Credit Card Reform Bill Passes With Guts Intact

NYT: It sounds like most of the good stuff stayed in the Senate Credit Card Reform bill:

  • Plain-English contracts
  • Can’t raise interest rates on existing balances unless the card holder is 60 days behind, then the rate has to be restored if payments are on time for six months.
  • 45 days advance notice required for rate increases.
  • Credit card companies can’t charge a late fee if they themselves are late processing a payment.
  • Statements have to get mailed 21 days before the payment is due.
  • Harder to give credit cards to people under 21.
  • Interest rates can can’t be increased within the first year
  • Promotional rates have to last at least 6 months

Senate Passes Bill to Restrict Credit-Card Practices [NYT] (Photo: frankieleon)

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  1. KingPsyz says:

    w00t

    Consumers FTW?!

    • henwy says:

      @PSN: kingpsyz:

      Only for the stupid ones. Those of us who actually have half a brain will end up paying more because of this.

      • TouchMyMonkey says:

        @henwy: Or we play credit card triage. Trim back to the one best card in your wallet; shred the rest. I plan to get one from my credit union.

        • henwy says:

          @HurtsSoGood:

          It’s going to be harder and harder to do that. I’ve been trying to find a good rewards card to consolidate and I find that many of the benefits are being cut for ‘new cardholders’. I’m afraid it’s never going to be as rich as it was living off the cream of those programs.

      • KingPsyz says:

        @henwy:
        some fact to back that up?

      • Citizen Kang says:

        @henwy:

        You must have missed all the posts on Consumerist where people with perfectly good credit and made all their payments on time, but were still having their interest rates. Tell me, in the scenario I’ve described, whether or not those people had half a brain.

        • henwy says:

          @Citizen Kang:

          They have a quarter of one. At least they can make their payments on time. To have half a brain you have to realize that carrying credit card debt is stupid and to only charge what you can pay for. If you have to borrow money, there are better means to go about it than credit cards.

          • henwy says:

            @henwy:

            Oh, and by ‘pay for’ I mean immediately pay for as in you have the funds. Using a credit card as a revolving door for interest payments is just as stupid as visiting payday loan companies, just more socially acceptable.

      • cerbie says:

        @henwy: true, but you have been benefiting due to being heavily subsidized by others–IE, their loss is your gain.

        Also, this bill hardly makes it where they can’t have those people you’re worried about losing. It just keeps the CC companies from being able to do quite as much wonky stuff to screw people over.

        • henwy says:

          @cerbie:

          I look at it as a stupidity tax. While there are a few people who really did suffer through no fault of their own, for most it was ignorance, stupidity, and poor decision making. If we’re going to punish someone, it might as well be the stupid.

  2. RonDiaz says:

    Hot. Hopefully the house doesn’t water it down.

  3. I Love New Jersey says:

    What about the stuff that is going to screw responsible people since they have to pay for those who are not.

    • m4ximusprim3 says:

      @I Love New Jersey: This argument has never flown with me- if you’re using credit “responsibly” and getting free airline miles, etc, and those benefits go away when you stop predatory lending, how responsible are you being, really? You’re just using the CC companies as a conduit to siphon wealth from the less responsible.

      I’m not against it, but you can’t really complain when your benefits (which were subsidized by idiots) go away when the govt protects the idiots. You’re admitting culpability in the same sentence as implying victimhood.

      one or the other, buddy.

    • shoelace414 says:

      @I Love New Jersey: Didn’t take long for this talking point to make it through the internet.

      “We have to allow predatory lending, or else I’ll lose my table scraps!”

    • William Brinkman says:

      @I Love New Jersey: You have it all wrong with credit cards. It’s the other way around: the irresponsible people pay for the responsible. Your copy/paste complaint doesn’t work here.

    • HiPwr says:

      @I Love New Jersey: I’m certainly not a pro-regulation guy (to the chagrin of the many totalitarianists that frequent this blog), but none of what is listed above sounds unreasonable to me. Nor would I expect the credit industry to punish those of us that play by the rules and live within our means to make up for this. If they do, people like me will simply jump ship to those that don’t or whittle down the number of credit cards used.

      The question is, what else is in this legislation?

    • Trai_Dep says:

      @I Love New Jersey: Proof that “I <3 NJ” avatar badges indicate even worse quality of thought than Facebook badges.

    • stevejust says:

      @I Love New Jersey: Yeah, because they’re REALLY going to start charging interest immediately or charging annual fees…

      They NEED the people who pay their bills to offset the people that don’t. If they chase the non-risky, responsible cc users away, which those proposals will, all they’re left with are subprime accounts and they are bankrupt.

      NOT. GOING. TO. HAPPEN.

      And yet they still find people like you who will believe this crap they put out there???

      Yikes.

      • Eryk says:

        @stevejust: I see your argument, and it does make sense. I don’t feel however that we can universally say that all card companies won’t charge annual fees or do the Interest Truffle Shuffle. I think some will.

        I think some will rethink/retool their reward programs. I think some will make it harder for everyone to get a card.

        Not all will do it, and you’re certainly right that the successful ones will find some miraculous way to avoid having to do the things above.

        BTW – I use the word miraculous in a sarcastic manner. It cannot be that hard or impossible to do.

        I just think that while he’s presenting one extreme side of the argument, you’re presenting the other extreme. The truth will likely be somewhere in the middle.

