Bad Credit

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Somewhere up there, George wrote: If I could change one rule I'd either have a maximum wage of say $25 million or just tax the crap out of any earnings greater then 25 million... say maybe 90%. People need incentive too grow their productive businesses not their personal fortune (beyond on need).

Physician and psychologist! How do you find the time?

He thinks we'd all be better off if Bill Gates retired after making $25 million.

What's so bad about an individual controlling a lot of money? That money doesn't disappear. There are only a few things someone can do with money: consume it, save it, invest it, give it away. Those options are the same for a billionaire as they are for the rest of us. And no matter what the billionaire does with the money, everyone else benefits in one way or another.

You are all missing the point, the reality is business will find a way to cover financial burdens pressed upon it by the government.Any financial constraints placed on business will result in higher prices, or higher fees period.

Inactivity fees have been around for a long time. More card issuers may start to use them, but its one of the oldest tricks in the book. The credit card companies would be having a hard time right now even without this legislation, so its not obvious this is specifically a response to that. Even before it came along they were cutting limits, changing terms and adding fees all over the shop.

I have never known it any different.

Do you really believe that without legislation, these card issuers would refuse this steady stream of income and profits?

yeah, really. I think the article is too quick to imply that the fees are a response to legislation. There's a number of other factors that could be leading to the increase in annual fees.

I think some of the fees are being charged not because of the legislation but because they can blame in on Congress.

What's really going on here is cost-shifting. Prior to this new regulation, credit card companies could charge more to bad risks. Now that their ability to raise rates is limited, they're simply making up the lost revenue by applying small fees to everyone. So the people with good credit are subsidizing the people with bad credit, all under the guise of protecting the consumer

Sound anything like health care reform yet?

Oh but health care is just too important to leave up to prices...we'd all be much better letting the politicians allocate who gets the best health care, they know better than us!
/snark

*sigh*

The market works miracles for food and clothing. And shelter, when the government gets out of the way. But apparently Washington thinks health care is too important to leave to the market. Because, you know, people can't live without access to expensive medical care that only exists as a result of the free market itself.

Do you really believe that without legislation, these card issuers would refuse this steady stream of income and profits?

Your assumption (that this could just be done at any time) begs the question: Why wasn't this occurring to this extent already?

My local coffee shop might want to raise prices today too, but it cannot do so and remain competitive. However, if a cost raising measure is imposed on ALL coffee shops then the result is a likely increase in coffee shop prices generally .

you forgot to quote the first line. I have never known it any different.

Almost all credit cards ever offered to me, came with annual fees. But if you select the right bank at the right moment, they might pay these fees for you and offer a credit card "without" annual fees.

Alternatively, if the turnover is above xxxxx dollar /year, the annual fee is cancelled. That's my "free" amex card.

I am sure also after the legislation such "free" offers continue to exist.


Two days ago I got mailed by Star alliance, offering me, as frequent flyer, the exclusive right to their credit card, at an annual fee of slightly below 100$. Special offer.

Once Citi offered me a "free" current account. On the condition I kept xxxx dollars on at least one account in their bank at any time.

All the fault of those damn legislators. Wonder how my bank manages to continue offering me the same conditions as before...?

My take on it is that banks willingness to supply credit has decreased, due to questions about their own solvency, higher perceived credit risk, and so on. Consequently, they want to shed some customers. The best way to do that is to raise prices and let the people who don't want to pay the higher price take their business elsewhere.

What makes this process more complicated for credit cards is that there is no single price for a credit card. Interest rates, annual fees, rebates, penalty fees, and so on all combine to give an effective price that varies according to how you use the card. Banks have to figure out which aspect of the price to raise, and that's probably going to lead to a period of experiments and trial balloons until they find something that gives them the right mix of volume and risk.

There is some tie-in to the recent legislation, however, inasmuch as some types of price increases are impermissible. Banks would probably prefer to target their riskiest customers through penalty rates and late fees, but the new laws limit their ability to do that, so they have to settle for something short of optimal.

That said, I think credit card companies will work pretty hard to keep their low-risk customers, especially those that pay their bill in full every month. For all the talk of "leaches," getting that 2% point of sale fee on a charge that will be outstanding for at most 25 days has got to be pretty profitable.

Yeah as if our dependence on bank credit cards isn't a form of serfdom already. Even people who don't use these cards pay extra in cost passed on by the retailers who have to pay fees on every transaction made by card bearers. You think you're pushing liberty but you're getting servitude... dutifully paying your fees and the equivalent of a credit cad taxes and defending the system as one of choice.

