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Credit Card Reform: Inside the CARD Act of 2009

Written by Nickel - 47 Comments

In case you haven’t heard, the Senate just passed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 by a 90-5 vote. The House passed their own version of this bill, known as the Credit Cardholders’ Bill of Rights, back in April by a 357-70 margin. It’s now up to the House and Senate to settle their differences and then send it on to the White House for the President’s signature.

What follows is a rundown of some of the key provisions that are included in this legislation. Wherever possible, I’ve tried to indicate how the House and Senate versions differ.

  • Rate increases: Both the House and Senate versions ban interest rate increases on existing balances unless the account is more than 30 (House) or 60 (Senate) days delinquent. Also, according to the House version, promotional rates must last a minimum of six months.
  • Payments: All payments above the minimum are required to be applied to the portion of your balance with the highest interest rate.
  • Punitive rates: According to the Senate version, if you pay late and your rate gets increased, you have the right to go back down to the original rate if you pay on time for six consecutive months.
  • Universal default: Both the House and Senate versions ban universal default, wherein card issuers can raise your rates if you have a late payment to a different creditor. Note that several issuers have already stopped this practice.
  • Notification: Card issuers have to send your bills at least 21 days before the due date. They also have to give you 45 days notice before increasing your rates, fees, or finance charges. Under the House version, card issuers are required to give you 30 days notice before they close your account.
  • Over limit fees: Card issuers can only charge over limit fees if you opt in for approval of over-the-limit charges. If not, your charge won’t go through, but you also won’t get hit with a fee.
  • Age restrictions: The House version limits issuers from extending credit to those under the age of 18 and also limits college students to a single card with the credit limit being governed by the students income. The Senate version goes further, requiring those under the age of 21 to have a cosigner or otherwise provide proof of income.
  • Fees: Issuers cannot charge fees to pay by mail, phone, and electronic transfer or online, except for expedited service.
  • Gift cards: According to the Senate bill, gift cards can’t expire in less than five years. The House bill doesn’t mention gift cards.

Note that many of these regulations overlap with new rules put in place by the Federal Reserve. However, the Fed’s rules won’t kick in until July 2010. Depending on how quickly the House and Senate versions get reconciled, it’s possible that the President could sign this into law before Memorial Day.

Published on May 20th, 2009 - 47 Comments
Filed under: Credit Cards

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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47 Responses to “Credit Card Reform: Inside the CARD Act of 2009”

  1. 1
    Alissa Says:

    My only problem with this is the age restrictions in the Senate version. If someone can be sent off to war and die protecting our country, shouldn’t they be allowed to have a credit card without someone else’s permission? Then again, I also believe the drinking age should be 18 for the same reason.
    And what is the definition of “college student”? Does the 32 year old full time undergraduate student I work with count as a “college student”? And why should a “college student” be treated any different from anyone else of that age? A 18-21 year old is a 18-21 year old no matter whether they are in school.

  2. 2
    Andrea Says:

    I like the age restriction. I think it’ll help avoid too many young people getting in over their heads these days.

    I also like not having to pay a fee to pay over the phone. Why make it harder to pay the bill? It’s just a company money grab. They’re already getting a late fee for being late. Sheesh.

  3. 3
    kev Says:

    I’m sure there were be some fall-out from this, but to what extent I can only guess. I’m sure the lost revenue is going to be made up some how though. Annual fees will probably make a mass come-back and rewards programs will probably get scaled back or changed to a “pay to play” type system. At the same time, they ultimately make their money by having people use their credit lines. Every time you swipe it – they get paid. I doubt they will do anything that will make credit cards so unattractive that people stop using them all together b/c it would kill them. Either way, the scrambling will begin shortly and we all have front row seats – it should be an interesting show.