        That being said, we should all start watching our CCs for the next year for any shenanigans they try to play on us.

      • Eyebrows McGee (now with double the baby!) says:

        @stevejust: And even if let us say ONE of my credit cards makes my terms less attractive to try to make up for lost profit on predatory lending to bad risks, I’m obviously just going to jump ship to another card that’s not pursuing that strategy. Judging by the perks, upgrades, and new card offers I get, I’m a profitable and desirable customer. If they’re losing customers that are profitable on fees and they’re left with customers that are profitable on “responsible” use, I’d expect my desirability to GROW, not shrink, and cards will have to compete harder for my business.

    • rhys1882 says:

      @I Love New Jersey: Way to buy into the credit card company scare tactics. You should volunteer to be in an ad for them.

    • sporesdeezeez says:

      @I Love New Jersey: Jeez, this is a dog-eat-dog blog. I don’t think he’s phrased the statement exactly right; it’s not the bill, it’s the banks that may do what he’s concerned about. This sentiment was expressed in an earlier post today on Consumerist, so I don’t think he’s that far off:

      ‘Those that manage their credit well will in some degree subsidize those that have credit problems,’ said Ed Yingling, American Bankers Association CEO.
      [consumerist.com]

    • Galactica says:

      @I Love New Jersey: Welcome to America. First day?

    • PersonalResponsibility says:

      @ Lv Nw Jrsy: Cnsmrst nd ts cmmnttrs hv trnd nt pplst mb – ppl wh r rspnsbl r vl nd shld b pnshd.

      • Traveshamockery says:

        @PersonalResponsibility: I don’t know if I’d go that far…

        • William Brinkman says:

          @Coach Cal Is My Dream Weaver: I would. They are a populist mob, but just reference my post- the revenue from financially unstable, interest paying customers benefits the other end of the spectrum through rewards, bonuses, and lower limits. The relationship is the exact opposite that the OP stated. His or her point was destroyed.

          • Anonymous says:

            @William Brinkman: Are you trying to say that the capital to fund the “rewards” on rewards cards comes EXCLUSIVELY from irresponsible credit customers?

            Perhaps you’re forgetting about the fact that every credit card purchase has a fee at the point of sale that goes directly to the credit agencies. That amount adds up quickly. Also, the whole concept of “rewards” is based on using the card the way they want you to (spend more of your available credit, being more likely to accrue interest), so for many “responsible” credit customers, those rewards never materialize for us because we don’t use enough of the credit line before the “rewards” expire.

            Don’t kid yourself: the credit companies are screwing EVERYONE, responsible or not… Be it through binding arbitration, interest rate hikes, or automagic credit reduction, and this bill addresses 2 of those 3 problems.

    • RandomZero says:

      @I Love New Jersey: Why all the hate for the government because of threats from CC companies? To me, this looks like the local mobsters saying “There’ll be some… unpleasantness… if you go to the cops”, and then people get upset at the police. The government isn’t the party who started the predatory lending, they’re not the ones who insist on continuing to wrench as much money from the consumers as predatory lending gives, and they’re not the ones making veiled fucking threats to the people who keep them afloat. Why isn’t there more fury aimed at the companies who actually had the balls to MAKE the threats?

  4. David Rodriguez says:

    Harder to give credit cards to people under 21.

    I think my financial history would have been a lot easier had that been the case 10 years ago, rather than throwing credit cards at a foolish college kid with no job.

    Is any of this retroactive? Can rates that were increased for no reason in the past few months be brought back down?

    • oblivious87 says:

      @David Rodriguez: How is it that I’m 22, have a half dozen credit cards, and have never carried a balance over into the next month except when I was getting 0% APR introductory rates for the first 6 months to a year??

      Sure there are stupid kids out there who get credit cards, max them out, and suffer for it. There are also kids who have their parents pay for everything. But there are also responsible people who know what they are doing when they are handed that new piece of plastic.

      I’ve built up a credit score that is much higher then most adults double my age and had this legislation been around 4 years ago, my shiny new car in the driveway would be a little less shiny and a lot older.

      The answer shouldn’t be to penalize, but rather educate that credit cards are really only short term loans and tools which can be used to protect yourself when making purchases online and in person when cash isn’t a viable option.

      • Drew5764 says:

        @oblivious87: You’re clearly in the minority of younger CC users. Luring kids into signing for a card they legitimately cannot afford while giving them free stuff is pretty predatory. Before cell phones were ubiquitous, pre-paid calling cards were popular give-aways.

        On a side note, you bought a car on a credit card? Seriously?

        • Rain says:

          @Drew5764: I believe they said that they used credit cards to build up a good credit score, allowing them to get a car loan for a new or slightly used vehicle instead of a $500 beater.

          In theory, if you had the cash to buy the car you could put it on the credit card to get cash back or reward miles and pay off the credit card immediately. I’ve heard of people doing this with their tuition.

        • TreyWaters says:

          @Drew5764: “Luring kids into signing for a card they legitimately cannot afford…”

          Really? They are signing kids up for expensive credit cards? I thought most were free. All of the ones I saw when I was in college were free. Then again, I guess if you can’t afford free, you really are broke!

          Now, for the kids buying things they cannot afford, that is a completely different topic, and one could easily argue that CC companies are not forcing ANYONE to spend money they don’t have. At least I’ve never been forced to do so by any of the CC companies I have used.