Maybe I'm wrong and maybe you are a liberated person not reliant on credit cards, their fees and able to avoid cost mark ups by shopping only at stores that don't accept them. But I bet I'm not wrong. You are indentured as well. Paying a little tax to Citi-bank to till their soil.

if there is a cash-only store that will give me goods cheaper than wal-mart or my local supermarket (neither of which offer cash discounts) around my house please let me know. i will be the first to shop there.

There's not. That's the whole point. Any merchant trying to compete will not survive if they don't accept one of the two major credit cards. So the merchant and you have no choice.

Doesn't having liberty and being independent mean you should have choices? Isn't competition in the market place important?

My barber has no problem competing with others who take credit cards. Competition and pricing are not as simple as you suggest.

And at what store do you suggest I will be denied the choice to use cash? When a merchant accepts credit cards, we both have the choice to use cash if we so prefer.

Again you can use cash but you are still paying the increased price the merchant has to add to the cost of your haircut to cover his mastercard fees.

No... you need to understand you pay taxes to Citibank on are regular basis weather you like it or not. You may not be a full-fledged serf but you are a mini-serf. Me too and I don't like it. I'm not one to defend it as some are around here.

Can you explain how that works? How is it that I, a cash-paying member of society, is paying money to CitiBank by going to merchants who do not accept credit cards (the barber shop referred above)? Extend that explanation to those shops who do accept credit cards.

George, if you had a private practice, I bet you would greatly appreciate credit cards rather than accepting checks. The fee you pay is usually a guarantee that the funds are actually available when the customer pays. That's valuable. And it's not an assurance that anyone can provide for free.

I understand the utility of credit cards. I guess I have a problem with the virtual monopoly Citibank and US Bank have on them.

Exactly. Credit card usage is great for businesses because it reduces the amount of bad checks received. The consumer debt get shifted from the business to the credit card company.

M,

You're correct that there is a transaction fee associated with the use of cards, but you forget that handling cash has a significant cost. There's a reason, for example, that many airlines now take only cards and not cash for snacks and drinks. The way I see it, if prices are being driven up by a method of payment, it is by the continued need for many operations to handle cash, with its associated extra employees and security measures.

P.S. I work for a company that sells cashless payment sytems to campus environments - and business is good.

...And of course, there are costs to the individual for carrying cash as well (handling, time, security), or card payment would never have caught on.

"Even people who don't use these cards pay extra in cost passed on by the retailers who have to pay fees on every transaction made by card bearers."

The buying public pays for lots of costs that the majority of patrons desire from a store which they willfully visit. A comfortable aesthetic; music and much, much more. Your point?

This is a little like me saying the public pays lots of taxes for extra government services they desire... your point.

My point would be that I would like to have the option of not paying a single penny to Citi-Bank but I am not sure that is even possible even if I don't use credit cards at all.

Servitude is not an all or none issue. It comes in degrees.

"This is a little like me saying the public pays lots of taxes for extra government services they desire... your point."

You have an intellectual blind spot for what is a voluntary exchange and what is not.

No I don't. Massive accumulations of wealth can be used to control people. That and it can also be used to control peoples government.

You and your children will pay taxes for Goldman Sachs right? How do you tell Goldman sachs from the government. They are infiltrated into every nook and cranny.

So how much do you charge for your medical services again? What do you do with little army of serfs anyway?

If only irony was nutricious, then there would be no health care crisis.

But is there really a health care crisis?

Or is it really just the latest in a multitude of "crises" manufactured by the political elites and spewed by a sycophantic media to justify yet another power and money grab for themselves and their favored friends at the expense of our money and liberty?

I rather suspect it's the later. Call me silly.

"I rather suspect it's the later. Call me silly."


You're SILLY!

45,000 die a year related to the lack of access and health care bills are a leading cause of bankruptcy (only in THIS country)... oh but I bet you have a government subsidized plan so there must be no crisis. I LOVE THE way you guys think..OR DON'T.

Do you know the details of your own plan?
Can they recind you, or drop you or choose not to renew your plan if you get sick. Is there a yearly cap they will pay for your rare disease when you get it?

I was just thinking about "lack of access". I wonder if they will force people in remote locations to obtain health insurance even though no providers exist within a reasonable distance/time. And even in not so remote areas. I can easily see a situation develop in which people are forced to pay for a government run plan, but no providers are actually available when they need assistance because the providers refuse to provide any decent level of service for the reimbursement rates offered by the government. This is already happening frequently to medicare patients.

health care bills are a leading cause of bankruptcy

I hope you're not relying on the Warren study for that factoid. It has two glaring oversights that render it worthless.

No one in my organization that I know off makes more then half million a year... if even that.