  4. 4
    Nicole Says:

    I think the part that I will benefit the most from will be “Payments: All payments above the minimum are required to be applied to the portion of your balance with the highest interest rate.” I am finally getting serious about paying down my student loans and credit card debt from college. I spent a lot of time moving balances around to get lower interest rates, and ended up with one card that had an original balance of $5,000 at 10.99% that has now grown to over $7,000 due to compounding interest charges over several years. I kept forgetting that if I had balances at different promotional interest rates, and transferred some of the balance to another card, the company would transfer the remaining balances at 0% or 2.99% before it would wipe out that 10.99% balance. I’m paying more than the minimum balances now, and snowflaking whenever I can, but it’s making such a slow dent because those extra $20 payments every few weeks go to the remaining balance at 2.99% instead of that huge chuck at 10.99%.

    (Yes, I fully understand that it is my own fault the balance grew so much because I didn’t understand exactly how the transfers would work.)

  5. 5
    Gary Anderson Says:

    You guys are missing the most important part of this bill. It is the part that is left out. The bill fails to cap interest rates. The banks are borrowing at the fed at 1/2 percent or not much more. They are lending out at 20-30 percent interest. This is wrong people! This is usury, loan sharking, profiteering, whatever you want to call it. I say if you are able and debt burdened, to just walk away from these immoral banks. I am not a financial advisor. This is a protest.

    I say that this simply is another attack upon the consumer. The first attack was off balance sheet banking that lead to toxic loans. That scam was set up at Basel 2 in 1998. That scam killed the consumer. Then these greedy banks scoffed at US sovereignty and stole from the US treasury. Now they are hiding behind mommy government both for bailouts and for usurious practices.

    We need to establish a protest against these banks by pulling our money out, putting it under the mattress or maybe into credit unions, and changing our phone numbers so that these sleazy banks will GO AWAY.

  6. 6
    Greg Says:

    First to Gary’s comments. If you have not already I would strongly encourage you to read a previous article on Nickel’s blog called Is Personal Responsibility Dead? Written by Matt. This is my view and I can already see you do not agree, but let me explain it anyway. Why should we expect other people especially the government to take care of us? No one is responsible for our actions except us. If the banks decide hey, it is getting to risky to lend to anyone then guess what people will start complaining that they cant get credit!! If that happens you won’t be able to get a mortgage, no student loans etc so America will fail to grow at least at the rate that has been expected. Yea maybe the credit card companies do charge silly fees but if you do the things you are supposed to be doing guess what you will not be getting any fees unless you signed up for them (i.e. Rewards program). I just do not understand it when you apply for a credit card do you not understand that you are BORROWING money. If I loan someone money and they are late on a payment I would charge a late fee, yea maybe they have been a little excessive on raising the interest rates. But even then if you have been doing everything else right you would still have a choice you could call then and tell them I will be switching to another card unless you lower the rate or just get another card and switch it. I guess my real question is why have people stopped taking responsibility for their actions?

    Now to the CARD article. My only question is how will this effect people who do play be the rules and pay off their card every month? Also if banks start needing to make up the money elsewhere and start charging all cardholders annual fees what will that do to credit scores? Let me explain that last one, if I start getting charged an annual fee for cards I will more than likely close them, in turn when looking at what the FICO score takes into account I see this affecting 2 areas the first is length of credit history. If I close my oldest card then my credit history will take a nose dive. The second is debt to available credit meaning if I close my card I will have less available credit and that will also take my score way down. The other thing I am concerned about is loosing reward programs. I guess I see this legislation hurting more than helping but we will see.

    For those that are going to say you don’t even need a FICO or credit score let me tell you it means a lot more than just being able to get credit cards. It can keep you from getting your dream jobs, an apartment, you may not be able to get your utilities i.e. water, gas etc., not even a cell phone until they pull your credit. So your FICO means a lot more than credit it shows the kind of person you are.

  7. 7
    Independent George Says:

    I agree with some provisions I agree with some provisions (better notifications, payments going to highest-rate balances), but I think that the rest will have the effect of raising interest rates as a whole. It essentially makes it more expensive to lend money. Credit will become rarer, and more expensive; this will effectively deter the people who care about those things, while having minimal effect on the people who don’t.

