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Showing posts with label Credit Cards. Show all posts
Showing posts with label Credit Cards. Show all posts
Sunday, November 08, 2009
Friday, October 30, 2009
Delegate Bill Frick Comments on Credit Card Vampires
By Delegate Bill Frick (D-16).
Thank you for sharing your experience at the hands of credit card vampires with MPW readers. The situation you faced is exactly what motivated me to introduce House Bill 1048 in the 2009 legislative session.
Like you, many thousands of Americans are discovering that the major credit card companies are jacking up their interest rates to astonishing levels, often more than double the rate the customer previously enjoyed. In most instances, these increases are being made to consumers that have always behaved responsibly – like you they have not missed payments and have not engaged in risky behavior to justify these dramatic changes. Even worse, the rate increases are not limited to future charges. The increases also apply to existing balances that consumers incurred in reliance on the lower rate.
It is important to remember that credit card companies do not profit from responsible lending. With credit cards, the most credit-worthy borrowers never carry a balance and therefore never pay interest. The credit card companies make their money from those borrowers that cannot afford to eliminate their debt, and are stuck paying monthly finance charges and other fees. Not surprisingly, when the economy faltered last year and many Americans lost their jobs, credit card defaults skyrocketed. In need of cash, the card companies began jacking up rates on everyone.
My bill would have prevented many of the worst abuses. We would have required banks to live up to the terms of their deals with consumers, but preserved their right to make prospective changes to account for bona fide changes in risk. We knew that federal law would eventually catch up with the rampant abuses, but we also knew that those changes would not come until 2010, long after many Marylanders had been victimized by the card companies. To help protect our consumers, the House of Delegate passed HB 1048 by a 136-1 vote. The Maryland Senate, however, killed the bill. Based on comments from one Senator on this blog, the Committee believed the banks’ allegations about the scope of my bill and preferred to wait until July 2010 for federal protections to take effect.
I’m sorry to say that we were right on this one. After Congress passed federal legislation on this subject with a 2010 effective date, the credit card companies began raising interest rates on millions of existing cardholders. Like you, the federal rules will be too late to protect most cardholders from these abuses. Had H.B. 1048 passed, Marylanders would have been protected.
Thanks to Congress, this battle is essentially over. But I know that there are many more rampant abuses of consumers and businesses in the world of credit. For example, why do businesses pay such enormous interchange fees to Visa and Mastercard – fees that increase costs to consumers? Why do tax preparation firms like H&R Block or Jackson Hewitt charge outrageous interest rates to our poorest taxpayers for access to their own tax refunds, when those loans have zero risk?
In this session and beyond, I hope to tackle some of these issues. I hope that with your support and others, we’ll be able to provide vital protections to Marylanders.
Thursday, October 29, 2009
Low Rate Credit Card Balance Transfers Available: Save. Money. Now.
By Delegate Saqib Ali (D-39).
As an elected official, I have a unique perspective to the grinding recession facing our nation. I unfortunately get to hear from too many of my constituents who are suffering from the poor economy. Day after day after day my inbox is filled with depressingly similar stories: Down-on-their-luck families facing lost jobs, mortgages slipping into foreclosure and utilities threatening shutoff. Too often the most I can do is lend a sympathetic ear or refer them to a County/State/Federal programs that might or might not help. It's not a very satisfying feeling.
But I am aware of one easy way that my constituents can save some serious cash. And I think I owe it to your readers to share it far and wide. In advance of the stringent rules enacted by the Federal Credit Cardholders Bill of Rights, credit card companies are raising their rates. A lot. My constituents have gotten notices saying that their APR will be rising to a mind-blowing 29.9% within 30 days. These constituents have balances that cannot be readily be paid off. What can they do to avoid being hammered?
If they have good credit, they can apply for - and will likely be approved for - a platinum credit card from the Pentagon Federal Credit Union. This card offers a sweet 4.99% APR on transferred balances (not new purchases) for 24 months. The one-time balance transfer fee is 2.5% but capped at $100. They are offering generous credit lines. One happy constituent was just approved for $25,000. On a $10,000 balance, that's a savings of as much as $2,400 per year. It works for me, so it could work for you.
BTW, you needn't be a member of the military to join this credit union. Anyone can join for a measly $5 over-the-phone payment. Do it now. Call: 1-800-247-5626. They are even open late: until 1 am EST for nocturnal people like me!
- Saqib
PS.
If you are wondering, No, I'm not making a penny off of this recommendation. PFCU doesn't even know that I'm blogging about them. It's just a good little secret that I heard that I didn't think I should keep to myself. If this helps you, please post a note in the comments. Please remember to sign your full name in the body of your comment otherwise it may not be printed.