Me personally.... I voted to freeze our plenty-good-enough wages for the next several years so we could add more docs and nurses to provide better care. I'd much rather have another partner to share the work load and help improve my quality of care and job satisfaction than a salary increase at this point. But there are some fricking paper pushing asswipes out there that think they deserve another $20 million bonus for doing nothing of value.

in the Soviet Union, there were massive accumulations of wealth by the Politburo members. It's just that there was no middle class to speak of. I guess you prefer it that way, muirdog?

And I, credit card user, pay extra because you pay cash. If it wasn't for you, the store would not need a cash register and a safe in addition to all the overhead of counting money, taking it to the bank, closing out registers between shifts, etc.

All they would need is an automated card-swipe machine, just like a gas pump.

One of the many things I have learned from being married to a history professor is that if ever you see someone use the terms "serfdom," "slavery," or "indentured servitude" in reference to modern life, then that person has no idea what he is talking about. He has demonstrated both a woeful ignorance of the meanings of those terms in history and an unabashed willingness to hold forth on topics of which he knows little and understands even less. His ignorance of other matters is unlikely to be less than his ignorance of history; thus, you can safely ignore anything he has to say thereafter.

If ever you see someone use the terms "serfdom," "slavery," or "indentured servitude" in reference to modern life, then that person has no idea what he is talking about unless they referring to their relation with the government and then it's the most truthful thing ever written.

Muir is here just for comic relief, that's all. The sad thing is there are tons of limousine liberals that think exactly like that.

It's tragic comedy to me to see a bunch of co-dependents claiming they are seekers of liberty. You all suffer from a bizarre form of Stockholm Syndrome.

OH goody please explain how I'm co-dependent?
Save me Muirgeo, your my only hope!

Everytime you go to a store that uses credit cards the price of the products you buy all have increases in them relflected in the fee charged to the store.

"U.S. banks raked in $45.3 billion last year from credit- and debit-card fees charged to merchants. "

http://online.wsj.com/article/SB125590252696692...

You are paying those fees even if you do not use a credit card.

This sort of thing kills small merchants and makes even libertarian minded people not as independent as they think they are.

Wow you are a serf and you didn't even know it. That's whats so cunning about modern serfdom. They have the serfs arguing to protect the interest of their Lords and Vassels. It's very effecient. And that's why they get billion dollar bonuses while the rest of us have to work that much harder to make up the difference in what they steal.

Wouldn't you think with all the modern world effeciencies we'd all be working a bit less? But if you look around the average working stiff and their family is nothing but a bundle of frayed nerves. And a lot of this isn ot just so some dopes can have a $500 million dollars or even a billion dollars but they need multiple billions of dollars.

If you are a working class person and you think that 400 people having $1.5 trillion dollars of wealth doesn't effect how hard you need to work in some way then you are a fool or more liekly ignorant of the details of how this all works.

I am not really concerned about the richest 400 people and their $1.5T. They and the banks are keeping the system working for all of us "serfs."

Using the $45B figure for credit card fees and the 2007 census data from govt, I calculate that, per capita, banks made about $150 each this year, or about $300 per wage earner/worker in the labor force. What did I get for my $300?

-I do not have to stand in line at banks to get my cash out to go shopping. That adds up to many hours per year of my time saved.

-I do not have to carry large amounts of cash and risk getting robbed or losing it when i go to make a major purchase. Peace of mind.

-I can order things on the phone and over the internet using a card, shopping for the best prices not available in my high-rent NY neighborhood.

-I can go on vacation in foreign countries and instantly get cash equivalents in their currency at an ATM, saving major hassles of paperwork and risk carrying currency and exchanging it.

The list of advantages to using plastic goes on and on.

Considering the low annual cost ($300), compared to real taxes paid to govt, which are orders of magnitude higher, I am happy to pay it for the convenience it brings to my life. But what conveniences, in comparison, do I get for my >$100,000 paid to govt in taxes annually?

I would rather have bankers making money off me in exchange for services I really want and value, than having Nancy Pelosi and her buddies getting rich from my tax dollars providing govt "services" I really don't want.

So tell us how should we transact? Do I have to carry around $1,000 in cash, make a zillion trips to the bank machine to buy goods and services? How do I buy stuff online with cash? To go grocery shopping I have to write a paper check? What is the costs associated with the latter? You do understand there is no way to avoid costs in transactions - I know becuase I build a lot of this stuff - there are a lot of moving parts, controls, maintainance etc...

You want me to tell you how to overthrow our CitiBank overlords? I wish I knew. My only point is that the libertarian philosophy of unregulated markets is no way to liberty if you are a regular guy. My point is to point out that this idea that the market forces no one to buy its products is BS. Accumulated wealth and the monopolies it creates are threats to liberties just as too big governments are. And usually they become one and the same as we now see. And there are no politicians at that are billionaires. But their are many billionaires who owe their fortune to political favors.