    In other words, the people who pay attention to and adjust their behavior based on these changes also tend to be the people who already use their cards responsibly, never miss a payment, and rarely (if ever) pay interest. You could raise our rates to 50%, and it wouldn’t make a difference, as I still wouldn’t carry a balance on any interest-bearing card. Everyone else, though, would pay more as a result of these new efforts to ‘protect’ them.

  8. 8
    Gary Anderson Says:

    You bring up some interesting points Greg. But they could mess up your fico score today by cutting your credit line. They will no doubt charge an annual fee, so you could charge one item a year and pay 2 dollars interest. You can get around that problem without closing your cards.

    One more point, Greg, I have a hubpage that essentially argues that we should have spent our stimulus last year and we would have gotten another one. The reason the consumer did not get another one is because we paid down credit cards. We didn’t “get it”.

    But the government owes us protection from predators. The government owes us protection from profiteers. If you rape the consumer enough he won’t show up to buy anything, and then what? You kill the golden goose of prosperity, the middle class or even the poorer classes and you kill the economy of the United States. I would even say it is patriotic to walkaway from debt at this point, or pull savings from the big banks. We have lost our sovereignty, and my taxpayer dollars have bailed out the cc companies. They got welfare, and the government, Gregg, owed them.

    One more thing, I have a student loan for my kids. If PPIP allows investors to walk away through nonrecourse loans then why can’t I walk away Greg? The government is not being fair to me. It is not equal protection under the law. I will pay my student loan but the cc companies can just go away. I am through with them. And I am a patriot. They are scammers and profiteers.

  9. 9
    Kev Says:

    @Greg – “So your FICO means a lot more than credit it shows the kind of person you are.”

    Wow. That was a pretty broad brush stroke. I agree that a few industries have tried to turn it into that with skewed statistics and hidden formulas, but to say your FICO score defines anymore than someone’s credit worthiness is absurd.

    Anything can happen to anyone. Me, you, anyone. None of us know what tomorrow is going to throw at us. If something horrible happens to me that results in total financial ruin then I would expect my FICO score to go into the toilet. I would also expect not to be able to get a decent loan or loan at all for that matter. What I wouldn’t expect is for someone to tell me that my insurance rates are going to increase b/c my FICO score somehow indicates that I am going to file more claims or commit insurance fraud. I also wouldn’t expect to be declined employment b/c my FICO score is being used to define my work ethic. It’s ridiculous.

    A FICO score may indicate that one is not credit worthy, but doesn’t indicate “why”. Until Fair Issac can accomplish that a FICO score can NEVER be used to show what kind person someone is.

  10. 10
    Jesse Says:

    @Alissa (#1): Agreed.

    The age restriction adds nothing to this bill, and remarks like “I think it’ll help avoid too many young people getting in over their heads these days” come off as paternalistic and short-sighted.

    What exactly is supposed to happen between age 18 and 21 that endows a person with the power to use credit wisely — especially when that person isn’t allowed to use credit during that time? This is a recipe for making 21-year-olds of the future as financially naive as the 18-year-olds of today.

  11. 11
    Jacob Says:

    While I can get over most of the stuff in this bill, there are a few things that really annoy me. As much as the general population might need a helping hand from the government, I am a firm believer that you should watch out for your own back. Read the fine print and know what you are getting into (or at the very least, bloody ask the company for a written bullet point breakdown of possible fees/charges and interest rates).

    The part that really gets me though: the age limit. I am currently 21 and let me tell you, its pretty hard to get a good credit history going at this age. Between student loans, low income, and short credit history, the boost I can get from being a responsible (e.g. high credit limit and low credit limit usage) credit card user is invaluable. If I can only get one card, with a low limit at that… It would be kind of ridiculous if putting my electric and cable bill on my credit card would put me into the 20-30% usage right off the bat especially when I would like to keep it around the 5-10% mark. If this passes, lets just hope it lags long enough that the age restriction doesn’t apply.

  12. 12
    Cindy Girl Says:

    I agree with those posters who think this Bill will have the effect of, in some ways, making it more expensive to obtain and maintain credit cards. This will negatively affect those who need the cards the most. Annual fees can add up quickly – so can the credit companies who will begin to charge you interest from the moment of purchase instead of the current grace period. Don’t be fooled – this will raise the cost of owning and using credit cards for the vast majority of Americans. Sure we got some protections, but in weighing the good and bad, this Bill just made it more expensive for all of us to use credit.

