I just got through watching this great docu covering the credit card and lending industry...Highly recommend watching it...Is a real eye opener on just how sleazy the credit card industry is...It is just plain incredible what they get away with and how powerful their lobbyists are...They prey on the poor and uneducated who make up the majority of their profits...Surprise surprise

Showed that the credit card giant MBNA was the largest donor to Dubya...And magically the Bankruptcy legislation that cracked down on the middle class was passed during his term

Also shows how they throw credit card apps at college students from the first day they are on campus...Showed a piece on a young college student who had 12 credit cards with only a part time job....Unreal the depths the cc companies will stoop to

The movie will leave you with a sick feeling in your stomach and will lead you to take those evil cc's out of your wallets...Know I just did

MAXED OUT (http://www.maxedoutmovie.com/)

It is just plain incredible what they get away with and how powerful their lobbyists are...They prey on the poor and uneducated who make up the majority of their profits...Surprise surprise

MAXED OUT (http://www.maxedoutmovie.com/)


Easy,

All corporations will 'prey' on whomever that they feel will be a good target audience... we may not like it, but the college student is a better target for any business than a multi-millionaire. With a multi-millionaire, you get an incredibly large asset base with what is hopefully an established earning potential. With a college student, you get a generally low asset base, but with a potentially unlimited earning potential.

So, if you look at it in a positive aspect, the credit card companies are 'banking' on the potential earning power of the up-and-coming. Now, who is to say that those folks (poor or otherwise) won't overcome all the obstacles in their path and form a mulit-million dollar start up business that continues to grow? And who wouldn't want to be a part of that, even if from a basic fiscal point of view...?

The credit card companies are just trying to turn a profit. I signed up for tons of credit cards in college. I got all kinds of free stuff by doing so.

I've actually made money off of my credit cards. I pay 'em off every month and I get cash back.

At any rate, I do agree that they've paid for some incredibly one-sided reforms. However, consider that under the previous regime, a debtor could simply tell a creditor "Sucks to be you, you ain't getting paid" by declaring bankruptcy.

Now at least folks are required to pay back what they spent. I could care less if it's on interest or whatever. That doesn't concern me one bit. These peoples' situations are products of their free choices. We can't expect the State to protect us from our own stupidity in all cases, can we?

Guess you guys look at it a different way, but I've always thought the pushing of credit cards on students was sleazy...Giving credit to someone who will likely only be able to pay the minimum for several years is crap in my book

Lot of college students that didn't come from the same home situation that you did mid...Lot of pressure to keep up with their friends who may be more well off when they hit college

I would hope you would at least be troubled by the fact that they are willing to give a college student 12 credit cards knowing full well they make less than 10,000 a year...Said on the doc the credit companies barely even take income into effect when decisioning a card...More sleaze

I'm a hardcore believer in people taking responsibility, but I doubt anyone can watch this film and not realize cr card companies, payday lenders and others in the consumer lending biz aren't making most of their money off people's misfortunes and lack of finance education

Perfect example for the credit card co's...Said for every $1 of principal payments paid back they make around $2 on interest and misc fees...Quite a profit machine

Guess you guys look at it a different way, but I've always thought the pushing of credit cards on students was sleazy...Giving credit to someone who will likely only be able to pay the minimum for several years is crap in my book

Lot of college students that didn't come from the same home situation that you did mid...Lot of pressure to keep up with their friends who may be more well off when they hit college

I would hope you would at least be troubled by the fact that they are willing to give a college student 12 credit cards knowing full well they make less than 10,000 a year...Said on the doc the credit companies barely even take income into effect when decisioning a card...More sleaze

Sleaze? Show me the high school graduate who has never heard that spending more money than you make is a bad idea? To do so is a conscious choice. A stupid choice, but a conscious one.