    • PersonalResponsibility says:

      @David Rodriguez: Because the evil credit card companies clearly force college kids to buy things they cannot afford.

    • William Brinkman says:

      @David Rodriguez: Thanks for using your CC irresponsibly so that I could use mine responsibly. I guess you should’ve taken that financial literacy course in high school like I did instead of doing something else.

    • HogwartsAlum says:

      @David Rodriguez:

      I doubt very seriously that it will be retroactive. My guess is you’re stuck with it.

  5. bornonbord says:

    This is really good news. I’m still iffy on how this effects people with poor/ok credit who want to get BETTER credit. Will it be harder to get a card with a fair interest rate and a decent limit? Especially after the other posting about what the credit card companies are threatening to do.

    • italianscallion33 says:

      @bornonbord: Credit cards are not the only way to improve your credit – and if they are what got you into trouble in the first place, you probably shouldn’t look for more. You can buy a car in your name, buy a house, open any type of account where you make monthly payments (cable, cell phone, etc.), pay all bills on time, etc. Obviously most people aren’t in the shape to make large purchases, but becoming more responsible and paying off debits will help.

      • bornonbord says:

        @italianscallion33: I totally understand. But people with little/no money, and diligently paying off massive debts (student loans) will find it hard to get credit.

        Especially in this economy…

      • wcnghj says:

        @italianscallion33: EHhh, new tradelines are better than doing doing.

        Cable, cellphone,etc- Does not report.

        Buy a house or a car? Good luck getting approved with no open tradelines…

      • Kimaroo - 100% Pure Natural Kitteh says:

        @italianscallion33: Paying regular bills on time, or even paying rent on time does not build better credit..

        Now if you’re late and they send you to collections it does harm your credit..

        To build credit you have to have a lender that reports to the credit bureau. The way I did it when I was younger was open a secured credit card.. I made on time payments on that for a year or so before they would release the security, and then I got another card to build more history.. Then I had a little bit of a hard time buying a car because of my “limited history” but then a dealership came along that gave me a great rate and I’ve been paying on time ever since.

        Now I have good credit. Yay me. lol.

    • KingPsyz says:

      @bornonbord:
      at first it might be hard, but you’ll also see the FICOs self right eventually when this has had time to impact credit at large

  6. HIV 2 Elway says:

    What about rate caps? The stuff listed above seems more than resonable. The talk last week was that they would put a cap on rates that can be charged.

  7. William Brinkman says:

    Never say that us middle and upper-class folks never took a hit for “the greater good.”

  8. Skankingmike says:

    now comes the fluff and lobbyists!

    ATTACK!

  9. jaydez says:

    But can we bring guns into Nationa Parks again?!?!?!?

  10. ckaught78 says:

    Glad to see our government protecting people from themselves.

  11. Jevia says:

    This could really hurt those who accept the fact that using a credit card and having a balance will end up costing them a bit more, but can’t make some expensive purchases outright.

    Airline tickets is a good example. It cost my family over $5,000 a year ago Christmas to fly to visit my husband’s family overseas. We didn’t have that kind of money up front, so we charged it. We accepted that it would take us a while to pay it off, but it was worth it to visit family.

    We had planned to do the same this Christmas. Now that the credit card company can raise our rates sky high before the new laws kick in, we don’t know that we can go because of how much more it will cost us to pay every month, or having it take a lot longer to pay off the balance (the airline prices so far are the same as last year).

    • KyleOrton says:

      @Jevia: They could always jack up your rate anytime they wanted.

      And I would suggest skipping one Christmas trip, saving up the $5000 for the next year and repeating. This way you’re ahead of the curve, don’t need to care about the rate and probably save $1k/year just on that trip.

    • Martin Focazio says:

      @Jevia: Was it an unexpected trip? A death in the family? If you can actually affort to pay MORE than $5,000 AFTER the trip, why didn’t plan ahead and start saving up for the trip BEFORE you take it?

      One thing that is clear to me at least is that the ability to PLAN FOR THE FUTURE has been drummed out of our heads with the ability to buy now, pay later.

      I’ve taken my family to Disney – we saved and saved and saved and then, when we had the money, we went. Crazy, huh?

    • BritBoy says:

      @Jevia: This could really hurt those who accept the fact that using a credit card and having a balance will end up costing them a bit more, but can’t make some expensive purchases outright.

      Why ? And how exactly could it ‘really hurt’ ?

    • Traveshamockery says:

      @Jevia: This is a great example of everything that is wrong with the American credit card mentality.

      Now, not later, more, not less, spend, not save.

    • Triterion says:

      @Jevia: Why don’t you just get a small loan? It would be a lot cheaper since the APR wouldn’t be anywhere near the 15 or so percent you’d get charged with a credit card? Why is it so hard for people to understand that they’re borrowing money and there’s tons of places to do that other than a credit card!!!

  12. Trai_Dep says:

    It feels pretty darned good that a change has taken place in Washington. I couldn’t imagine something even close to this passing several years ago.
    Yay, people bothering to show up at the polls to vote!!

    • Big Poppa Pimp says:

      @Trai_Dep: A 90-5 vote required support from the evil right wing in addition to the nation’s altruistic benefactors that are currently in charge and fixing everything that is wrong with America. This bill would have passed no matter who controlled the White House.