  13. 13
    Greg Says:

    First off thank you Gary and Kev for your follow up comments.

    First to Gary’s comments: Very true about your FICO score they can definitely mess it up at anytime by lowering you limits or etc. I went to your website and it looks like you and I both wholeheartedly agree that the government is not helping us with this situation. One thing I should say is that I am a complete believer in free market capitalism, I also believe the government is a big reason we are in this problem. But to the main point, in free market capitalism those who do things better than the competition succeed and those who do bad fail. If this were the way we dealt with problems we would never have gotten in this situation in the first place. Why should OUR tax dollars go to companies that took on to much risk? Instead those who were stupid should pay for their mistakes and cease to exist. As you said Gary “If you rape the consumer enough he won’t show up to buy anything, and then what? You kill the golden goose of prosperity” I couldn’t have said it any better the customer will decide the fate of every company. But I also think the government should be as far away from the private sector as possible.

    I realize there is a trade off and a lot of innocent people would loose their job but this “too big to fail” notion has to be taken care of. The companies do not have enough skin in the game, they know if they over extend one of two things will happen. Number one they will make a lot of money, or number two the government will bail them out. I know it is a very fine line but some resolution must be made.

    Now to your last point Gary, the point I tried to make last time is if everyone steps up and takes RESPONSIBILITY for their actions 2 things will happen. One, more investors will be willing to lend which will also lower the cost of borrowing, and two we will never be in this mess again. I guess my main question is if you have a credit card you had to apply right, and you knew there was interest, and you probably used the money to buy things you needed or wanted for yourself? So if you used someone else’s money to buy things for you don’t you think they should get the money back? I am not saying the CC companies have not done bad things with fees and rates etc. but isn’t it stealing using the money and not intending to pay it back.

    Now to Kev’s comment: You really made me think about this and it kind of bothered me. I should not have been so broad, I was aiming more towards it shows what kind of person you are with respect to bills, etc… But I completely agree with you that a FICO or credit score cannot and will never be able to define someone. I do not believe there will ever be a computer able to have an equation for explaining a person. And to go a bit further I believe FICO should be calculated a bit different I don’t think because you lost your income that you will not eventually pay the debts. But thanks for the comments Kev, glad I am looking at it a little bit different.

  14. 14
    Gary Anderson Says:

    Hi Greg, under normal circumstances people should take responsibility in the traditional ways for their actions. I would not argue that. However, these are not ordinary times. I am not sure under fair lending practices if I haven’t already paid my debt back many times. But certainly if people can walk away from mortgages, if private investors can walk away from PPIP, etc. what is the problem with walking away from a bunch of usurious loan sharks? There are only 6 major credit card companies. There is no competition, there is no government accountability. You cannot escape unless you walk away or have the money to pay the debt down. I have some family obligations that are more important. I didn’t get my fair stimulus because the banks, who scammed us with liar loans, raided the treasury. This is an out of control financial system. And the banks made it that way. They had an opportunity to increase credit knowing that people were not keeping up with their cost of living and instead of letting the market correct with the dot com crash they preyed upon the consumer. Sorry, I have no problem walking away from such evil corruption. They wanted Iraq Oil and a presence in the middle east and needed a way to pay for it. It didn’t matter who they hurt. I am almost 60 years old and I have to take care of people.

  15. 15
    Tom Whitworth Says:

    I’ve seen the next shoe dropping as a result of CARD. In yesterdays (6-26-09) mail I received notification from Chase that minimum payments were increasing from 2% to 5% of outstanding balance with no opt out by closing the account. I have no other debt so I can afford this increase. I called the lender and inquired for the reason for a 2-1/2 fold increase. I was told it was due to recent credit card legislation and subsequent requirement by regulators. So for millions of strapped families CARD=Bankruptcy. Is skyrocketing bankruptcy rates really credit card reform?

    In my almost 63 years on this planet, I never thought I would see a socialist USA, who really won The Cold War?