In America, once a "man" hits the age of 18, they are considered adults insofar as the freedom to contract. It's true that past courts (the court in the day of Justice Fields of the late 19th century) pushed this "freedom" to invalidate minimum wage laws, child labor restrictions and other safety restrictions in the workplace, but we need not pass on those issues. The presumption here is that an 18 year old possesses the mental capacity to contract his/her own business. If they are truly stupid people, yes, it is the prerogative of business to take advantage of stupid people wherever they may be so long as they remain within the law.

-- I agree there is the ever-present issue of who writes the law and for whose benefit those laws exist, but that is a topic for another day. Imagine if we gave the government the power to oversee the "fairness" of contracts between parties. What is the touchstone of "fairness"? In almost all contractual situations, one party is going to come out with the short end of the stick. In this case, the kid gets to get some sweet rims for his car without having the money for them (a benefit) and he'll then have to repay the credit card company. Either said "adult" can get a job and earn the money or he can pay minimum payments so his $600 rims end up costing around $12,000 or so.. his choice. A lot of how onerous these contracts are depends on the behavior of the individual customer. If you behave stupidly with a credit card, they stick it to you.. that's their business model... or you behave smartly with your card and you stick it to them.. or rather let them stick it to the retailers you purchase from :)

If you interfered with my contractual relationships with credit card companies where I earn a few hundred bucks per year for doing nothing, I'd be most upset with you.


I'm a hardcore believer in people taking responsibility, but I doubt anyone can watch this film and not realize cr card companies, payday lenders and others in the consumer lending biz aren't making most of their money off people's misfortunes and lack of finance education

Perfect example for the credit card co's...Said for every $1 of principal payments paid back they make around $2 on interest and misc fees...Quite a profit machine

Since when did making a profit become a bad thing? These companies also provide society a huge benefit -- jobs, capital investment, etc. No matter what, in a capitalistic system like ours, money flows from the dumb people in society to the smart ones.

The problem is not one of financial education, it's one of discipline. We live in a society where the government is supposed to solve all of our social ills -- no one is supposed to be accountable for their own stupidity. I find such a concept offensive. I much prefer social darwinism :)

Never said they weren't smart to profit off of it all, but it smells to high heaven...They know exactly who their best customers are and they aren't the ones paying off their cards monthly

Consumer advocate told a story of a seminar she held at the request of a major cr card company...Had a long winded explanation of how they could cut the amount of their customers who file bankruptcy in half by having a more precise prescreening process

Said she answered many questions before a guy in the back who she figured was the guy in charge said "Well that would cut out too many of the people who make up most of our profits"

Solid business model, but a sleazy one...Barely a step above payday lenders in my book

Then, as a society, we need to decide do we or don't we want to allow consumers to freely contract with whomever they choose to contract with when they are made aware of all of the facts so long as there's no fraud, duress, misrepresentation or other undue influence or perhaps we would more prefer a controlled economy where only specific types of transactions are allowed and where the government is the sole arbiter as to when something is "too profitable" or "too unfair."

Frankly, given the golden rule of politics (he who has the gold makes the rules), I prefer a less regulated system in which consumers are free to contract as they choose. I feel pretty much the same when it comes to minimum wage and workplace safety. The former being an unnecessary encroachment by the government into private industry, the later has essentially been solved by the worker's compensation system where it becomes unprofitable to hurt workers, thus workplace safety is a sound investment (as opposed to the situation in the 19th century when a worker had no recourse against an employer who injured them).

Your objection seems to be hung up on the "sleaziness" of these transactions because you have a strong party taking advantage of an otherwise weak and generally ignorant party. How would you propose to "fix" this problem? Would you suggest that one must pass a basic intelligence test in order to contract?

My suggestion would be for personal finance courses to be mandatory in high school and college...Heck even in middle school to at least help those who drop out of high school for one reason or another...Need to hammer in people's brains how these companies entice you to spend and then put the hammer down

Just leaves a bad taste in my mouth how these large financial companies are profiting so much off the middle class's misery

Cool if you are ok with it, but you might have a little different view if your parents got caught up in this mess...Overspending is the norm in our society now...It's not just ignorant people doing it

How do you feel about the credit card companies increasing people's credit lines (w/o request from the customer) who they know good and well have essentially maxed out their card and only pay the minimum??...Still no hint of sleaze?