      • HiPwr says:

        @Big Poppa Pimp: You’re wrong. Bush/Cheney would have forced Congress to change the bill so that it gives no-bid contracts to Haliburton, kills polar bear cubs by setting them on fire, eliminates all taxes for oil companies, and imprisons all of the GOP operatives responsible for blowing up the New Orleans levy so that the truth will never be heard.

        • Trai_Dep says:

          @HiPwr: 8 years of running the White House and what, 12 years of controlling Congress (more or less)? And… Nothing.
          Versus Hopey comes in with quite the full slate of Things Gone Very Wrong Thru Conservative Malfeasance, and he and Dem-controlled Congress have this in less than half a year.
          It must hurt to have to rely on empty rhetoric when plain facts are against you.

          • HiPwr says:

            @Trai_Dep: The Democrats controlled Congress for going on three years now. Did you miss that? Was there a bill that went before Bush out of the Democrat-controlled Congress that he vetoed? You also overlook Big Poppa Pimp‘s point that the vote was 90-5. Were all those evil Republicans having out-of-body experiences at the time?

          • MostlyHarmless says:

            @Trai_Dep: I thought you’d learned not to try and argue those points here. Rhetoric and talking points come out right away.

            Anyways, the point here is that this happened only after the President showed initiative about it. No one even considered doing this before (BillyC included).

            Moreover this is one of those bills which the congress hopes never comes up, because they will look _incredibly_ bad if they vote no on it.

            This bill would have passed anytime if it had come up, but the the fact remains that no one wanted to take initiative before President Obama did it. Thats what makes a leader.

            • HiPwr says:

              @Lucifer_Cat: You seem to be a bit confused about our system of government here. Obama can’t direct Congress to do anything. If he did, he would have got funding for his Gitmo closing “plan.”

              • MostlyHarmless says:

                @HiPwr: Obama has as much control over the Dems in the Congress as much as most parents have over kids who have grown up and moved out. Essentially, they dont have any legal control over them, but still have a big influence (in well adjusted families, anyways).

                Now if Obama, (who is twice as popular as the Ds in congress) tells them that he wants a credit card reform bill, there is no way they are going to say no. As I said before, they look like incredible dicks if they do that.

                Gitmo is a different matter, with lots of things up in the air. And it makes them look “weak on national security” if they vote to fund it. Its just election attack fodder. Whereas the chances of someone attacking you for saying “i support the electorate, for once” are very very low.

                • HiPwr says:

                  @Lucifer_Cat: If anything, Congress is leading Obama around by the nose. Wasn’t it Obama that was saying that he was going to cut pork in Washington while he was on the campaign trail? And yet he signs the “stimulus” bill that is the most pork-laden legislation of our generation.

                  • MostlyHarmless says:

                    @HiPwr: The stimulus bill was in large part his idea. Also, he very clearly campaigned about passing the stimulus if he got elected.

                    I still dont get why people are shocked when he does what he said he would do.

                    • HiPwr says:

                      @Lucifer_Cat: He said that he was going to cut back on pork. He said it over and over. The stimulus bill was chock full of pork. Congress called the shots and he just went along despite his promises. Or, did he lie on the campaign trail? Liar, or follower. Take your pick.

                    • MostlyHarmless says:

                      @HiPwr: There are a couple of specific points I have in reply to your comment, but knowing from experience that well reasoned conversation is not quite possible with you, I will just leave it at that.

                      I have taken my pick, and I do not need your approval for that. :)

                    • Trai_Dep says:

                      @Lucifer_Cat: Honestly, I was hoping that the Freepers would just leave it alone for once. It was an honest expression of genuine happiness that things had changed and that for a change, the Washington critters are doing something to help average Americans.
                      Optimism or foolishness, take your pick. :)

                    • HiPwr says:

                      @Trai_Dep: @Lucifer_Cat: Run Away!!!!!!!

                    • henwy says:

                      @Trai_Dep: I don’t see how this helps average americans. It certainly helps the stupid ones though.

                • henwy says:

                  @Lucifer_Cat:

                  Ya, he told them he wanted to shut gitmo. Just look at how they’re doing everything he says.

      • Snarkysnake says:

        @Big Poppa Pimp:

        “This bill would have passed no matter who controlled the White House.”

        Right -O …And it would have immdiately been vetoed by any president with an (R) beside their name,where it would have required 67 votes to override and make it law.The fact that the administration got behind this bill and busted out the whoopin stick on the credit card companies shows that elections mean something.

        These are not draconian reforms. They are just common sense changes in the relationship between these companies and their customers to make the transacton equitable for both sides. The CC companies destroyed their own argument to continue such practices when they went begging to Washington for a bailout last year.

    • PersonalResponsibility says:

      @Tr_Dp: Ths prpgnd sttmnt brght t y by th Dmcrt Ntnl Cmmtt. Pls stnd by fr frthr trnsmssns.

  13. Anonymous says:

    While this is all well and good, am I the only one who thinks this really isn’t going to make a lot of difference for people who get into the worst trouble? I don’t see anything that really prevents predatory lending – that is, giving credit to people who really shouldn’t have it anyway. Irresponsible people will continue to read (or not) the plain English contracts, with explicit high interest rates, and continue to not pay on time, run up huge debt and get into trouble regardless. This is the nature of being irresponsible…

  14. Skaperen says:

    None of these rules inhibit CC companies from charging low-end customers for the actual cost of their services. So there is absolutely no reason whatsoever for the costs to high-end customers to increase … unless it was a case of low-end customers subsidizing high-end customers all along.

