Tuesday, June 17, 2008

A "Credit Card Bill of Rights" Pt. 2 - Responding to Comments

Specifically I'm responding to this comment over at Uncle's by Nomen Nescio

"y’know, if you click through all the way to the original story and read it, you’ll see he’s actually proposing three specific laws to pass as this “bill of rights” of his. mind criticizing those specifics instead of just jeering at the very idea of passing laws to regulate the credit industry?"

Nomen- As I discussed in my original critique of the article, he wants to do 3 things that only punish the credit industry for the irresponsibility of consumers. He's ignoring the most important fact here. If it says "rate changes may occur without prior notification" or something to that effect well then you had fair warning and signed the contract anyway.

Obama wants to ban unilateral rate changes and says consumers should be able to opt out if the rate is raised. I might support requiring notification of said changes, but the original contract you sign does make you aware that such changes can occur. Also, you should be checking your account often enough to notice said changes.

The credit card companies should be able to decide the terms they wish to insert into their contracts without having their hands tied by the government. Likewise consumers should be free to enter into such contracts at their own risk without government holding their hand the entire way. That is the entire basis of my rant.

Obama wants to ban interest on transaction fees and explains,

"If you're late in making a payment, you have to pay a late fee. But you shouldn't be paying a fee for paying a fee."

Why not? If you'd paid on time you wouldn't be in this mess to begin with. You knew the consequences of late payments. (you did read the contract. right?) Again, who's fault is it that you didn't pay on time? Who fault is it if you didn't read the contract? Who's fault is it that you didn't talk to the company about not being able to make your payment on time. As I said before, talk to them and there's a good chance they'll work with you regarding payment and excuse the fee. Of course this assumes you haven't made a habit of missing payments. If you have then why should they reward you?

Obama says,

"We'll ban rate changes on past debt. If a credit card company wants to raise interest rates, then that new, higher rate should apply to the debt you add going forward, not what you already owe. The store can't change the price of what you bought after you bought it and neither should your credit card."

I agree that if interest rates are raised the new rate SHOULD apply to debt going forward. That's certainly better for the consumer, but if the CC company wants to say otherwise they can, and consumers can choose whether they want a credit card that applies interest in such a manner. Businesses exist to make money. They don't exist to be "fair."

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