Credit Card reform is finally starting to take effect. Whew! Right? Not really. The credit card is the greatest con in this history of the world. They truly are evil. I, myself, do not have a credit card by my own choice. I have a debit card for convenience and I have a high limit on that card so I can make major purchases if needed, but I will not be one of the fools who falls prey to this legal con game—of course, I still pay for it. We all do.
Think about it: You pay them a fee so you can have the privilege of having their “service.” The stores pay them so that they can have the privilege of having their “service” too. They charge on both ends. If you pay your bills as soon as you get them, you don’t have to pay the ridiculous penalties and interest fees, but you do still get to pay more because the stores, who pay a percentage of your purchase to the credit card companies raise their prices on everything across the board to cover those costs. Meaning? That’s right kids, the privilege to use the card is put upon you again. And worse, because a retailer can’t charge one amount to someone using a card and another to someone paying cash, even those of us who don’t have or use cards have to pay for your privilege.
To encourage you to use your card more, the credit card companies offer incentives, in the form of points which can be redeemed for airline fares, gifts, prizes, bless their hearts they’ll even put money aside for your kid’s college education if you want! Of course, with more credit card usage, they earn more from the retailers and the retailers who see a larger chunk of their bottom line flying out the door raise prices again which means? You are the one paying for your airline fare, your gifts, your prizes, your child’s college education, only you’re paying infinite times more than you would be in a credit care free world where you simply put that money aside.
Want to buy a house? A car? Anything? Well, first we’ll have to take a look at your credit score. Want to take a guess who has the greatest influence over your credit score? If you guessed the credit card companies and the banks that finance them, you are 100% right! So, if you’re late making a payment and they want to add a ridiculous late fee on top of the interest you already pay, they can. Ever try arguing with a credit card company? Don’t. You lose. The outcome is determined before the argument starts. Why? Because they own you. They have the power to financially cripple you.
These are all powers and influences the credit card companies still have. This new “reform” is only ridding the companies of some of their more underhanded ways of messing with the people who pay for their “service,” such as:
* Requires a credit card issuer that raises a cardholder's rate to periodically review and cut the rate if warranted.
* Prohibits card issuers from raising rates on a cardholder in the first year after an account is opened, and requires that promotional rates must last at least six months.
* Bars issuers from charging a fee to pay a credit card debt, whether by mail, telephone or electronic transfer, except for live services to make expedited payments. (didn’t you love this one? For the low, low price of $25 you can pay your bill by phone!)
* Bars issuers from charging over-limit fees unless the cardholder elects to allow the issuer to complete over-limit transactions, and restricts any over-limit fees.
* Requires penalty fees to be reasonable and proportional to the cardholder's omission or violation.
* Requires payments in excess of the minimum to be applied first to the balance with the highest rate of interest.
* Prohibits interest charges on debt paid on time, known as the "double-cycle billing" ban. (ha! Gotta love a “service” that charges interest on ON TIME payments!)
* Requires credit card companies to consider a consumer's ability to pay when issuing cards or increasing credit limits. (Oh no! No more preying on 12 year olds and people on welfare!)
* Requires that cardholders must get 45 days notice of interest rate, fee and finance charge increases. (did I mention that they used to be able to change your interest rate at any time they wanted? For any reason?)
* Requires issuers to provide disclosures to consumers upon card renewal when card terms have changed. (Yeah. They used to just change your terms without you knowing. Isn’t that a nice “service?”)
* Requires that cardholders get information about how much time it would take and the interest cost involved in paying off a card balance if they make only the minimum monthly payments. (If you were ever dumb enough to be a minimum payment person, you deserve your credit hell)
* Requires full disclosure in billing statements of payment due dates and applicable late payment penalties.
* Requires issuers extending credit to consumers under the age of 21 to obtain the signature of a parent, guardian, or other person 21 years or older who will take responsibility for the debt, or proof that the applicant can repay the credit.
* Increases protections for students against aggressive credit card marketing, and increases transparency of affinity arrangements between credit card companies and universities. (Oh yeah, I forgot to tell you that the Credit Card company LOVES to collude with establishments who you THINK are your friend, like the local university!)
* Requires that gift cards are valid for five years.
* Requires the Government Accountability Office study the impact of interchange fees on consumers and merchants.
The changes are all great. They are all long, LONG overdue. Your friendly politicians, both Republican and Democrat have let it go this far. Maybe the politicians were in the pockets of the credit card companies, or maybe…just maybe, they were afraid of how powerful the credit card companies had gotten and were so afraid, in fact, that they refused to call them out.
It’s not coincidence that this reform bill passed or that it did now while the banks are at their weakest. Our government had to wait for this weakening before they could act on this matter. Think about that for a second.
Still. We pay them to have a card. We pay more because we all use cards. We pay interest if we can’t pay off our entire balance on the card. We pay late fees if we don’t pay on time. We overpay for incentives given to us to entice us to use our card more often which means we pay more again. We pay at every turn.
Think about that the next time you pull out your wallet or purse. Think about that when you “earn” miles or rewards. Think about that when gas prices rise. Think about that when you want to buy a home or a car. Think about that every time you complain about the price of any item in the store, any service you receive, think about that as you swipe your card at McDonalds. They’re everywhere—and make no mistake, we belong to them.