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Avesism

credit card buyer beware

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<b>from www.nytimes.com</b>

<a href="http://www.nytimes.com/2007/07/31/opinion/31tue1.html" title="here">here</a>

 

Editorial

 

Credit Card Buyer Beware

 

Published: July 31, 2007

 

The federal agencies that are supposed to regulate the banking and credit card industries have failed utterly to keep pace with deceptive and unfair practices that have become shamefully standard in the business. As a consequence many hard-working Americans who pay their bills are mired in debt — and in danger of losing whatever savings they have, and perhaps their homes. Congress, which sat on its hands while the problem got worse and worse, needs to rein in this sometimes predatory industry.

 

The scope of the problem was laid out in Congressional hearings this spring held by Senator Carl Levin, the Democrat from Michigan. <b>According to testimony, one witness exceeded his charge card’s $3,000 limit by $200 — triggering what eventually amounted to $7,500 in penalties and interest. After paying an average of $1,000 a year for six years, the man still owed $4,400.

</b>

That experience has become all too common as the credit card industry has stealthily adopted methods designed to maximize burdensome penalties and fees, while ratcheting up interest rates as high as 30 percent. Companies bombard unwary consumers with teaser packages that promise very low interest rates to start, while reserving for themselves the right to raise rates whenever they choose. The details are buried in deliberately arcane contracts that run 30 pages long and that even lawyers have trouble understanding.

 

Congressional investigations and studies by consumer advocates have exposed other unsavory practices. Some card companies apply penalty rates retroactively — to purchases that were made before the penalty was incurred or in some cases to debts that were even paid off. As one Congressional witness pointed out, the credit card industry is the only one allowed to increase the price of a product after it has been sold.

 

<b>Under a provision known as “universal default,” a cardholder who pays a credit card company faithfully can still be hit with a high penalty interest rate for missing payments with another creditor. In another despicable tactic known as “double cycle billing,” a cardholder who pays $450 of a $500 balance is charged interest on the entire amount as opposed to the unpaid balance.</b>

 

State usury laws would once have precluded many of these practices, but those have been preempted by federal regulations that are increasingly designed to make banks and credit card companies happy — rather than protect consumers.

 

A bill introduced by Senator Levin would limit “penalty” interest rates to an additional 7 percent above the previous rate. It would also prohibit retroactive penalties and double cycle billing, and it would limit the amount of fees companies could charge customers who exceed their credit limit.

 

Passing the Levin bill would be a good start. But Congress needs a comprehensive approach to this problem. Lawmakers need to ban deceptive card offers outright, strengthen federal oversight and toughen truth-in-lending laws.

 

Meanwhile, American consumers should think long and hard before they accept credit card offers that are too good to be true.

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You need a credit card to build your credit. You need credit to get a house. You need credit to buy a decent car(new). As you get older, credit becomes a fact of life. That is why you need to manage your money and pay your bills. Just because a credit company will give you credit does not mean you have to take it. Also, just because they will give you a high amount does not mean you need to accept that amount, tell them to lower it to something more managable. Most people get into trouble with debt, because they overspend and can not control themselves.

 

Just because you want something does not mean you can get it.

 

 

A large chunk of the profits credit card companies make are from interest from people who do not pay their bills. It is in their best interest to lure you into debt. So go ahead and buy a big screen tv, new clothes and whatever else that people buy. If you can not pay cash for it, then you might want to thing about your purchase.

 

Best advice ever: get a credit card and only buy things you can buy outright. When your bill comes in, pay it all off every month. That way you do not have any debt and your credit builds, so when you go and buy a house, you will have great creidt.

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that's why i only buy what I have the dough for. like dat.

A wise approach.

Lots of banks have secure credit cards. You give them a certain amount of money, which becomes your credit limit. If you pay off the balance monthly, it reflects well on your financial habits, and can often be transferred into a regular credit card after a while... at least it worked pretty well for me.

 

Those credit card sign-up booths you see on college campuses and at baseball/football/etc. games are definitely not a good deal, from what I understand.

 

edited for spelling

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i have excellent credit. you just need to know how to work the system and you wont end up in debt. if you're an impulse buyer do what dawood does, but if you have self control there is nothing wrong with cc's.

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You need a credit card to build your credit. You need credit to get a house. You need credit to buy a decent car(new). As you get older, credit becomes a fact of life. That is why you need to manage your money and pay your bills. Just because a credit company will give you credit does not mean you have to take it. Also, just because they will give you a high amount does not mean you need to accept that amount, tell them to lower it to something more managable. Most people get into trouble with debt, because they overspend and can not control themselves.

 

Just because you want something does not mean you can get it.

 

 

A large chunk of the profits credit card companies make are from interest from people who do not pay their bills. It is in their best interest to lure you into debt. So go ahead and buy a big screen tv, new clothes and whatever else that people buy. If you can not pay cash for it, then you might want to thing about your purchase.

 

Best advice ever: get a credit card and only buy things you can buy outright. When your bill comes in, pay it all off every month. That way you do not have any debt and your credit builds, so when you go and buy a house, you will have great creidt.

 

 

well put.

 

cash is the only thing that stands in their way of completely controlling world monies/currency standards, and we are movin wit tha quickness towards a cashless society sadly.

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