Friday, May 02, 2008

Credit-Card Crackdown

Being held up at gunpoint is a minor problem for most Americans compared to having money stolen from them by credit-card companies. Now, as the economy worsens, regulators are finally bestirring themselves to prevent some of the theft.

The Washington Post reports: "The Federal Reserve and two other banking regulators are set to unveil today one of the most aggressive efforts in decades to crack down on the credit card industry, prohibiting practices such as arbitrarily raising interest rates on outstanding balances.

"The proposed regulations, which could be finalized by year's end, would label as 'unfair or deceptive' practices that consumers have long complained about. That includes charging interest on debt that has been repaid and assessing late fees when consumers are not given a reasonable amount of time to make a payment."

More than a year after hearings on the industry's "unfair or abusive" practices, Congress has done nothing about the loan-shark tactics of large banks that charge as much as 30 percent interest for late payments and cash advances.

After being burned by the sub-prime mortgage scandal, federal regulators are taking some action to head off massive credit-card defaults beyond their efforts to educate consumers on how issuers use fine print to steal from them.


R. S. Abrinaud said...

There's a wonderful song by Radiohead called "Just," with a chorus that goes: You do it to yourself, you do. And that's what really hurts. You do it to yourself, just you. You and no one else. You do it to yourself.

In the case of credit card angst, how many of us "do it to ourselves" when it comes to getting screwed by these issuing companies? I know that for a long time, before I wised up and started reading the fine print, I was right there with countless others being robbed blind. However, I've discovered a solution to that problem: I don't buy things on credit anymore. I pay cash, and I only keep one credit card hidden deep in a drawer somewhere in case I have to make a travel reservation or I have an emergency. It's wonderful that the Fed wants to crack down on predatory practices--and they should. However, a better solution would be to encourage more Americans to be frugal, so save more money, and try as much as possible to live within their means.

Anonymous said...

I tried to report credit card fraud and now I feel like I'm The one on trial.