  16. 16
    Jesse Says:

    Don’t worry, Tom, there are still about a billion miles between this change in credit card regulations and “a socialist USA”. You can put the hyperbole away.

  17. 17
    Tom Whitworth Says:

    Hyperbole? Government ownership of banks, government ownership of AIG, government ownership of GM and Chrysler? Take off your rose colored glasses Jesse. Or are you just drinking the Democrat tea? Don’t forget impending National Health care. Spent a great deal of time in the UK in the late 1990’s where I met a man who was in the 12th month of waiting for his turn for a quadruple cardiac by-pass. I don’t rant for no reason.

  18. 18
    Jesse Says:

    Tom, perhaps this chart will reassure you:

    http://correspondents.theatlan.....s_like.php

    Yes, it is hyperbole to cry “socialism” when 99.79% of assets are in private hands. I’m not the one drinking the party-line tea, sir.

    As for health care: I guarantee you’ve met more Americans who can’t afford to get a bypass at all than Europeans who have to wait. But that’s beside the point — if you think the UK’s single-payer system is in any way relevant to the health care reforms that are actually being debated in the US today, you haven’t been paying attention.

  19. 19
    Tom Whitworth Says:

    Jesse, I am not an extremist. I believe in the second amandment, I don’t think it’s effect is unlimited. Private citizens don’t need machine guns. I not in favor of abortion, but it’s not the federal governments business. I’m a live and let live conservative. I’m not a social facist. As for my personal experience with uninsured people and health care. My late sister who was disabled, but not yet “officially disabled” per Social Security with her case pending in 1995. Got her triple bypass within a week of her second heart attack with WV medicade picking up the tab.

    If you control the banking system you control the economy. You have no need to own everything. Banking, taxes, autos, insurance, that’s a pretty good start.

  20. 20
    Tom Whitworth Says:

    I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
    Thomas Jefferson, (Attributed)
    3rd president of US (1743 – 1826)

  21. 21
    Jesse Says:

    Jefferson was arguing against private banks issuing currency. You’re arguing against the government owning stock in banks, which is almost the opposite. So what’s the relevance of that quote?

  22. 22
    Tom Whitworth Says:

    Jesse it’s obvious we don’t agree politically, and that’s OK. I can agree to dissagree politely, I didn’t post a personal comment about you except in replying to yours. I’m sorry this isn’t the proper forum for that type of communications and it’s generally counterproductive.

    What do you think about my observation which was the original purpose of my post re the CARD act. The possibility of bankruptcy increasing.

  23. 23
    Jesse Says:

    I would need to see more information about the link between the CARD Act and your increased minimum payments. I don’t see anything in the summary here, or from a quick Google search, that says any bank is required to raise your minimum payment.

    It sounds to me like the banks are just trying to squeeze in all the hikes they can before the law goes into effect, and I suspect the explanation they gave you is untrue. Whatever your bank is doing, it can’t be the CARD Act forcing them to do it — it doesn’t even take effect until August (some parts not until next year).

    Two of my credit card issuers have tried to jack up my rates recently. One almost doubled the rate. But I was able to opt out of both changes.

  24. 24
    Tom Whitworth Says:

    The only information I have is what Chase told me over the phone. Your observation of the bank possibly lying was not lost on me. One other question I asked which I didn’t include in my original post was was there any option, if I couldnt afford the increased payment. Surprise, they offered to replace my fixed 3.99% loan with a fixed 6.00%, 60 month loan. Since the change in question takes effect 9/1/09, it’s entirely possible Chase is using a ruse to by-pass the no interest increase provision of CARD. I included this possibility in letters to both of my Democratic Senators, and my Democratic Representative in the House.

  25. 25
    Gary Anderson Says:

    Jesse, as my link shows there is a lot of misinformation floating around. First, private fed is ordering Paulson who orders Lewis. The private bank owns 1/2 of the US government debt. The private fed is out of control representing private bankers who set up the Basel 2 off balance sheet banking scheme leading to liar loans. The private financial system is fascistic, and controls the sovereignty of the United States. Andrew Jackson kicked out the federal bank. We need to do the same.

