Paul Ferraresi

For years Americans have complained that the interest rates, excess fees, overlimit fees and change in rates by credit card companies are not reasonable. Credit cards have been a profitable center for most banks and other issuers. Keep in mind that a large percentage of Americans are way behind on their payments (not just recently, but for years), many people run up charges and never pay a penny on the debt, and then, there are the fraudulent activities on cards. Well, not in defense of these card companies, but, someone needs to pay for these “bad transactions.” Guess what…. It has been you. Yes, the “good credit” people have and are paying for the “bad credit” people.

You know, I remember over 20 years ago when Representative Markey, from Massachusetts, brought the credit card companies into a Congressional hearing to go over the same complaints listed above. He demanded that all card interest rates should be no higher than 8%. The card companies agreed to return in two weeks to submit their thoughts and findings (you see, the card companies had testified before Congress about the “bad credit” people forcing them to keep rates high to make up for the losses).

Two weeks later the card companies presented a short list of those Americans whose credit scores were strong enough to support an 8% rate. Also, there was not one Senator or Congressman that made the listing of “good credit” people. The hearings were adjourned.

Well, your cries have been heard in Congress again. But be careful what you pray for…. The present administration passed a bill on May 19, 2009 to “protect the consumer.”

This new bill will not allow the credit card companies to raise your interest rate unless you have been late for 60 days. It eliminates the overlimit fee and many other benefits for you. BUT, there is a cost to you!!! DUH!!! The correct way to use a credit card is to make sure the balance is paid in full by the end of the billing cycle, say, 30 days. So, you will have no interest charges if paid on time and using OPM …other people’s money. That is the correct finance approach. Well, that is no longer true, “ol’ bankrupt breath,” under the new rules. Effective when you swipe your card…interest begins to accrue immediately. There is NO more grace period. So if you run up, say, a $1,000 charge today, at a 30% annual card rate, in 30 days when the bill comes you will owe $1000 + $25 interest = $1025. So, what did you gain? Well, to facilitate the “bad credit” people and their slow paying, the “good credit” people are paying the price. Sounds exactly like the bailout of the subprime mortgage people. Good payers are paying for bad payers. “From each according to his ability to each according to his need” – sound familiar? – Check your history books under the communist manifesto.

You wanted change? You voted for change, you’ve got change, but I don’t think it is the change you voted for…since with this new law you will no longer have any “change” left in your pocket.
Ah, discipline or regret.