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Econwatch
February 23, 2010 9:46 AM

Exacting Revenge On Credit Card Companies

By
Jill Schlesinger
Topics
Financial Decoder

This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

Just because the new CARD Act is operational, consumers shouldn't count on the rules for protection. If anything, it's more important than ever to comb through each statement to thoroughly understand what's going on, because there are lots of loopholes that still exist for the card companies. (Warning: there's still likely to be plenty of fine print (think 401 (k) prospectus!), so make sure you have a magnifying glass and some time to plow through the information.)

(iStockphoto)

Lots of people wrote to me yesterday, arguing that debtors are responsible for their sorry states and I should stop being so hard on the credit card companies. Here's a comment that was posted on cbsnews.com:
Gee, imagine that, credit card companies putting the fire to the feet of delinquent card holders. Ooo, forcing them to pay a fee for being late. Ooo, raising interest rates if they're late sixty days. Ooo, having to show the card holder how long it will take to pay off their incurred unsecured debt if they just pay the minimum. Sounds like whining on the part of the card holder. If card holders don't like the rules, then they should consider not incurring the unsecured debt in the first place. It's that simple. Living beyond one's means definitely has its downside.


We get it - there are lots of irresponsible people out there and they should pay for their excessive behavior. I was a financial planner for 15 years and of course preached financial responsibility and the evils of credit cards. But I don't like the nasty, preachy edge to some of the comments about individuals who end up in a bad financial condition. We don't know the circumstances that led to each situation. In some cases, there was recklessness while in others, there was bad luck. This is akin to the foreclosure issue that created an endless flow of electronic moral judgments.

How can we help people dig out from the piles of debt and at the same time exact revenge on some of the sleazier aspects of the credit card industry? The good news is that although America remains addicted to debt, a funny thing happened as a result of the Great Recession: consumers are waking up and nursing their credit hangovers by paying down outstanding balances.

According to the most recent Federal Reserve report, in 2009 consumers slashed their credit card debt levels by nearly $1,700 per household. They did so by reducing their credit card debt for a record 15 consecutive months, eliminating $109.2 billion in credit card debt.

The declining credit trend is probably the best outcome of the painful recession and it has the added benefit of rebuilding consumer balance sheets; satisfying moralists; and exacting revenge on credit card companies, whose business models rely on consumers' remaining mired in debt.

More on MoneyWatch:
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•Top 10 Interview Mistakes
•New Rules for Writing Off Haiti Donations
•The Best New Credit Cards
•Will Health Care Focus Derail a Jobs Fix?
•Don't Fall for This Mutual Fund Trick
•How to Really Tick Off the IRS

(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

  • Jill Schlesinger

    >> View all articles

    Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

Add a Comment
by formrusmcsgt February 24, 2010 1:12 PM EST
But I don't like the nasty, preachy edge to some of the comments about individuals who end up in a bad financial condition.
---
You don't, eh?

Then you can continue to feel sorry for people who's materialism is so unbridled that they spend money they don't even have.

I sure don't.
Reply to this comment
by toldyouso21 February 26, 2010 12:59 AM EST
Consider this--the huge economic growth in retail and many business markets relied on consumer debt. That's right--when they build those new shopping malls, or car show rooms or vision centers or fast food places or restaurants they rely on people frequenting them and paying with --credit cards. Remember we are a debtor society. Businesses run usually getting paid about 8 months behind their investment. How do they do that--by taking out short term loans.

The government tells us that consumers are the engine that drives our economy. The only way consumers could have EVER been that engine was to have access to credit cards. Only 5% of all Americans make over 100K/year so when you see all those strip malls being built or all those lines supplying customers to car washes and concerts and malls just think about this--it is not that everyone has a lot of money--most do not--but many have access to unsecured credit lines.

If all Americans were forced to cease using credit cards tommorrow--we would go back to one horse towns, a few stores and our world would crash. YOu may see credit cards as evil and people who use them as irresponsible but it is precisely those characteristics and that interdependency which is necessary for capitalism to work. If you doubt that, consider how businesses are interconnected and how much those in retail or service industries would make if no one had access to credit--better yet--consider what jobs would NOT be there.

When you proclaim the justification of comeuppance--chances are great you are simply a jealous person who is finally glad so many are joining you in the mudpits where you no doubt have always suffered and always been.
by quapawsix February 24, 2010 7:37 AM EST
Hurry up 12/21/2012
Reply to this comment
by hateisafourletterword February 23, 2010 9:52 PM EST
You do not need the stupid U.S. government to help you with credit cards. It is rather simple, do not charge something if you cannot pay it off immediately.
Reply to this comment
by formrusmcsgt February 24, 2010 1:18 PM EST
If you can pay for it, why charge it?
by rockcutr February 23, 2010 5:59 PM EST
Throw the stupid cards away. Pay off your debt. Get on with your life. The sign at the zoo reads, do not feed the monkeys for a reason. They are insatiable.
I have been credit card free for 14 years. Didn't need a 12 step program either. Just stop the insanity. Make a bankers kid go to community college.
Reply to this comment
by JBasara February 23, 2010 5:51 PM EST
Hello,
My name is Josh Basara and I work at Capella University.

However you want to make light of the situation, folks will want to know how the new changes affect their personal finance. Capella University has a webinar series produced by University faculty and staff members. Tomorrow's discussion is on Financial Literacy with Dr. Shailendra Verma, and the new credit card laws are sure to be a hot topic during the webinar.

If you have questions or interest in this topic, check out the webinar series at: http://***********/y95souv
Reply to this comment
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