  26. 26
    Tom Whitworth Says:

    Jesse, your link to Conor Clarke, hardly a middle of the road associate of Michael Kinsley, you may be interested in the article in the link by Joseph Stiglitz former World Bank chairman who I watched decrying America’s socialism for the rich on CSPAN Journal this morning. Guess even PhD economist can spout hyperbole.
    http://www.project-syndicate.o.....tiglitz113

  27. 27
    Gary Anderson Says:

    Indeed Tom, fascism is socialism for the rich. But it is for a select rich, ie oil companies and the financial sector.

  28. 28
    Nicole Says:

    I am seeing a lot of effects from this legislation, even before it has officially gone in to effect. My Citi APR went up to 17.99%. Sears card APR went up to 21.99%. My Washington Mutual/Chase credit card was closed last week. A Visa card was closed down a few months ago (the bank went out of business). I only have a small emergency fund (about $1400), and it was somewhat reassuring to know that I had available credit if there was an emergency that was more than my e-fund. Right now, I have almost no available credit, and my credit score is going down the toilet. I want to refinance my mortgage to take advantage of lower rates, but now my debt percentage is even higher than it was a few months ago. I am still making progress on paying down my credit cards, and putting $25 from each paycheck to my e-fund, but it’s very slow going. I’m trying to pay down about $50k between car loans and credit cards. I am putting at least $1400 per month towards my debts, but with the high interest rates, it’s not getting me as far as I would like.

  29. 29
    JulIn Boone Says:

    The bill left out a very important deceptive practice used by banks. I caught my bank “buffering”debit card charges AND CHECKS qgqinwt65 my cheaking accoiuntl ” checks $20-$30 etc I have on-line banking and can wattch checks and debit card payments, . uInoticed one very paculiar issueld in a “buffer” for 12-24 hours before they are processed through your account.

    Then the depositor writed a check for $300. If your account is low say, “$450, the software at banks computer will check your bance and push through the $300 check FIRST, ahead of the smaller checks written BEFORE the $300 check, the bank will pay out the $800 check FIRST, leaving you will a balance of $150. Thennn it will follow with the checks yhou wrote PRIORR to the $300 check after it calculates that the remaining5-5 checks written chronoligically earlier.

    The effect is simple. This technique brings the account closer to being overdran. Then by procesing the checks written eaier, it ASSURES that the depositor, by assessing the largest check first, out of chronological order ,that the remaining several checks behind it, place your account in an overdrawn condition processing the smaller checks behnd the larger ones, the check will in fact each add a $37.50 per “check fee for each check adding to the overdrawn status. This way, the bank can say that you wrote more checks then that account has it. WRONG. Because had the bank processed the checks or debit card information in the chronological order in whinch it arrived instead of buffering it waiting for a larger check, the smaller checks would have cleared WITHOUT any overdrawn pinutive peniltys at $37.50 each charged because their are insufficient funds, then if the $300 CHECK CAME ALONG AND PUSHED THE DEPOSITOR into an insufficient funds situation it would only be entiled to the $37.50 overdrawn penality for the ONE large check. Instead, using their method, the depositor is charged for all 5 or six checks that were processed and assessed a $37.50 fine AFTER the lagre checkj all but assured the customer would have innuctived on all SIX checks.I

    Yes iut is unlawful because that money your creditors presented for payment were held in buffer and the large check used to unlawfully minuplate funds belonging to you thus using your own money to penilize you for YOUR MONEY an overdraft fee, when in fact they deliberatedly manipulated your money to to create the “overdrawn” fines totalling over $400 using your money in a deceptive pracitce using your money to FINE you. Don’t believe it? set them up and you will see.

    Last thursday USA TODAY July 23, printed a story on from a gentleman who himself had written in to report of thus very thikng happened to him too DIfferent bank, different cikty, different state practicing.