Credit Card Vampires Out for Blood
Ever think that even though the credit card companies are going after everyone else, they won’t come for you? I used to believe that too until I received the following notice in the mail. But these vampires came after the wrong blogger, and I am fighting back!
Check out the following notice that arrived in an unremarkable, non-descript envelope. I almost threw it out without looking at it.
Citibank informed me that they intended to jack up my rate to 29.99% unless I opted out. Bear in mind that I have had this credit card since 1990 and make payments on it every month, usually every two weeks. They offered me a chance to be eligible for a payback of 10% of my interest as long as I paid once a month, making the rate essentially 27%. If I turned down the terms, the card would lapse on its expiration date, which in my case is November 2010.
So I called them to opt out. Their representative informed me of the “opportunity” for the 10% interest payback, which did not sway me. Then his manager got on the line to offer me a “special” deal: a rate of 27.99% for six months, after which the 29.99% would become effective. When that didn’t work, he offered me a “super” deal: 25.99% for the first six months. None of that would make me put down the garlic.
So I asked him why I was targeted. He admitted that I was “an excellent customer” with “zero chance of default,” but claimed that Citibank’s lenders were raising their interest rates, causing the bank to pass them on to customers. So a pair of fangs is buried in Citibank’s neck, driving them to search out the tender necks of others.
Back, forces of evil! I opted out despite the “special” and “super” deals, but only because I was lucky enough to open the envelope. Otherwise I’d be a nightwalker myself.
Can’t anyone stop the relentless march of the undead?
Sunday, August 23, 2009
Thursday, April 30, 2009
Rob Garagiola on Bill Frick’s Credit Card Bill
Senator Rob Garagiola (D-15), a member of the Senate Finance Committee, sent us this statement on Delegate Bill Frick’s (D-16) credit card bill.
*****
First, the bill would have covered every conceivable contract beyond just credit cards. We heard from many industries who said that they would be affected under the bill as passed by the House and expressed concerns about unintended consequences. Delegate Frick said that was not his intent so he went back to the drawing board and had some suggested amendments drafted to his bill. He presented them before a work group (a handful of Senate Finance members), which included me. However, the amendments would have brought in all regulations of the Federal Trade Commission, Federal Reserve, and I am not sure which other federal agencies, since the beginning of time - and did it by reference to a federal statutory provision - rather than by saying specifically which federal regulations we wanted the State Attorney General’s office to enforce.
His bill as it came before us, and the suggested amendments that he presented, were both overly broad beyond what he was trying to accomplish. He essentially acknowledged that his original language was overly broad by trying to remedy it with an amendment. Unfortunately, his amendment was also overly broad and we were not presented answers to questions about what federal regulations we would actually bring under the enforcement of the State Attorney General if we passed the bill with his amendments. He could not answer what regulations he was essentially bringing under Maryland law via simple statutory reference.
Delegate Frick stated that he was aware that the Federal Reserve considered thousands of pages of comments on their proposed regulations on credit cards (the same issue Delegate Frick sought to address with his bill) prior to the Federal Reserve deciding to make such regulations final. The federal regulations on credit cards will be effective on July 1, 2010. Was there reasoning for such delay? Did the Federal Reserve consider all sides when deciding upon an effective date? One has to assume that the Federal Reserve saw a problem, studied it, promulgated proposed regulations, took in thousands of pages of comments, and issued final regulations because they wanted to do something to protect consumers. I am for protecting consumers. Was there some balancing of interests in having an effective date on July 1, 2010? Are there issues with timing to get national banks to comply in a shorter time period?
Finally, there were concerns about whether state law would be preempted under the notion that the state can’t impose its laws on federally chartered banks. It is my understanding that last year, Delegate Frick had an Attorney General letter that said such state law would be preempted. It is my understanding that his bill last year only focused on credit card interest rates and not broad contract law that this year’s bill was drafted to do. This year, he said he had an Attorney General letter saying that it was not preempted, perhaps because it was more broadly drafted to affect contract law in multiple other industries (not just credit cards). Nevertheless, there were still concerns by Committee members.
Delegate Frick’s legislation, even if it wasn’t so broadly drafted to affect industries he did not intend to impact, had an effective date of October 1, 2009. So Delegate Frick wanted us to pass a bill that sought to remedy problems with credit card interest rates being changed on consumers nine months earlier in Maryland. It’s not that the overwhelming majority of members of the Senate Finance Committee are anti-consumer - in fact, we crafted model mortgage lending legislation in 2008 that the federal government used for national legislation, and I could cite other multiple examples of consumer-friendly legislation worked on by the Senate Finance Committee - it was that Delegate Frick’s bill was too broad without knowing fully what the implications of it would be. Perhaps there would have been support for legislation that said “do just the federal regulations on credit card interest rates in Maryland 9 months earlier,” however, in isolation without a broader contract impact, it may have been preempted by federal law. The Committee was not willing to pass legislation that had a broader impact or unknown impact (with his amendments).
