WP: Credit Card Penalties, Fees Bury Debtors (as bankruptcy bill debated)

[DeepModem Mom]

Credit Card Penalties, Fees Bury Debtors
Senate Nears Action On Bankruptcy Curbs

By Kathleen Day and Caroline E. Mayer
Washington Post Staff Writers
Sunday, March 6, 2005; Page A01


....Punitive charges -- penalty fees and sharply higher interest rates after a payment is late -- compound the problems of many financially strapped consumers, sometimes making it impossible for them to dig their way out of debt and pushing them into bankruptcy.

The Senate is to vote as soon as this week on a bill that would make it harder for individuals to wipe out debt through bankruptcy. The Senate last week voted down several amendments intended to curb excessive fees and other practices that critics of the industry say are abusive. House leaders say they will act soon after that, and President Bush has said he supports the bill.

Bankruptcy experts say that too often, by the time an individual has filed for bankruptcy or is hauled into court by creditors, he or she has repaid an amount equal to their original credit card debt plus double-digit interest, but still owes hundreds or thousands of dollars because of penalties....

***

No one knows how many consumers get caught in the spiral of "negative amortization," which is what regulators call it when a consumer makes payments but balances continue to grow because of penalty costs. The problem is widespread enough to worry federal bank regulators, who say nearly all major credit card issuers engage in the practice....


http://www.washingtonpost.com/wp-dyn/articles/A10361-2005Mar5.html

[Warpy]

1. I chopped up my cards and sent them back in 1991

when those greedy sons of bitches, not content with usorious interest rates, decided to start charging junk fees on top of them, all to sucker people into making minimum payments and staying in debt for 40 years.

These cards are sucker bait, and too many good people are getting suckered, getting cards at a low rate, charging a luxury, and then finding the company has arbitrarily raised the rate as high as 34.9%, something that is perfectly legal for them to do and which they agreed to in print too fine for the human eye to read.

Pay them off if you have them. If you must take out a loan for a luxury, go to a bank or credit union and get a contract that gives you that loan at a fixed interest rate that can't be changed unless you renegotiate the loan sometime in the future.

Just don't use those cards. They're financial time bombs.

[Straight Shooter]

5. I keep one card and pay my balance before it's due.

Out here in the boonies, there's so little to choose from and the prices are high, it's either order off the Internet or waste gas going out of town for a good selection. I buy here, when I can, to support local merchants, but it's ridiculous to spend $200 on a light fixture you don't really like, when you can find a good one in an online outlet store for $60 that is just about perfect.

The trick is to always have the money before you make the purchase and deduct it from your checkbook balance, and to go online and see what your credit card balance is before they send you the statement, then mail the full payment in with plenty of time to spare before the due date. That's how they get a lot of people; they mail that statement to you so that by the time you get it, you have to mail your money within a day or it doesn't get credited according to their rules.

It's a racket. And don't talk to me about using my local bank. The president is a rightwing crook, and they charge a flat $100 fee just to give you any kind of loan, no matter the dollar amount, in the first place. x(

[Warpy]

6. Get a debit card

and use that for online purchases.

It's what I do.

[RamboLiberal]

8. Debit card for online purchases - no way for me any more

I had mine hacked last year. Fortunately I caught it before more than $150 in damage was done. Four separate charges were made for online porn and music downloads. And even though it was supposed to be "guaranteed by Visa" I had to go 3 rounds with the bank before they accepted the charges as fraudulent.

One web account IBills was great about reversing the charges, the other CCBills was a MF!

Get a credit card that offers virtual numbers for online and telephone purchases, then pay that off each month with your checking account.

[amazona]

13. you pay more for everything without a credit card

Credit cards have changed. If you pay cash, you pay MORE. A good credit card gives you cash back or something else of value, such as free air travel. On my low income, I can't afford to pay MORE to pay cash. Credit cards can be used intelligently. As the other poster said, be sure you already have the money in your checking account to pay for what you charge. I go online and pay my credit card bill every week so the amount never gets high and there is never any way for a late charge to occur. Most of the time I get around 1-2 percent cashback on purchases but during promotional periods I have received as much as 5 and an one occasion 10 (!) percent cash back.

Plus credit card companies give you bribes to get new cards. Amazon.com just gave me a $30 coupon off my next purchase. The best card I ever got paid me $75 to accept the card.