They should have to have some level of income to debt ratio for an increase to even be allowed...That should be regulated

I think there should be a 5 day waiting period for credit card spending. You want those shoes? Wait a week.










/not really

I think there should be a 5 day waiting period for credit card spending. You want those shoes? Wait a week.










/not really

Or...Maybe spousal approval on every purchase over $100 :053:

Woohoo!

No spouse!

The spousal approval method works at my house!

Woohoo!

No spouse!

Probably why I have so much crap.

Question: How narcissistic do you have to be to quote yourself?

My suggestion would be for personal finance courses to be mandatory in high school and college...Heck even in middle school to at least help those who drop out of high school for one reason or another...Need to hammer in people's brains how these companies entice you to spend and then put the hammer down

Ah.. and which courses would you cut so that we could educate people about what is so damn obvious it's ridiculous? Band? Art? Physical Education? Biology? I mean... I'll sum up those courses for you: "Don't spend more money than you make." Pretty easy, eh?


Just leaves a bad taste in my mouth how these large financial companies are profiting so much off the middle class's misery

Misery? I'm pretty much the epitome of middle class right now. I have TONS of credit cards. They will all be paid off by the next billing cycle... I will earn 1% through 5% cash back on my purchases. I am not miserable.

Again, who are we to second-guess a company which makes a profit by loaning money? How are those profits too much? How much profit is too much? I suppose you have an answer for this? Should the government simply confiscate all profit above a certain point? Would that satisfy you?


Cool if you are ok with it, but you might have a little different view if your parents got caught up in this mess...Overspending is the norm in our society now...It's not just ignorant people doing it

Okay, so you say they're not ignorant. They know full well what they're doing. They know credit card companies loan you a little bit of money, charge an onerous amount of interest and allow a low monthly payment. They know that by having too many credit cards and having said cards maxed out that they will be financially ruined... yet they do it anyway?

In the U.S., theoretically, we have this thing called freedom. With freedom comes responsibility. I'm sorry, I'm just not about to jump on this bandwagon. People have to be responsible for their own actions. We are free to contract -- we're even free to make dumb contracts. That's one of the few freedoms which hasn't been to overly regulated by the government.


How do you feel about the credit card companies increasing people's credit lines (w/o request from the customer) who they know good and well have essentially maxed out their card and only pay the minimum??...Still no hint of sleaze?

On the flip side, how do you feel about some idjit who is maxed out getting a limit increase notice from the credit card company deciding that they'll go ahead and keep on spending? No hint of irresponsibility there? Who actually spends the money? Not the credit card company...


They should have to have some level of income to debt ratio for an increase to even be allowed...That should be regulated

First that.. then the interest rates, then what next?

Agree with everything you said, but I do feel you would be a little more compassionate for those struggling with debt problems if you weren't from money

Know they should all know better blah blah, but it's just much easier to stick to that point of view if you have never struggled with debt is all I'm saying...Not saying you haven't of course since I don't know you

I would be different if college kids were being forced to sign up for the cards, but it's an individual's choice. Education is key, but I for one won't be counting on that education coming from the state. I view it as part of parenting and preparing my kids for the real world.

I would be different if college kids were being forced to sign up for the cards, but it's an individual's choice. Education is key, but I for one won't be counting on that education coming from the state. I view it as part of parenting and preparing my kids for the real world.

That would be great, but that doesn't help any of the kids raised by parents who don't know squat about personal finance...I would think there are millions of adults out there who don't even understand how interest works...All they know is what their monthly payment is

Worked as a banker...Unbelievable how many are finance ignorant

As for the student cards...Don't find it a little unethical they are pushing them at every single function with free t shirts and other stuff and with sales pitches like " Hey just sign up for it....You don't even have to use it"....What percentage of 18 yr olds are going to say no to that?