  30. 30
    jbrare Says:

    Does this new law protect against a lender such as AMEX announcing that they intend to raise rates on my accounts without due cause? Can I reject these new terms and stay at my current rates since I am not now or have I ever been late. Can I just notify AMEX in writing that I reject these increases. I have already decided to stop using their products. I am tired of having to read my statements and their notices with a magnifying glass!!!!

  31. 31
    Tom Whitworth Says:

    jbrare,
    The new law isn’t in effect until September, 2009. You may be able to op out (close your account), and retain your current terms. You will have to check with AMEX.

  32. 32
    jbrare Says:

    Tom,

    I emailed a response on one of my notices, and of course I got a response from someone in either India or Pakistan. The response seems to avoid my question about the “opt out” procedure. Is there some other source that you can refer me to. I would appreciate it! Anyone in Congress that might know?
    I am really considering “opting out” of paying these predatory b___ards the $50000 I owe them, 50% of which is balance transfers that they offered to me!
    Never thought that I would ever had considered such an action, but this is really wearing on my sense of right!

    I appreciate your help!

    jbrare

  33. 33
    Jesse Says:

    I wrote above that two of my card issuers had jacked up the rate… here’s an update.

    My original rate on the one that I said “almost doubled” was actually lower than I thought, so in fact it *more than doubled*, from 12.24% to 27.24%. I had a hefty balance on this card, so it meant over $100 a month in additional interest.

    I thought I was able to opt out of this change, but they hit me again with the 27.24% rate the very next month! They said that my opt-out was overruled and the new rate was permanent because I had continued to use the card for some recurring monthly charges — funny how they forgot to mention that part when I called to opt out! (In fact, I got the impression from that call that I was expected to keep using it.) They also claimed I had been told about it a few months earlier, in a notice they claim to have mailed but which I never received.

    I spoke to a handful of people by phone and got nowhere. I complained in writing and got nowhere. So I found the best balance transfer offers I could, transferred most of my balance away, and started wondering whether I should (1) pay off the rest of the legitimate balance, calculate the legitimate interest myself, refuse to pay the last $500 or so in excessive interest, and take a 7-year hit on my credit report, or (2) submit to the bank’s extortion.

    But I finally got somewhere by filing a complaint with my state’s attorney general! A month later, I got a call from someone important-sounding at the bank, and later that week they refunded the excessive interest charges and dropped my rate back down.

    jbrare: I would suggest calling them on the phone and asking about opting out of the rate increase, and make sure you find out exactly what the status of your account is afterward (i.e. how long you have to pay it off and what will happen if you make any additional charges). I don’t think they can unilaterally change the terms of your account without your consent.

  34. 34
    Tom Whitworth Says:

    In my original post I mentioned that had e mailed both my senators and my representative in Congress. I received a reply from Sen. Roberd Bird. He ( or his staff) had contacted Chase, and referred their action to Attt. General Holder’s office for investigation. Within two days I received a letter from Chase saying they had been mistaken on offering me a 6.00% interest rate when I had been paying 2.99% promotional rate for the life of the loan (I had quit charging on the account), they then informed me I was enrolled in a balance payoff program for a 60 month (max) term with 2.00% interest. Minimum payment was $297/month. I had been paying $450/month and will continue doing so until the balance is paid off. I will pay off the balance and tell Chase to take a hike.

  35. 35
    Bernie Gunya Says:

    Chase cards told me that on 1-1-2010 my interest rate will go 11% to 20.24%. I have two options agree to the rate increase or refuse and have my account cancelled with the current interest rates. Can they do this and do I have any other options Thanks

  36. 36
    Tom Whitworth Says:

    I’m not a lawyer. Unless it absolutely necessary to keep the card I would let them cancel it. Keep the lower interest rate. Pay off the remaining balance as soon as possible.

  37. 37
    Gary Anderson Says:

    Hi Tom. You guys already know my position, and I have been warning from my website that the banks are at war with us. It started with the ponzi housing loans and off balance sheet banking allowed at Basel 2. The Fed brought this decree of the Bank of International Settlements to our shores. The CDO’s proved to be not AAA so investors quit buying all sorts of CDO’s. The banks were stuck with them and their capital was low (and still is low based on 8% BIS requirements that will take place).