Don't be stupid and accept a free T-shirt instead of cold hard cash to take a credit card, but DO read all the offers you get for the cards. You will be amazed.

Those who play the game right...win. You buy gas and groceries anyway, you should be getting cashback for it.

The conservation movement is a breeding ground of communists
and other subversives. We intend to clean them out,
even if it means rounding up every birdwatcher in the country.
--John Mitchell, US Attorney General 1969-72

[xray s]

2. Haven't those Fundie Republicans read the bible?

God hates unfair interest rates.

25 " If you lend money to any of My people who are poor among you, you shall not be like a moneylender to him; you shall not charge him interest.
26 "If you ever take your neighbor's garment as a pledge, you shall return it to him before the sun goes down.
27 "For that is his only covering, it is his garment for his skin. What will he sleep in? And it will be that when he cries to Me, I will hear, for I am gracious. (Exodus 22:25-27)
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35 ' If one of your brethren becomes poor, and falls into poverty among you, then you shall help him, like a stranger or a sojourner, that he may live with you.
36 'Take no usury or interest from him; but fear your God, that your brother may live with you.
37 'You shall not lend him your money for usury, nor lend him your food at a profit. (Leviticus 25:35-37)
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19 " You shall not charge interest to your brother -- interest on money or food or anything that is lent out at interest.
20 "To a foreigner you may charge interest, but to your brother you shall not charge interest, that the LORD your God may bless you in all to which you set your hand in the land which you are entering to possess. (Deuteronomy 23:19,20)
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10 "I also, with my brethren and my servants, am lending them money and grain. Please, let us stop this usury!
11 "Restore now to them, even this day, their lands, their vineyards, their olive groves, and their houses, also a hundredth of the money and the grain, the new wine and the oil, that you have charged them." (Nehemiah 5:10,11)
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5 He who does not put out his money at usury, Nor does he take a bribe against the innocent. He who does these things shall never be moved. (Psalm 15:5)
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8 One who increases his possessions by usury and extortion Gathers it for him who will pity the poor. (Proverbs 28:8)
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10 Woe is me, my mother, That you have borne me, A man of strife and a man of contention to the whole earth! I have neither lent for interest, Nor have men lent to me for interest. Every one of them curses me. (Jeremiah 15:10)
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7 If he has not oppressed anyone, But has restored to the debtor his pledge; Has robbed no one by violence, But has given his bread to the hungry And covered the naked with clothing;
8 If he has not exacted usury Nor taken any increase, But has withdrawn his hand from iniquity And executed true judgment between man and man;
9 If he has walked in My statutes And kept My judgments faithfully -- He is just; He shall surely live!" Says the Lord GOD. (Ezekiel18 7/9)
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13 If he has exacted usury Or taken increase -- Shall he then live? He shall not live! If he has done any of these abominations, He shall surely die; His blood shall be upon him. (Ezekiel 18:13)
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17 Who has withdrawn his hand from the poor And not received usury or increase, But has executed My judgments And walked in My statutes -- He shall not die for the iniquity of his father; He shall surely live! (Ezekiel 18:17)
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12 "In you they take bribes to shed blood; you take usury and increase; you have made profit from your neighbors by extortion, and have forgotten Me," says the Lord GOD. (Ezekiel 22:12)
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[DeepModem Mom]

3. Good work, xray s!

[NMDemDist2]

4. i filed chapter 13 about 5 months ago and my attitude was

screw the credit card companies, due to just the things mentioned above I have paid them back three times over and just couldn't get ahead

Chapter 13 was my only hope of keeping my business or Chapter 7 would have been my choice

[FormerOstrich]

7. They are crooks....

When I first started having trouble finding work my balances were not excessively high on my credit cards (well by pre-broke terms anyway). I started having trouble keeping up on the payments and bam.....the sob's dropped my credit limit (understandable) and started charging me over credit limit fees (outrageous). They call and threaten everyone with your last name in every state they think you may have family. Slime they are...slime!