I say it's crap for the universities to be profiting off creating even more debt for college students...Student loan debt is already unbelievable w/o piling it on

Here's a little more advice. ;)
College Student's Guide to Credit Card 'Investing' (http://www.flixxy.com/college-student-credit-card-investing.htm)

Agree with everything you said, but I do feel you would be a little more compassionate for those struggling with debt problems if you weren't from money

How do you go from compassion to taking away freedom? I don't see how the two can be equated. Sure I come from money. That's irrelevant though. It's hard to feel compassion for someone who dug their own hole.

Would you use this same compassionate feeling of yours to make alcohol illegal since some people drink way too much of it? College students in particular :)


Know they should all know better blah blah, but it's just much easier to stick to that point of view if you have never struggled with debt is all I'm saying...Not saying you haven't of course since I don't know you

I've never struggled with debt because I never spend more than I make. That's shouldn't be such a difficult concept.

It's not a difficult concept. But it can be diffucult to spend less than you make when life at times costs more than you make. A quick google search reveals that the average American debt is staggering.

If you pay off your credit cards every month, I salute you. You are the minority. It's hard to be compassionate when you have never been there. It seems easy...its not.

Yes, they knew what they were doing when they contracted. Yes, credit card companies should be allowed to hit up college students for cards. Ethical?...IMO, no. Legal and fine? Definitly.

It's not a difficult concept. But it can be diffucult to spend less than you make when life at times costs more than you make. A quick google search reveals that the average American debt is staggering.

If you pay off your credit cards every month, I salute you. You are the minority. It's hard to be compassionate when you have never been there. It seems easy...its not.

Yes, they knew what they were doing when they contracted. Yes, credit card companies should be allowed to hit up college students for cards. Ethical?...IMO, no. Legal and fine? Definitly.

Not really. Here's a story from MSN Moneycentral which includes some interesting figures provided by a 2001 Federal Reserve study:

(oh.. link)
The truth about credit card debt - MSN Money (http://moneycentral.msn.com/content/Banking/creditcardsmarts/P74808.asp)

* 23.8% of American households have no credit cards at all -- no bank cards, no retail cards, nothing.
* Another 31.2% of the households the Fed surveyed paid off their most recent credit card bills in full.
* So together, the households that owed nothing on credit cards equaled 55% of the total.

* Only 29% of households owe $1,000 or more on their cards.
* 21% owe $2,000 or more.
* 6% owe $8,000 or more.
* 4% owe $10,500 or more.
* 1% owe $21,400 or more.

* About 48% of credit card holders owed less than $1,000
* About 10% of card holders had total card balances in excess of $10,000.
* More than half of all people with credit cards use less than 30% of their total credit card limit.
* Just over 1 in 8 people use 80% or more of their credit card limit.

There are still stats out there which do tend to point out that a minority of people are horrible with their money... That'll likely always be the case though. At any rate, the picture is not nearly as grim as some would paint it to be.

Even worst case, if my current credit card debt were $8,000.. I could definitely manage that. I'd have to make some cuts in my current lifestyle. I certainly would have foregone purchasing my 46" LCD TV, I might live in a smaller apartment, etc., but it's something I could tackle on a fairly short order. Bandnerd and I live well within our means. Hopefully, soon, we'll be living well below our means.

* More than a third -- 36% -- of those who owe more than $10,000 on their cards have household incomes under $50,000, according to the VIP Forum analysis.
* 13% who owe that much have household incomes under $30,000.
* The percentage of disposable income used to pay debts is still near record highs.
* The median value of total outstanding debt owed by households rose 9.6% between 1998 and 2001.
* Bankruptcies set another record in 2003, with 1.6 million personal filings, the American Bankruptcy Institute reports.

That study was from 2001. 6 years ago.

