Credit card regulations

  • #1
jal
549
0

Main Question or Discussion Point

The gov. is starting to address how to get regulations on credit cards.
Unfortunately, few realize that the businesses are paying large fees to the
"money changers" which results in higher cost for the consumer.


http://www.bloomberg.com/apps/news?pid=20601087&sid=auMTEm_3PAgM&refer=home [Broken]
Obama Demands ‘Clarity and Transparency’ on Credit
He also called on credit-card companies to make available "a plain vanilla" account with simple and easy to understand terms.
http://www.theglobeandmail.com/servlet/story/LAC.20090423.RINTERAC23ART1919/TPStory/?query=credit+cards [Broken]
U.S. credit card firms push for access to debit
Visa, MasterCard also urge Ottawa not to legislate on fees, rates
TARA PERKINS
Retailers are urging Ottawa to limit the fees they must pay each time a customer pays with a credit card, payments that ultimately go to financial institutions and help to support loyalty programs and other perks of the cards.
http://www.theglobeandmail.com/servlet/story/RTGAM.20090422.wcreditcards0422/BNStory/Business/ [Broken]
Ottawa to regulate credit card firms
JULIAN BELTRAME
The minister's comments came as the heads of Visa Canada and MasterCard Canada, the country's dominant credit card companies, appeared before the Senate banking committee to argue against regulation.
The also asked for further powers to enter the debit-card market, which withdraws funds directly from a consumer's accounts — a business that is dominated by Canada's chartered banks.
Last month, spokesman for the Canadian Bankers Association said one reason rates are high is that delinquency has risen from about 1 per cent to 4.5 per cent as a result of the recession, noting that 70 per cent of users pay no interest because they pay on time.
Comments
David Lorne from White Rock, Canada writes:
For those who think that if they pay their entire credit card balance each month, that the Visa or Mastercard service is free: think again. The merchant pays a very high fee, perhaps 5% so you might have free interest for about 30 days. Factor that out: 60% per anum, and you pay for it in higher prices. Higher prices that Visa Matrcard prohibit being reduced to a cash-paying customer. If you use your card in the U.S., you pay a higher rate of foreign exchange, essentially another mark-up for the bank. Should you not clear the whole balance by the due date, interest is charged back to the purchase date. Don't forget your annual fee of $25 to $140. If you are only one day late, twice a year you may be charged interest at 24.5% instead of 19.5%. The list goes on. If you pile up credit card debt, don't count on the bank (even the same bank you owe on the credit card) to lend you enough to pay a lower rate of interest. Why should they? It could take decades to clear a 24% balance even by doubling minimum payments (providing you cut up the card and never use it again). The banks convinced us that debit cards were more convenient than cash. It also saves the banks money to handle cash. Yet they charge a fee for this too. If you take cash out of a machine, another fee (perhaps two). But don't blame the banks. They know that few people read or understand how these things work. They know that many of us will run up balances eventually. They know that eventually, they'll hook us. So, use their products carefully and responsibly. Pity those who don't; invest in bank stocks; and don't lend the banks your money.
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Peter Grimm from Canada writes:
I have been relying on a bunch of losers paying interest on their credit cards to pay for a bunch of perks offered by my credit card company. Now the Gov't is going to skrew it up...

No more zero fee cards as the credit card companies will rewrite the rules and add fees to make up any losses,

No more free trip cancelation and 90 day product warranty for trips and products bought on the card,

No more cash back or 'GM dollars earned' or whatever perk your card has

Potential reduction in the discounts I can negotiate for paying cash in most owner operated stores...

Exchange rates on foreign card purchases beat the bank rates for physical currency and certainly beat the money changer rates at airports etc. Those rates going to go up now???

Plus a nice itemized bill monthly with no bank fee per transaction and the convenience to pay it online - one transaction at the bank vs a pile of debit transactions with fees.... CC companies going to start adding fees to cover cost of 'regulation'?

Sorry I like credit cards just fine exactly as they are - don't mess with what is only a problem for idiots that pay interest. Either pay it off every month, cut it up, or put up and shut up and pay the price!
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Nickstar One de Bantario Banada from Canada writes:
Bank rate is now lowered to 0.25% then why do we have CC interest rates as follows to name just a few: TD Visa Rewards 19.75%; Canadian Tire MC 19.5%; RBC Visa Platinum 19.5%; CIBC Visa Platinum 18.5%; Citi Platinum MC 15.5%; Scotia Value Visa 11.49%. This really is outrageous, and as such, they rightly deserve to have defaults on CCs by the truckload.
Lines of Credit are the saviour, are they? Lines of Credit of say $10K, to those who are not homeowners, have also gone up from under 4% to approaching 7% to 8% and the additional insurance on top of the Lines of Credit have almost doubled. This effectively makes the Line of Credit closer to 10%. Hardly salvation in recessionary times and this makes it doubly hard to pay off balances. About time the CC companies offered CC consumers a stimulus package to prevent massive defaults and a huge surge in bankruptcies. Cut the bull on CC 19% loansharking.
 
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Answers and Replies

  • #2
149
0
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  • #3
67
165
Always read the fine print:


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  • #4
67
165
The low interest rate balance transfers can be a scam. Read that fine print. Make more than the minimum payments.

A person owes $5000 to BOA at 10%. They take a 2.9% balance transfer offer from BOA to pay off $5000 on another card. Nothing is paid on the higher rate balance until the 2.9% balance is paid off. Using the minimum payment schedule this will take about thirty years.

Being late on one payment will jump the interest rate up to as much as 27%.
 

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