[zalinda]

9. Little known fact......

I ran up credit card bills because of almost being homeless twice in the last 5 years. Those credit cards saved my butt. I stopped paying the minimums on them, because I just couldn't keep up after the interest raises and over limit fees. I had ever intention of paying them off, because they were there when I needed them. Then the phone calls started. First some seemed understanding, but wanted money. Then they started to get more pressing. Then they got down right rude. What I did find out is that after awhile, the cc companies sell your account. A company buys it for about 10 cents on the dollar. I found out about this from a program on NPR. Two "lawyers" were being interviewed. They really didn't practice law. They found out that it was much more profitable to buy debt.

I worried like crazy, but I didn't have much choice and then I got pissed. These people who called would tell you ANYTHING to get money out of you. There were so many lies, it was unbelievable. They even sent me a fake court summons on a couple of occasions. How did I know they were fake, I called my friendly court clerk. The court case numbers didn't even match our system here. I didn't pay anything to these people, I was afraid if I paid something that they could use that against me. After awhile the over limit fees were stopped and the piling on of interest stopped, probably when the debt had been bought. After awhile, I got in touch with a debt relief company (be careful there are a lot of scam companies out there). I gave them copies of all my last bills, and then set up a payment plan. I think your debt has to be a year old, but I'm not sure.

What the debt relief company does is, they become your power of attorney on the debts. They contact all your debt holders and tell them that they are the only one to be contacted concerning the debt. This doesn't stop the debt collectors for awhile, but then the calling does taper off. Your monthly payment goes into an escrow account and when there is enough, your first debt is negotiated. They reach an agreement to pay less than you owe. Now this amount can be as much as 40% off to some who insist you pay everything. I think I ended up paying about $30,000 for about $50,000 owed.

Meanwhile, while all this was going on, I got a refinance on my house and was able to pay most of my debt off after being on the program for about 7 or 8 months. The funniest part was with my Chase card. I brought the payoff check to them at their bank (they were not part of the debt relief program). Some how the check went to the wrong bank during the clearing house procedure. I didn't find out about it until almost 2 months later, because of the statement timing. Meanwhile, I started to get phone calls from them, but I thought that it was a scam since I knew I paid off the bill. They kept adding interest to my account, and keep calling me, some got REALLY ugly. Since I was in the right, I told them I was not going to pay one penny more than what my original check was for as I did my due diligence, handed it to a teller, and from there what happened was their fault. This went on for about 6 months, and WOW, what lies they told. I asked to talk to managers and just got some assholes who thought they could bully me into paying. I knew that if I paid ANYTHING that I may be liable for all the interest and fees that they tacked on. After awhile, I got a call from a woman who said that she would see if she could work a deal. Now, I'm not sure if she worked for the cc company, or had bought the debt, but I ended up paying only 60% of the ORIGINAL debt owed. Now, what is funny about this? If they had someone who just managed this sort of goof, they would have gotten the whole amount, as it was sitting in an escrow account. But, they only know one way to collect debt and that is strong arming.

zalinda

[Mandate My Ass]

10. Credit card delinquencies were at a 5-year low last year

The CC companies know that people are becoming aware of their tactics and are doing what they can to prevent being gouged. This bill allows them to go after the most vulnerable. I wish they had published this article last weekend before this bill was a done deal. All the amendments failed and enough dems are consistently crossing the aisle to have this sail through by Mon. or Tue.

[AlCzervik]

11. i watched the debate all week on cpsan, getting madder every

failed ammendment. It is an awful bill thats a major boondoggle to the cc companies.

[HeeBGBz]

12. I had one lousy credit card

Money went kaput and I missed 4-5 payments before I checked in to try to start paying back again. I found the late charges were equal to the amount I owed. So I owe twice as much as I borrowed. That sent me into a "fuck this" mode. I'm still not sure how I am going to deal with it. I was thinking of bankruptcy until all this hoopla came about.

[alarimer]

14. I had a payment that was credited the EXACT DAY it was due

And they still charged me a late fee. Assholes.

[amber dog democrat]

15. I use Debit cards at local venders - never on line

and a Southwest Airlines Visa card for everythinhg else but I do NOT carry a balance.

Its the other cards i have that I never use I need to cancel

1 Chase Mastercard
2 some local department store
3 an LL Bean card
4 a Sears Card.

its just stupid to keep these accounts open.

I do have a VISA card from my credit union but I use it for traveling.

Point is - these things are potentially dangerous to use. On a large ticket item I will have the money in cash saved up first. I just use the card for free airline tickets - which I can SELL to friends. Then I buy something fun to have