    I suspect this was a case of “redistribution of wealth” these companies were doing … just not the kind that Joe The (unlicensed) Plumber was whining about.

  15. wcnghj says:

    “Rates can be increased within the first year”

    I hope that is a typo.

    • processfive says:

      @wcnghj: So do I. As it stands, that doesn’t look like much of a reform action.

    • Brandon says:

      @wcnghj: Yes it is a typo. From the link “Rates could not be increased within the first year, and promotional rates would be in force for at least six months.”

    • tbonekatz says:

      @wcnghj:
      It’s a typo. The actual news article says “can not” be increased in the first year.

  16. HIV 2 Elway says:

    A reasonable legislative compromise and news that the Dems won’t fund the closing of Gitmo until there is actually a plan in place for the detainees? All in a day? USA USA USA!!!

    • HiPwr says:

      @HIV 2 Elway: It would be icing on the cake if we could get another $800k for Murtha’s airport that supports seven flights per day. Too much to ask. Sigh.

  17. Skaperen says:

    Now where is that bill to take out the Mandatory Binding Arbitration clauses from a wide range of contracts (including credit cards)?

  18. Tim Marvin says:

    Fantastic … on his desk by Friday!

  19. TEW says:

    Before this bill was passed I tried to get a credit card from Capital One and Citi but both declined me. I was 18, a college student making $7200 a year and had $12,000 in a savings account with Capital One. I was declined for a $500 limit for by both companies. I don’t see why it is needed for the government to make it harder for CC companies to give credit to people under 21. I do not know the details but will this screw me and my preexisting card with USAA. (I am 19) I don’t like carrying cash.

    • TEW says:

      @TEW: Sorry but I forgot to add this. I would have liked to see the bankruptcy reform act of 2005 repealed instead of these new laws. I think that law has made the credit card companies and other loan sharks go crazy because they know it is near impossible now for you to void your debts. If you can wipe out all of your debts than a lot of these loans and credit cards would have never been issued.

    • RStui says:

      @TEW: Debit Card? I understand your pain, but you ARE in the minority. The VAST majority of 18-21yr olds should NOT have access to the unreasonably large and unreasonably expensive credit they currently do.

      I applaud you for being fiscally responsible, and I’m sorry for you that this just makes it harder, but at the same time, I’m glad SOMEONE stepped in to curb the College Credit Card drama.

      • Corporate_guy says:

        @RStui: Pure trash. Just because some people are irresponsible, does not mean someone under 21 shouldn’t be able to get a credit card. And debit cards are not safe to use online. It is a travesty to prevent 18-20 years olds from getting a credit card. I had one since 18 and never held a balance because I never needed a loan. But I racked up free cash back and a credit history. Denying someone that is sick. No body should be forced to graduate college without a credit history, some people actually do need to buy cars when they graduate.

        • consumerfan says:

          @Corporate_guy: Nobody should be encouraged to bury themselves in debt either.

          I remember being in university and you don’t plan ahead more than about a day. And you’re so inured to debt that an extra thousand seems like such a small thing compared to being able to live.

          Yes, you ought to have access to credit at 18, but more than that, you ought to have access to credit if you have an income. And you ought to have access to credit if you have someone who will indemnify your losses (like parents) if that someone has an income.

          That someone should have some control over the maximum loss, since it’s that person’s money.

          • Canoehead says:

            @consumerfan: At 18 you can vote and join the military, but you shouldn’t have access to credit if you are otherwise qualified? Look, I think it is dumb to give a bunch of high-limit cards to a guy with no job, but lots of college students have legit expenses and real jobs. I know college kids don’t always act like it, and I know the US has a dopey drinking age, but these are ADULTS we are talking about – the government cannot round off all of life’s sharp edges forever.

            • Drew5764 says:

              @Canoehead: Real jobs at 18? Making how much exactly?

              Your hyperbole of “shouldn’t have access” is exactly that. Hyperbole. It’s simply harder to get access. If you need one, you’ll do what it takes to get one.

              We don’t seem to have an issue with restricting alcohol access to someone under 21, why not credit?

              • Canoehead says:

                @Drew5764: Then why not move voting to 21 too? Oh right, younger voters trend Democrat, my bad. Either 18 is the age or majority or it isn’t. At 18 I was in school full time and also a member of the Army Reserves, making good money in the summers and weekends, in addition to doing some odd jobs for my Dad’s company. I earned cash back by putting books, dorm rent and other expenses on my credit card, and paying the balance every month. It also ensured that I was able to build credit while in school.

                • MostlyHarmless says:

                  @Canoehead: Multiple of Anecdote does not make Evidence. Or something of that sort.

                  Also the voting age has been 18 for a long long time. Even when the younger voted tended R.

            • HogwartsAlum says:

              @Canoehead:

              I never liked it that someone who was only 18 could go get killed in a war.

          • MostlyHarmless says:

            @consumerfan: Most people seem to be interpreting the “Harder to get credit if you are under 21″ as “No Fing way you are getting credit if you are under 21″, as compared to the “If you are under 21, you can get credit if you have an income and someone co-signs for you.” which it really is.

            And I would say that is a reasonable thing to ask.

