Credit Cards Are Broken

Finally, a compelling legal argument for why credit cards should be considered a defective product.

[Science Blog via The Transcendental Wildcard]

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  1. Daytonna says:

    The last paragraph terrifies me.
    “His article is titled, “Why ‘It Pays’ to ‘Leave Home Without It': Examining the Legal Culpability of Credit Card Issuers Under Tort Principles of Products Liability.”

    None of his intrest or concern is for the people hurt by credit cards… This is preliminary ground work for a wave of class action lawsuits against the credit card banks. This could make the tobacco settlements look like pocket change.

    A few common sense pointers about Credit Cards.
    1. Use for emergencies only.
    2. NEVER EVER EVER use a card that has an annual fee.
    3. If you dont have one PLEASE dont get one, they make spending money you don’t have way to easy.
    4. If you are going to have one, get it through a local Credit Union, their APR’s are almost always 5-10% lower.
    5. “The man” wants you to have credit cards and debt’s, its a form of control.

  2. thrillhouse says:

    Mostly the same stuff Dave Ramsey has been telling people for years – but its good to hear other people getting on board with it.

    I’m not sure how financing an emergency is common sense, Daytonna. Having cash in an emergency fund is common sense. Spending less than you make is common sense. Not going into debt is common sense. The trouble is that common sense isn’t common any more.

    You’ll never regret giving up your credit cards. Despite what billions and billions of dollars of advertising tells you, you just don’t need them.

  3. Solo says:

    Not sure I agree with any of the comments.

    Credit cards are a good tool to build “credit history” since they won’t give you any significant loans before you have an established one. So in that sense, credit cards are essential.

    The next thing you know you’re gonna tell me I don’t need to finance my car or my house, I could just save until I can pay cash. And then I die.

    I believe in a concept called personal responsibility. And it has nothing to do with common sense. It has something to do with the consequences of your actions.

    Of course the credit cards companies will grant you limits that are far too high. (one of my card has $12,000 credit limit, apr 21%, balance: 0) They make money out of your desire, but it’s nothing different from McDonalds selling you food or Apple selling you a computer.

    It’s up to you to know what is best for you. Didn’t your mommy teach you that?

    Don’t pile up more food on your plate than you can eat.
    Don’t spend more than you have.
    Don’t drive faster than it is safe.
    Don’t trust advertizers.

    As long as we keep telling ouselves we are big babies and we need to be protected by the mighty laws and our mighty government, we’ll still be in trouble. That’s the exact undertone of the article.

  4. Chris H says:

    The paper doesn’t appear to deal with the security problems of credit cards, which is interesting. I think the most compelling defective aspects of credit cards are 1) how loosely they are issued (ID theft happens because of instant credit), and 2) that there is no user password like there is with ATM cards.

  5. Good point, Chris. And I don’t agree that the fact that “people should know better” excuses banks from irresponsible tactics or misleading advertising. Just because there *are* undereducated, not-genius people in the world doesn’t mean it’s okay to take advantage of them. And it isn’t like the damage credit card companies are doing to consumers, families, businesses, etc. isn’t affecting the rest of us!

  6. thrillhouse says:

    solo-
    you don’t need a credit score.

    you can buy a car with cash – they’ll take it. In fact, here’s a way to save thousands on a car – Buy used. There are tons of perfectly reliable 2-4 year old cars on the market. Stop buying new cars that you can’t afford and there will be no need to finance it.

    You can pay cash for a house. In fact people who get serious about it can save it up in 4-5 years not a lifetime. But if you insist on getting a mortgage, then try something crazy like puting 50% down. And you don’t need a credit score to get a mortgage. If you are truely responsible, then you will have paid your landlord early or on time. Do that for two years, and according to the FHA guidlines you have qualified for the prime rate under manual underwritting guidelines. Much easier than dealing with these stupid credit cards.

    It doesn’t matter if you agree, or what your mommy taught you. the truth is what matters. And the truth is that credit cards are a bad product, and you don’t need them.

    This attitude of always having payments is not being responsible.

  7. Credit cards are a good tool to build “credit history”…

    But a credit history is just the information that creditors choose to share with one another. They don’t actually have to report my good habits should I choose to get a credit card.

    Besides, we don’t find it acceptable that other businesses try to farm and share information about us. Why should we feel differently about credit card companies?

    If you are truely responsible, then you will have paid your landlord early or on time. Do that for two years, and according to the FHA guidlines you have qualified for the prime rate under manual underwritting guidelines.

    Really?!?! Score!!

  8. methane says:

    I’m with Solo. The argument that we’re “allowing and facilitating people to be irresponsible with their money” is bogus. The truthiness of this situation is, to me, that people who pay off their bills completely every month will laud the convenience of credit cards. If you’re in the habit of spending even $1000 a month on a credit card, you should think about how inconvenient it would be to go to the bank and carry that much cash around. Credit cards carry, inherently, a level of security that large sums of cash don’t. If you’re worried about identity theft and the ease of someone using a stolen credit card, then you should really be directing you complaints toward the companies issuing and accepting credit cards rather than the consumers who find it convenient to use them.
    We’re not here to legislate protecting stupid people from themselves. That’s right! People who put themselves in large debts are DUMB. And you know what? I’m not going to inconvenience myself to protect dumb people.

  9. thrillhouse says:

    So, methane – If you do actually pay “bills completely every month”, if you live on less than you make, if your spending is really under control and on budget, then why do you need a credit card? How is that not replaced by a Visa Debit Card and a good emergency fund? Why do you go into debt every single month, just to pay it off? How does that make you feel somehow smart?

    And spendig with cash is not nearly so inconvenient as you try to make it out to be. Where do you live? Warren? Compton? Its not bloody likely that you’re going to get mugged (not that there is anything wrong with warren or compton). Even still, if you spend $1000 per month at stores, you wouldn’t carry it all with you, all the time.

    Anyone carrying a credit card (payed off or not) needs to educate themselves as to the actual state of that industry – their motives, their policies, their practices – as well as how people end up in debt to credit cards – here’s a hint: it has less to do with being “DUMB” and more to do with becoming reliant on them for day to day purchases when LIFE happens and Discover Card is their only plan.