    All CDO’s including credit card CDO’s were shunned by investors. With low capital, banks are now sticking it too the credit card holders. I have been advocating just walking away but all you good credit folk thought I was a rebel without a cause cuz it didn’t hurt you guys.

    But times have changed, and we just have to show these banks that we aren’t going to take it. If you have a lot of assets it will be better just to pay it down, but if you are like me, who lost 10k in the stock market due to this ponzi fraud, you can make yourself whole by putting your meager savings under the mattress and just walk away:)

    Point is, these are not normal times, and this is not a normal issue of morality, but is an issue of patriotism and of US sovereignty. The immoral players are the banks.

  38. 38
    Tom Whitworth Says:

    Gary,

    I agree with walking away unless a person has attachable income or other assets. Normally credit cards are unsecured loans.

    The way the Fed is monitizing the debt paper money under the matress may only have value as fuel.

  39. 39
    Gary Anderson Says:

    Lol, I think weak US consumers will put teeth in the dollar and cause a deflationary scenario. I don’t know that the government can overcome that. Japan didn’t. We will see won’t we.

    And actually, Tom, deflation is a raise for the common man, if he still has a job. Inflation and asset inflation are a tax.

  40. 40
    Jesse Says:

    Deflation is only a “raise for the common man” if prices are falling faster than wages, and even then, only for common men who don’t have any debt. If you owe money, deflation is a tax.

  41. 41
    Gary Anderson Says:

    That is why you have to walk away in a deflationary environment Jesse!

    If you are in debt you shouldn’t be rewarded for it by phony house price appreciation or asset appreciation that fails to protect the currency. That is a theft of and from the consumer. It is a benefit for those who own assets, mostly the rich.

    The middle class would have been better putting a percentage in stocks, a percentage in bonds, and very little into real estate which should not appreciate the way it did with Greenspan failing to protect the dollar and failing to prevent an obvious bubble.

    The tax on those who are frugal is inflation. Be frugal and walk away from bank usury and you will be ok in this time of capital preservation. That may last years. Look at Japan. It could happen here.

  42. 42
    Jesse Says:

    Walking away from the obligations you signed up for? Cowardly and irresponsible. Not to mention suicidal if your debts are secured (car loan, mortgage).

    Inflation isn’t a tax on those who are frugal, it’s a tax on those who take money out of the economy and stuff it into a mattress. That’s not frugality, it’s hoarding. If you want to save money, invest it someplace where you get a higher return than inflation.

  43. 43
    Tom Whitworth Says:

    It’s not cowardly or irresponsible to walk away from usurious banksters. It serves them right! A higher return under hyperinflation is impossible. You just can’t keep up.

  44. 44
    Jesse Says:

    What hyperinflation? This isn’t Zimbabwe. And even in a hyperinflation scenario, you can keep up: inflation doesn’t exist in a vacuum, it exists relative to assets. Use your money to buy some assets instead of hiding it in a mattress, and you’ll keep up automatically.

    As for “serves them right”… unless you were kidnapped, drugged, and forced to sign a contract, you voluntarily accepted the terms of your debt. If the bank doesn’t hold up their end of the deal, then sure, stick it to them — I considered it myself in a similar situation (see #33). But to walk away from a debt just because you no longer like the terms you agreed to is disastrous for your future credit prospects and demonstrates serious character flaws.

  45. 45
    Tom Whitworth Says:

    Only an idiot would sign on to original usurious terms.

  46. 46
    Jesse Says:

    In that case, there must be an awful lot of idiots out there. So which is worse, being a responsible idiot who accepts the consequences of his idiocy or an irresponsible idiot who runs away and has trouble getting a car, home, or job for the next decade?

  47. 47
    gary Says:

    i am glad to see that the overlimit scam is will be removed–have a problem with chase(bp gas card) didn’t get the bill one month -so next month had the late fee +an overlimit fee due to not paying previous bill-this seems like a pyramid sceme—i had been declined before on this card due to not small $400 limit-no big deal–they change the rules and we are supposed to read all the fine print in every notice they send or its our fault

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