            • Corporate_guy says:

              @Lucifer_Cat: Harder to get credit, means no job, no credit. I had loans to pay for things, but I was able to funnel my purchases through credit to gain cashback and a credit history. If they demand an income, I would have been unable to get a credit card. Credit cards are also good when you want to stretch loan money by buying books online.

        • BritBoy says:

          @Corporate_guy: Have no fear, there is nothing in this bill to prevent credit card companies issuing new cards to those under 21.

    • edwardso says:

      @TEW: I’ve had my capital one card for 4 years and the limit is still $800 despite never having missed a payment or any other “risky” activity. I think they were more cautious with credit lines.

    • sponica says:

      @TEW: Yeah I had 2 credit card before I turned 20. Because, I HATED the fact that I needed to pay a security deposit on a cell phone. Before I got that cell phone, I was invisible. @RStui: But I thought we were supposed to use CREDIT cards for all sorts of purchase protections and it’s pretty hard to rent a car with a debit card. In fact there are some places where you need to fork over a huge deposit if you use a debit card and seeing as USAA allows members to rent at the age of 21 (with no fee) it makes sense for their members to have access to a credit card. Plus I imagine if you don’t need mommy and daddy’s permission to join the Army @ 18, you shouldn’t need a cosigner on a credit card application.
      Also, maybe I’m in the minority and maybe it’s an SES thing. But I have yet to meet a college credit card moron…and I’m 25. And most of my friends who got into credit card debt did so waaaay after college. And those who did get in trouble did so because of bad money management not that “i didn’t understand…”

    • kazoni says:

      @TEW: I doubt it will. USAA’s credit card, especially their First Start (student) credit card is designed so you can’t overly screw yourself. It starts with a $500 limit and increases as you go further in school (and supposedly more financially mature). I know a measly $500 doesn’t even cover books anymore but it does get you started with a credit history and if you default on it, yea it’s going to hurt, but I’d rather default on $500 than $5000 as a college freshman. (I started with their First Start card when I hit college and they’ve been my only credit card…pay it off in full every month too).

      It’d be nice if other credit card companies and banks took cues from USAA and promote education along with their products. It’s not that people are getting outrageous credit limits, it’s that they are still being morons and not realizing that just because they have a large credit limit, they don’t need to charge up to it every month.

      Yes, their terms and interest rates border on criminal, but ultimately it is the consumer’s responsibility to read, understand, ask if they have questions and maybe not use the fool card.

      • say what?! says:

        @kazoni: credit card companies should not be responsible for teaching people fiscal responsibility. Along with other life skills, parents should teach their children that.

        • Trai_Dep says:

          @say what?!: Well then, things are settled, then!
          Good thing there are no unplanned pregnancies and everyone drives responsibly so there are never any accidents, being so irrational.
          Sometimes life is more complicated than words on paper. And when market-based solutions educate future customers to be responsible borrowers, how is that not praise-worthy?

  20. Jeff Heinen says:

    I think it will be interesting to see what survives the Senate/House compromises and how this will actually effect the CC companies.

    We have seen too often where new laws and regulations have different results then anyone suspects.

  21. dragonpup says:

    The 5 who voted against it were…

    John Thune (R-SD), John Kyl (R-AZ), Lamar Alexander (R-TN), Robert Bennett (R-UT), and Tim Johnson (D-SD)

  22. Tux the Penguin says:

    As great as this is (and some of this is needed to account for the uneven level between the lender and debtor), I’m just waiting for the law of unintended consequences to kick in.

    Will companies start bringing back Annual Fees? Or tie reward programs to annual fees? Reduce rewards? Or just cut limits?

    Something will happen to adjust for the change in the rules to account for risk.

    • wgrune says:

      @Tux the Penguin:

      I think a few companies have already hinted that they will do just that: bring back the fees and take away the rewards.

      Oh, and there was talk about interest occurring at time of purchase, even if you pay off your balance in full every month.

      • gnubian says:

        @wgrune:

        Amex still and always has had annual fees … It really wouldn’t make much difference if I had to pay a fee .. unless it also impacted my visa check card.

        time of purchase interest is how my credit union works with actual loans .. interest is calculated and applied daily. Those are also fixed length loans though. It would be troubling on an open ended loan .. could you ever get the balance paid off without having to actually overpay to accomodate any additional interest charges that might apply between when you scheduled your payment and when the payment was made (generally at the close of business the following day).

        • pecan 3.14159265 says:

          @gnubian: American Express has cards that don’t have annual fees. The Blue cash for example, has no fees.

          • FLConsumer says:

            @pecan 3.14159265: Quite a few of Amex’s cards lack fees. More importantly, if you’re financially savvy, the cards w/annual fees can easily pay for themselves if you choose the right cards & use them to maximize benefits/rewards.

  23. Corporate_guy says:

    Is universal default gone?

  24. allstarecho says:

    Also attached to the credit card bill was a gun amendment which now allows people to carry loaded guns in national parks and wildlife refuges. Unfortunately it didn’t allow people to carry loaded guns into the AIG building.

    • whydidnt says:

      @allstarecho: If this is true, just shows you how broken our system is. The continued practice of attaching an unrelated, probably unpopular, item to a bill such as this is ridiculous. Who want’s to be the one that votes “against consumers” even if they don’t agree with the gun law?

      I’m not against the gun law, per se, but it’s this kind of shenanigans that make many of us mistrust the government.

