Today I mailed a check for the remaining balance of my First Premier credit card. Apparently I wasn't the only one with credit on my mind; the Senate passed the Credit Card Reform Act today as well.
These two actions are related not just because they deal with credit cards, but because they deal with BAD credit cards.
My First Premier Visa card has never had a zero balance. I repeat: it has never had a zero balance. Ever. It arrived in my mailbox four years ago loaded with $179 in fees...on a $250 credit limit. The card charges a $6 monthly finance fee on top of 22 percent interest. I always mailed my payment because there is a $5 monthly fee to login online and a $14 fee to pay over the phone.
Therefore, you can imagine the victory I feel right now. You can also imagine my elation when I discovered a couple months ago that a bill was making its way through Congress to do something about the downright gouging that many creditors impose on consumers. The Credit Card Reform Act outlaws various fees and practices, including issuing credit cards to jobless college students, which is how I ended up with the low-life credit card that I did.
I enrolled in a college course my senior year of high school, which sent out smoke signals that I was a college student. I had four credit cards by the time I was 19. By the time I was 21, I had defaulted on all of them. After using financial aid to pay the cards off, I needed a fresh start to rebuild my credit. The First Premier card, with all its funk and fees, was the only one I could get.
"Debt is the slavery of theFor its credit (pun intended), having that card and making timely payments did open the door for better cards (I have two others in good standing). Yet, there were times when the storm of fees seemed nothing less than criminal. Payment is one day late and the account is assessed a late fee, which then puts the card over the limit, thus incurring an over limit fee, which now makes the minimum payment three times the usual. I used to toss the billing statements in rage thinking, "How is this helping anybody? If I'm drowning in fees, they're not gonna get paid, and nobody wins."
-Publilius Syrus (Roman author, 1st
Of course there are those who ask, Where does personal responsibility come in? Nobody forced you to accept a really whack credit card. That's like asking a guy living in the desert surrounded by burger joints, why he's fat. The man had to eat and there was nothing else available.
"Rather go to bed supperless than rise in debt. "
I could never understand why the highest interest rates and lowest favor were assessed to those who could least afford it. Edward Yingling, president and CEO, American Bankers Association, explains it like this, "It is a fundamental rule of lending that an increase in risk means that less credit will be available and that the credit that is available will often have a higher interest rate."
First of all, When I look around at the present economy, I don't have a whole lot of faith in banks' "fundamental rules." I'm all for businesses making a profit, but you have to draw the line somewhere. Jane's a credit risk; you give her a higher interest rate, fine. But a $14 payment...to make a payment? Thirty-five dollar late fee? A card that comes with $179 balance already on it? C'mon now, Mr. Yingling. If these aren't examples of extortion, I don't know what is.
extortion, n. An excessive or exorbitant charge.
exorbitant, adjective. Exceeding the bounds of custom, propriety, or reason, esp. in amount or extent; highly excessive.
Banks can no longer operate in a bubble as they have for years. You can't just rip people a new one, then step over them on your way to record profits (Banks generate billions of dollars annually in late fees alone). If this is done to enough people, a domino effect will result that will impact the entire country, and ultimately, the world (Again, just look around). Gross overcharging and bad deals don't help the consumer, the lender, or the economy.
I'm a single, childfree, college-educated woman, and I'm just now getting a handle on credit (thank God). But what about the millions of Americans with way more obligations than I have who are struggling to hold things down? Most of these folks aren't irresponsible beggars burdened with victim mentalities (as some conservatives would have you believe). They're hardworking people that deserve a fair and decent deal. Maybe the Credit Card Reform Act can help with that.