Your daily dose of healthy skepticism
May 7, 2008 | Texas, alternatives, industry, states | Comments (0)From a Texas blog:
I have to ask, are the poor going to be offered low rates like the rich? Are they going to be offered overdraft protection? Are they going to be paid interest on their checking accounts? Probably not.
I think it far more likely these accounts will turn out to be like the credit cards offered to the poorer families, that charge higher rates and higher penalties. The banks are just starting to realize what the credit card companies already know — the poor are easy targets for exorbitant profits.
I hope I’m wrong about all this, but I doubt it.
Credit Card Crackdown Top Story in Washingon Post
May 2, 2008 | alternatives, industry | Comments (0)The Feds are serious. Apparently, big announcements will be made today regarding new rules for credit card companies to end deceptive practices. The Washington Post is playing it big, making it the top story of the day. From the piece:
The proposed regulations, which could be finalized by year’s end, would label as “unfair or deceptive” practices that consumers have long complained about. That includes charging interest on debt that has been repaid and assessing late fees when consumers are not given a reasonable amount of time to make a payment. When different interest rates apply to different balances on one card, companies would be prohibited from applying a payment first to the balance with the lowest rate.
“It’s stronger than what has been issued in the past,” said William Ruberry, a spokesman for the Office of Thrift Supervision, which has joined the Fed and the National Credit Union Administration in backing the proposals. “What they proposed is a significant set of rules governing credit card practices and overdraft protection.”
Office of Thrift Supervision cracks down on “deceptive practices”
May 1, 2008 | alternatives, industry | Comments (0)The federal regulators that oversee the savings and loan industry are proposing new regs to prevent ”deceptive acts or practices regarding credit cards and overdraft protection.” The Payday Pundit says it’s about time. Key paragraph from the announcement:
Today’s proposal addresses practices that have raised concern about fairness and transparency. For credit cards, the proposed rule would address: (1) unfair time periods for making payments; (2) unfair payment allocations; (3) unfair interest rate increases on outstanding balances; (4) unfair fees from credit holds; (5) unfair methods of computing balances; (6) unfair security deposits and fees charged to an account for the issuance of credit; and (7) deceptive offers of credit. For overdraft protection services on deposit accounts, the proposed rule would address: (1) a consumer’s ability to opt out of overdraft services; and (2) unfair fees for debit holds.
“Credit cards are so Lord of the Flies.”
April 30, 2008 | personal finance | Comments (0)
What’s All This Fussing About? has an interesting (if lengthy) diatribe against increasingly pervasive and arbitrary fees from banks and credit cards. A taste:
Examing banks further; the fees we’re paying for accounts have nearly tripled in the past decade. Beyond the familiar maintenance fees and minimum balance fees, a NSF (nonsufficient funds) charge has reached $45, and bounced check fees now average $30. ATM fees can be massive, and can be incurred from your own bank AND the ATM’s host bank. Some ATM arrangements may charge you as much as a $10 fee for using an ATM more than three times a month. Fees for check “stop payment” are typically $25, and returned-deposit fees of up to $10 might accompany the many resulting bounced-check fees. We have seen the institution of fees to talk to bank tellers face-to-face. Cashier’s checks and money orders can now cost $10. Payments by phone and copies of old checks can now incur significant fees. You may also see fees with some banks for the privilege of enjoying online banking services. And while you will probably be able to select a rush payment option for Bill paying, it can come at a price from $5-$15. Paying for retail purchases with a PIN card may incur additional fees. Customers may be charged a $6 monthly fee for not having direct deposit. Wow. Be glad too, because there appears to be no cap for these fees, so maybe we should consider them low.
In addition to your significant overdraft fee (should you accidentally top your balance), you could see a cascade of these charges where you did not expect it. That’s because banks are allowed to change the order in which the checks clear. Read that sentence again, if you didn’t fully absorb it. This could cause you to bounce numerous checks as opposed to one, in certain routine situations.
Fed Cracks Down on Credit Cards
April 30, 2008 | alternatives, industry | Comments (0)This is a big development. As this article describes, the Fed is going to bar companies from raising interest rates on card holdings barring a default from the cardholder.
Banks are also fending off federal legislation to crack down on credit card abuses.
New York Sun: Credit cards offer less credit in black neighborhoods, Federal Reserve study says
April 29, 2008 | alternatives, industry, research | Comments (0)An article in the New York Sun reports, “Credit card companies offer residents of majority black communities a lower credit limit than residents with the same profile who live in white neighborhoods, an economist at the Federal Reserve Bank of Boston has found.”
The study, “Credit Card Redlining” is by Ethan Cohen-Cole.
Cole found that a 1% increase in the percentage of blacks in an area corresponds to a reduction in available credit of $123. Moreover, moving from an 80%-majority white neighborhood to an 80%-majority black neighborhood reduces credit by an average of $7,357.
Frontline’s special on credit cards is a real eye opener
March 19, 2008 | alternatives, industry | Comments (0)Last night on PBS, Frontline re-ran a program called: Secret History of the Credit Card. The show highlighted some facts about credit cards that make the criticisms about payday lending look like child’s play.
What Payday Pundit found particularly interesting is that by paying only the minimum balance every month, it could take you 35 years to pay it off in full!
Also of note was the fine print found on all of the credit card agreements. The fine print is in stark contrast to the fees displayed on posters in large type in all CFSA member company payday lending stores.
For consumers, Frontline lists ”8 Important Things a Credit Card User Should Know.”
It’s ironic that so-called consumer activists would advocate that credit card cash advances are a better option than payday loans.