    • Trai_Dep says:

      @allstarecho: Or the US Senate building, which would have also been high-irony value. Especially if it only applied to the Senators that supported it.

    • Canoehead says:

      @allstarecho: Hah-Hah – I bet you think that was especially funny if you had a loved one working there.

  25. Ratty says:

    All of this reform is great, but all of the pork attached to it is not.

    Someone even tried to slip in a federal ban on abortion into the bill.

  26. DrRonster says:

    Those of us that use different credit cards for specific reasons and also play the reward game by paying all balances will be getting the shaft. I use a few for the extended warranty offered as well as the percentage reward. I am so terrified of card fees that every 2 weeks I routinely zero them out. I even recieved a late fee because the payment was made 2 days prior to the statement date, not the due date. CC couldnt figure that one out, never saw that before but their computer charged it. Today I just about finished redeeming all my rewards from all my different cards. So far Chase has paid me $450 this year. Discover has paid NASCAR.com store $120 for $150 in junk.
    We will all now have to treat the rewards like we now treat gift cards. Use them as fast as you can. I was saving up gift card for a TV from Circuit City until last summer and told the wife to go and burn them on anything there. $200 in junk is better than holding worthless plastic. Im hoping they keep the extended warranties at least. We may wind up using our debit VISA or MC if there is interest charged from the second you charge something. Anything that didnt need a warranty was going on the highest reward card. Only had 1 card limit cut, 11,500 to 300 on the GM card. Bought a Chevy in August and never used since. GM card just offered me extra rewards, on $300?

    • PersonalResponsibility says:

      @SalenaBabblerash: Shh. Too many facts and logic. Your just supposed to hate credit card companies. You haven’t been drinking enough of the Consumierst propaganda kool aid.

      • Fist-o™ says:

        @PersonalResponsibility: Let me get this straight: You’re defending a person who:
        -Has so many credit cards that he has to oversee the accounts every 2 weeks and did not immediately cancel a card the erroneously charged him a fee for no reason;
        -likes to buy “Junk”,
        -Purchased a VEHICLE using a credit card; if i’m understanding him correctly?

        • DrRonster says:

          @Fist-oâ„¢:
          What else do you call “free” stuff you get from the nascar.com store
          And I purchased the vehicle after amassing over $2000 in GM dollars when they were offering employee pricing for all and I asked if the GM dollars could be used since I wasnt a supplier or employee only to be told that the GM dollar amount was NOT capped ie if I had been using the damn card instead of the others I could have walked out of the dealership without paying anything and it would have been a Caddy. BTW paid cash for the car, didnt put it on charge but did consider it for the % rewards

        • DrRonster says:

          @SalenaBabblerash: @SalenaBabblerash: @Fist-oâ„¢:
          If you use any financial software its very easy to set up 20-30 credit card, checking and savings accounts and keep track of them. Easy and enjoyable to payoff charge cards in 10 minutes or less online. You visit your account anyways so autopayment accounts on all and its just literally 2 additional clicks online for each account. I also enjoy playing this game with the banks. I have 8. I have 4 checking and 3 savings and 14 credit cards.
          In 2000 my info was stolen from a server which I had been told may have occured. First charge from Global Telecommunications of Moscow Russia for $10.88 and card was “canceled” and turned over to FBI for their investigation. Got my 10.88 back 4 months later when I found the form with the expired return date on it and the CC honored it. My Buddy waited for his Statement $600 in several transactions.
          The erroneous charge was immediately removed and its my most important card so why would I cancel a 3% that also has the extended warranty, 0 deductible insurance on rental vehicles up to 15 consecutive days of use. Totaled a car over a year ago and rented the same vehicle switching from a world mastercard to a visa signature every 2 weeks. Didnt need the Winter wreck till opportunity struck in August and got it early.
          Microsoft Money came with credit monitoring free for a year. Forced me to buy a new copy each year. Now Im using Quicken and am searching for a reasonable price for the credit monitoring. That alone was worth over $100 per year.

    • Trai_Dep says:

      @SalenaBabblerash: First Obama takes away your credit card rewards. Next are your guns.
      /sarcasm

    • Myownheroine says:

      @SalenaBabblerash:

      Maybe you’ll get the shaft. Or maybe you’ve been enjoying a free ride, so to speak, as the expense of those who can’t afford 30+% interest.

      But it’s not like CC companies are now going to be unprofitable. 15% interest is still legal. As is 25% interest, apparently. Late fees aren’t illegal. Rate increases aren’t illegal. Pay by phone fees aren’t illegal.
      And of course, they’ll still be charging the store every time you use your card.

    • hedonia says:

      @SalenaBabblerash: WAIT… a second. You’re afraid that they’ll charge interest on your DEBIT card? Guh? Is it attached to a checking account with a negative balance?

      • hedonia says:

        @hedonia: Sorry, can’t read =) Someone else said they were afraid they’d be charged interest on a debit card and I thought you were saying the same thing.

  27. LabanDenter says:

    18 yr olds can get aboritions without consent, but not credit cards?

    Makes sense to me

    • Trai_Dep says:

      @LabanDenter: You can cut your credit card to pieces then throw it in a dumpster when you’re bored with it.
      Can’t even give a compound fracture on an infant’ limb without The Gummit getting all parsnicky about it. Damn fascists.