I am going to do all my banking through a local credit union and try to get rid of all my credit cards. But just like I am dependent on the Fossil Fuel Lords it will be hard to keep all of my money going to the Wall Street Lords.

If I could change one rule I'd either have a maximum wage of say $25 million or just tax the crap out of any earnings greater then 25 million... say maybe 90%. People need incentive too grow their productive businesses not their personal fortune (beyond on need).

The argument is that when we heavily taxed extreme wealth people had more incentive to grow their companies and the money not used for ridiculous salaries and bonuses went back into the business and the economy. It makes sense and historical facts support the claim.

It makes sense to me and there is nothing unfair about it if we all agree that if any of us become that successful we will put back most above a certain amount.

The economy would be much better off, incentive would not be effected and no one would suffer from having hundreds of millions of dollars as opposed to billions.

Bottom line there is really no good reason to allow massive accumulations of wealth. People who are for such allowances are in my opinion for subjugation or they might possibly think that one day they want to become a multi-billionaire. In which case they are sick fu#$$ who need not be worried about.

Plenty of rich politicians, and a few billionaire politicians.

Michael R. Bloomberg Mayor, New York $4.8 billion
Winthrop Rockefeller Lt. Governor, Arkansas 1.2 billion
B. Thomas Golisano Gubernatorial candidate, New York 1.1 billion
John Kerry Senator, Massachusetts 550 million
Tony Sanchez Gubernatorial candidate, Texas 500 million
Amo Houghton Representative, New York 475 million
Jon S. Corzine Senator, New Jersey 300 million
Herb Kohl Senator, Wisconsin 250 million
Jay Rockefeller Senator, West Virginia 200 million
Mark R. Warner Governor, Virginia 200 million

Forbes List Richest Politicians:
http://www.forbes.com/2002/10/28/richpolitician...

Most if not all made their riches BEFORE becoming politicians... So again it's wealth infiltrating politics not politicians becoming wealthy. Makes MY case.

No, I do not make your case, becuase unlike you I would not grant these people more power, whereas you would, and do.

Good to know...so let's just all stop spending...see how the Keynesians like that one?

Seriously Muir, your just as much a "serf" as you claim everyone else is.

And the libertarian in me would rather pay hidden fees to the private sector than pay hidden taxes by using worthless paper printed by the Fed.

The bottom line, life sucks, nothing is fair and at least I can pick how I want to get screwed.

I love how you think your the only one to ever think of this crap, ha.

What else is amazing, is how you try to make fun of us "serfs arguing to protect the interest of their Lords and Vassels." Yet your the one always on here spouting off liberal Statist propaganda, while the rest of us are trying to promote the Decentralization of power....say it with me. D-e-c-e-n-t-r-a-l-i-z-e, that means getting the power away from the rich and corrupt, aka the politicians. Which is the reason why they get their "billion dollar bonuses." They wouldn't have gotten jack squat if the market, rather than the political class, had it's way.

Yet here you are still spouting off what your "Lords", aka Liberal Democrats, tell you to spout. So go on, spend spend spend, that's what your Lord Keynes wants you to do, you wouldn't want to upset him would you?

"Yet your the one always on here spouting off liberal Statist propaganda, while the rest of us are trying to promote the Decentralization of power....say it with me. D-e-c-e-n-t-r-a-l-i-z-e, that means getting the power away from the rich and corrupt, aka the politicians"
Justin


I completely agree. I just think decentralization is best achieved by better democratic representation of people and their needs and no direct representation of corporations and their needs.

A more strictly defined and followed constitution might help but straight-jacketing the government would not work IMO.

Decentralization through centralization. Freedom through slavery. Ignorance is strength.

You'd make Orwell proud.

Justin Palmer: "And the libertarian in me would rather pay hidden fees to the private sector than pay hidden taxes by using worthless paper printed by the Fed. "

I agree, Justin. But I wouldn't accept the claim that cash purchasers incur higher costs because of credit card use by others. Handling and storing cash has costs to both the retailer and his customer.

I'm referring to the tax through monetary debasement by the Fed. That is the very real cost of holding cash.
Just think of the cost when the dollar drops and goes Wiemar?

It's not serfdom, moron, in that one isn't forced to get Credit Cards, and anybody who chooses to can simply pay off their balance and use equally convenient debit cards.

The actual institution of serfdom was one where a person by the very act of being born was considered to have entered into a state of semislavery where they were forced to labor in the fields for a lord, give to the lord 50% of the man's production, and was legally constrained from leaving.

In other words, the institution of serfdom has far more in common to what non-plutocarch's would experience under your favored political system.