I was incorrect in my statment about a minority. Your just barely a majority and it is shrinking.

http://www.federalreserve.gov/Pubs/OSS/oss2/2004/bull0206.pdf
Q&A: Why Consumer Debt Is Rising - Newsweek Business - MSNBC.com (http://www.msnbc.msn.com/id/14251360/site/newsweek/)
Middle class living on the edge? - MSN Money (http://articles.moneycentral.msn.com/SavingandDebt/SaveMoney/MiddleClassLivingOnTheEdge.aspx)
NOW. Politics & Economy. Americans and Debt. Bankruptcy | PBS (http://www.pbs.org/now/politics/bankruptcy.html)
American Debt: Escaping the Credit-Card Quagmire - Newsweek Business - MSNBC.com (http://www.msnbc.msn.com/id/14366431/site/newsweek/)
Basics, Not Luxuries, Blamed for High Debt (http://www.washingtonpost.com/wp-dyn/content/article/2006/05/11/AR2006051101779.html)

Not really. Here's a story from MSN Moneycentral which includes some interesting figures provided by a 2001 Federal Reserve study:

(oh.. link)
The truth about credit card debt - MSN Money (http://moneycentral.msn.com/content/Banking/creditcardsmarts/P74808.asp)

* 23.8% of American households have no credit cards at all -- no bank cards, no retail cards, nothing.
* Another 31.2% of the households the Fed surveyed paid off their most recent credit card bills in full.
* So together, the households that owed nothing on credit cards equaled 55% of the total.

* Only 29% of households owe $1,000 or more on their cards.
* 21% owe $2,000 or more.
* 6% owe $8,000 or more.
* 4% owe $10,500 or more.
* 1% owe $21,400 or more.

* About 48% of credit card holders owed less than $1,000
* About 10% of card holders had total card balances in excess of $10,000.
* More than half of all people with credit cards use less than 30% of their total credit card limit.
* Just over 1 in 8 people use 80% or more of their credit card limit.

There are still stats out there which do tend to point out that a minority of people are horrible with their money... That'll likely always be the case though. At any rate, the picture is not nearly as grim as some would paint it to be.

Even worst case, if my current credit card debt were $8,000.. I could definitely manage that. I'd have to make some cuts in my current lifestyle. I certainly would have foregone purchasing my 46" LCD TV, I might live in a smaller apartment, etc., but it's something I could tackle on a fairly short order. Bandnerd and I live well within our means. Hopefully, soon, we'll be living well below our means.

* More than a third -- 36% -- of those who owe more than $10,000 on their cards have household incomes under $50,000, according to the VIP Forum analysis.
* 13% who owe that much have household incomes under $30,000.
* The percentage of disposable income used to pay debts is still near record highs.
* The median value of total outstanding debt owed by households rose 9.6% between 1998 and 2001.
* Bankruptcies set another record in 2003, with 1.6 million personal filings, the American Bankruptcy Institute reports.

I think those stats are 74% crap. You yourself have remarked in other threads on how statistics can be massaged with a bias. Matter of fact it happens 68% of the time somebody quotes stats. It's happening 100% of the time in this post.

Food for thought: 2001 is when interest rates dropped through the floor and 77% of people refinanced their houses to pay off their 21% credit cards. That percentage right there will FUBAR 42% of the stats.

I'm being silly, but I'm sure you can see my point. :)

Cool if you live within your means mid...That is to be applauded especially in today's society

Try living at your current household income for 5 or 10 (throw in a 4% annual raise) more years and check back in with us and let us know if you are still living within your means

Still satisfied with that apt in 5 years or maybe itching for a larger home?...Still satisfied with your current vehicles?

What a revolutionary concept....Lending based on income

Anyone want to guess how many of these classy lenders told their clients not to worry one bit when they signed the apps?


Subprime loans get new standards

Principles issued by bank regulators include new consumer protections; lenders should only offer loans to those who have proof they can repay.
June 29 2007: 5:02 PM EDT


WASHINGTON (Reuters) -- U.S. bank regulators Friday tightened standards for mortgage lending in a bid to curtail risky practices that have been blamed for a record level of foreclosures.