      • FLConsumer says:

        @Trai_Dep: @LabanDenter: Either way, you’re not going to be able to buy yourself a drink until you’re 21. Keep in mind you can still drive a 6,000+ lb SUV or car at 16, but can’t raise a 12oz beer.

    • edwardso says:

      @LabanDenter: 18 year olds are adults, where would the consent need to come from?

  28. robotrousers says:

    As nice as it is that we’re working to protect idiots who can’t manage credit, I’m guessing my cc will be cancelled soon. I pay my balance every month.

  29. BritBoy says:

    What happened in the bill to these unfair practices :

    -applying payments to the lowest APR balance first
    -mandatory binding arbitration
    -universal default

    ???

    • Fist-o™ says:

      @BritBoy: HEAR, HEAR! Binding Arbitration still the biggest ding ever.

      Perhaps they’ll start “Accidentally” charging people erroenous stuff then let it get to arbitration.

      • FLConsumer says:

        @Fist-oâ„¢: I fully agree. Arbitration makes sense regarding disputes between two businesses. It was never meant to be used between a corporation and a single individual.

  30. savdavid says:

    I can’t believe my eyes! Perhaps the credit card industry is pouring all their lobbyist money into the House to buy off the politicians? Or maybe, JUST MAYBE, the outrage is so loud from the public even the deaf Congress is going to do the right thing for the citizens for once. I will believe it when I see it. Of course, the industry has already jacked up rates, etc. in case the bill did pass intact. Still, I will be mighty pleased to see Washington doing something good for the public for the first time in over 8 years! Fingers are crossed.

  31. nova3930 says:

    All I see is another excuse for the companies to raise my rates before this takes effect. I’d be willing to bet cold hard cash you see a big spike in the average CC interest rate in the months before this takes effect….

    • hedonia says:

      @nova3930: already did… remember, THE ECONOMY means that they’re afraid that I might not be able to pay my bills, so they’re going to make the bills bigger so I’m sure to pay them.. wait…

  32. H3ion says:

    It will probably be the guy in the middle that gets screwed again. The card holder who pays the entire balance each month doesn’t care what the interest rate is because he’s not paying it. The credit card company makes money on him only from the merchant fees. The guy with no income who runs up his credit to the limit probably doesn’t care what the interest rate is because he’s not going to pay it. It’s the guy in the middle with the small balance that winds up paying the entire load and has to cover the lack of profit from the first guy and the absolute loss from the second guy. It isn’t fair but that’s how it appears to shake out.

    Unless they start charging a “user fee” to get the card, in which case I think you’re going to see a lot of cards canceled.

  33. Inail says:

    A significant part of this reform at one time included a provision to create different cash/credit prices, ie a discount for cash. I expect that would make the cashback many cards offer meaningless.

    Can’t tell if that’s still a provision. Anyone see anything about it?

  34. PersonalResponsibility says:

    Cnsmrst cntns t chmpn fr xtrmly cnsmr nfrndly lgsltn fr ths f s wh r rspnsbl.

    Thts t. ws rspnsbl cnsmr t 18, nvr pd dm n ntrst, hw dr th gvrnmnt mgclly dtrmn m ncpbl f hndlng crdt crds by mkng t xtrmly hrd t gt crdt ntl 21. Bcs t 21 w ll mgclly bcm rspnsbl. Th gvrnmnt hs n bsnss wth ntrfrng n th cntrcts vlntrly ntr nt.

    t n pnt dd ths blg vn qstn hw ths prvsns wld hrm ppl wh py thr blls n tm nd nly py fr thngs thy cn ffrd. ts dtrs t p th pltcl prpgnd. cn’t wt fr ll th strs dcryng dcrsd crdt lmts nd cmplt wpng f crdt crd rwrds.

    Cnsmrst hs prvn ts n th pckt f th Brck bm rgnztn, nd nt n th pckt f cnsmrs. ‘m sr nd vryn ls wh stts th sm wll b bnnd frm cmmntng fr sttng th bvs.

  35. maruawe42 says:

    The CC companies will find a convenient loophole where they can screw the customer someway or somehow..Where there’s money to be made the jackals will find it.

  36. Anonymous says:

    What about all the card holders who, in spite of having pristine payment histories and good credit scores, had their interest rates doubled or even tripled?

    Did this legislation do anything about that? Otherwise, it seems to me that the legislation is too little, too late.

  37. Amish Undercover says:

    What would you all think of the following provision:

    “Minimum payments are required to be at least 10% of the existing balance. (To be applied to new purchases only.)”

    Alternatively…

    “Each charge must be paid back within 1 year. (Buy a fridge for $600, and you will pay an additional $50/month + interest for the next 12 months regardless of your other purchases.)”

    Either of these might help prevent the large build up of credit card debt by those who cannot afford it (and typically don’t understand how much they are getting screwed by CCCs). If everyone understood math well, these wouldn’t be needed.

    Before anyone starts saying that this would be trampling on the free market, tell me of at least 2 people you know that understand credit cards well and also don’t pay off at least a large chunk of their CC bill every month. The free market doesn’t reach efficiency if it is based around people who don’t know what they are doing.

    • Amish Undercover says:

      @statgrad: “if it is based around people who don’t know what they are doing.”

      Should have been “if it is based on deception of those who don’t understand their free market options.”

  38. stands2reason says:

    They themselves? Oh god. You mean “they.” Themselves = object of a reflexive verb. Which also means it doesn’t belong in the subject part of a sentence.