anyway? I was lied to in school, probably. Damn idealistic teachers, they should have known better than to give us expectations that the world could not match.
As an aside, if you want to see predatory lending on a grander scale, just take a look at the mortgage industry in the past several years. There will be some nice little chickens coming home to roost when ARM resets happen in droves in the next couple of years. But then, they've already sold the debt off to some other sucker by then, so they don't get screwed themselves... sorry, I digress.
posted by beth at 8:51 AM on December 12, 2006 [1 favorite]
I don't know what civilized world you live in (can I come there with you please?), but in the one I'm trapped in, good faith is just a pipe dream. If there's a buck to be made by screwing the customer, rest assured it will be done. And if it's not, then the corporation is subject to shareholder lawsuits for not maximizing share value.
Seriously, good faith is for people who might encounter each other again. Faceless corporations don't give a shit about you, there's always another sucker to milk money out of. And they might care about screwing you a hair's breadth less than their competitors if it will improve their bottom line, but only to that degree and only for that reason.
Sometimes I get sad at the downfall that's coming, but when I see what's happened to the concept of honesty and fair play, I realize that we as a society deserve everything we get. Then again how strong were they in the past, anyway? I was lied to in school, probably. Damn idealistic teachers, they should have known better than to give us expectations that the world could not match.
As an aside, if you want to see predatory lending on a grander scale, just take a look at the mortgage industry in the past several years. There will be some nice little chickens coming home to roost when ARM resets happen in droves in the next couple of years. But then, they've already sold the debt off to some other sucker by then, so they don't get screwed themselves... sorry, I digress.
posted by beth at 8:51 AM on December 12, 2006 [1 favorite]
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Every month they chalked up $70 in late and over-limit fees on each card, for a total of $420, in addition to paying high interest rates as a penalty.
"I owe these people that much damn money and they are willing to give me another credit card? This is nuts."
No. You are nuts. They are making a killing.
posted by pompomtom at 7:33 PM on December 10, 2006