Borrowers should not be penalized for refinancing a mortgage before a low introductory rate resets to a higher level and lenders must have evidence a borrower can repay, according to a statement of principles issued by the regulators.

While several lawmakers congratulated the regulators' initiative, they said more must be done to prevent the current crisis from happening again and to aid troubled borrowers.

"The regulators have taken an important step in the right direction, but it only gets us part way to our final goal," said Sen. Christopher Dodd, chairman of the Senate Banking Committee, who has said the regulators stood aside for too long as the current mortgage crisis unfolded.

The guidelines, which lenders treat as binding, also call for lenders to warn borrowers when a reset is coming and grant them at least 60 days to refinance.

"This guidance ... underscores that the Federal Reserve and other banking regulators expect lenders to make sure subprime borrowers not only can afford their monthly payments while the introductory rate is in effect but also after the interest rate resets," Federal Reserve Governor Randall Kroszner said in a statement.

Many lenders relaxed underwriting standards for subprime borrowers with shaky credit during the recent housing boom. Among the most popular loans were those that offered low early payments that spiked within a few years.

Liz Pulliam Weston has made her living off of writing and selling books on how to increase your credit score. Her fiscal advise has nothing to do with saving and everything to do with managing and increasing debt. Anything she writes is suspect in my opinion.

A statistic that I find much more interesting is from the United States Department of Commerce. It did a study and recently found that the average American now saves -0.6%. Read that again. The average American not only doesn't save, he spends more than what he earns. Source:

Negative savings rate could bring recession -- economists - Dec. 21, 2006 (http://money.cnn.com/2006/12/21/news/economy/savings_rate/index.htm)


The issue that I have with credit card companies is that they are largely responsible for all of this. It makes no business sense whatsoever to offer revolving loans to college kids that are unsecured, where the borrower has no source of income and absolutely no hope of repaying the loan at least for the first five years. That is bad business in my opinion, and it is contributing to an overall negative effect on the marketplace. Practicing this kind of business will only generate short-term returns. Over the long run, if the trend indicated by the Department of Commerce continues, this country will eventually go broke. And those of us, like you and me Midtowner, who have actually been fiscally responsible, are going to end up being forced into bailing all these other people out. I can almost feel the tax increases coming.

I agree that we all need to be financially free to do as we wish, even make mistakes, but lending money to someone who has no credit score and absolutely no way of repaying it where there is an obvious negative effect to the country as a whole is just insane.

Cool if you live within your means mid...That is to be applauded especially in today's society

Try living at your current household income for 5 or 10 (throw in a 4% annual raise) more years and check back in with us and let us know if you are still living within your means

Still satisfied with that apt in 5 years or maybe itching for a larger home?...Still satisfied with your current vehicles?

Well, in 5-10 years, God willing, I'll get a hell of a lot more than a 4% annual raise. I'll be doing everything I can to expand my means. In 5 years, I'll be a practicing attorney in 10 years, I'll be a practicing attorney with a good deal of experience under his belt.

-- at that point, I hope to command a higher income than I do as an almost-legal-intern :)

I rented it from Netflix. I thought it was a great movie. Some of the arguments made here are blown out of the water by this documentary. The credit industry is a cesspool.

I rented it from Netflix. I thought it was a great movie. Some of the arguments made here are blown out of the water by this documentary. The credit industry is a cesspool.

Many parts made me cringe, but I was disgusted when they had all the credit card co CEO's and/or CFO's in front of a congressional hearing on the industry and the head of the hearing said "Unfortunately we are running short on time so no questions will be asked".....Completely unreal

So one by one the execs went on record with gems like
"We truly value our customers "

"We are sensitive to this issue" and the one lady from Capital One who used the opportunity to make it a commercial for her company throwing in their freaking slogan

Not sure if it really needs to be said yet again...But Congress....Bought and paid for