More on Credit Card Gouging
Unveiled: The Senators Who Blocked the Credit Card Bill
The Congress may finally be moving to prevent deceptive credit card practices, an effort supported by President Obama. As for Maryland, the House of Delegates passed a bill to crack down on abuses by a 136-1 vote, but the bill died in the Senate Finance Committee. Here's who voted to kill it.
Senators Rob Garagiola (D-15) and Delores Kelley (D-10) made the motion for an unfavorable committee report, which in almost all instances kills a bill. Every other Senator on the committee except Nathaniel Exum (D-24) and Catherine Pugh (D-40) voted with them.
If any of the Senators who voted against the bill would like to comment on their reasons for doing so, we will run those comments on this blog.
Thursday, April 23, 2009
Credit Card Bill Fails; Banks Run Amok
Folks, you just can't make this up. Delegate Bill Frick's bill limiting credit card abuses dies in the Senate Finance Committee after passing the House 136-1 and now the banks are jacking up rates:
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The next time your credit card statement shows a higher rate, ask these Senators how they voted on Frick's bill.
Tuesday, April 07, 2009
What We Are Watching in Annapolis
While the mainstream media titillates itself with the University of Maryland porn scandal, here’s what we have our eyes on in the rest of the General Assembly session.
Misclassification Bill
Despite heavy lobbying by anti-union hired guns Lisa Harris Jones and Sean Malone, the O’Malley administration introduced a bill to crack down on tax cheating by employers who misclassify workers as independent contractors. Other states have found that they are losing tens and sometimes hundreds of millions of dollars in income taxes and unemployment revenues every year due to such scams. The bill was nearly crippled by two poison pill amendments adopted by the Senate. The bill is now in conference and if the Senate’s amendments survive, the odds of any actual crackdown on tax cheats will be very low.
Prince George’s Stadium
Marc Korman says the stadium is a bad deal for Maryland and he’s right. But it could be a good deal for Prince George’s County if only they could get the rest of the state to pay for it. After all, with Senator Ulysses Currie (D-25) chairing the Senate Budget and Taxation Committee, you might figure the county could grab a bit of cash for it. Instead, the Prince George’s County Council voted against the stadium, pulling out the rug from delegation supporters and throwing the whole plan into limbo. It seems that the Prince George’s politicians can’t work together even to implement bad ideas, which may actually be a good thing.
Expungement Bill
Delegate Lou Simmons’ (D-17) odious abuser expungement bill is technically still alive in the House Judiciary Committee but we have not heard about it in awhile. We hope that it will not re-emerge from its lair.
Bill Frick’s Credit Card Bill
Delegate Bill Frick’s (D-16) bill to crack down on credit card abuse has passed the House 136-1 and is now before the Senate. We ask the Senators to read Marc Korman’s excellent post praising the bill.
WSSC
Several months after the disastrous pipe break on River Road, the momentum for structural reform at WSSC has petered out. If nothing emerges from the General Assembly, the Montgomery and Prince George’s delegations will have to flee to Antarctica when the next pipe inevitably explodes.
Reregulation Bill
The bill to reregulate new power plants is the ultimate “do-little-but-hype-a-lot” bill. It will have virtually no impact on electric bills and distracts attention from real measures that could make a difference. The Senate passed it but some members of the House Economic Matters Committee dislike it. The General Assembly would do well to return to the issue with different legislation next year.
MCPS Disclosure
Delegate Al Carr’s (D-18) local bill requiring online vendor disclosure by the Montgomery County Public Schools passed the House on a 139-0 vote. This bill is badly needed and we hope the Senate supports it.
Will Anything Positive Happen on Transportation?
The Governor and the General Assembly are doing nothing to raise revenue for transportation even though the Transportation Trust Fund (TTF) even though its money is disappearing before our eyes. A bill by Delegates Susan Krebs (R-9B) and Brian Feldman (D-15) limiting raids on the TTF was killed by the House Appropriations Committee. Senator Rob Garagiola’s (D-15) task force bill may or may not get a vote from the Senate Budget and Taxation Committee. Even if it does, time is running out on a House vote.
We’ll report back on how all of this turns out. In the meantime, don’t forget to check out Senator Andy Harris’s (R-7) latest anti-porn coverage.
Wednesday, March 25, 2009
Reining in the Credit Card Industry
By Marc Korman.
I have only been married ten months and I am not used to paying bills for two yet. So a few months ago I was a few days late in paying one of the bills for a credit card my wife and I share. A BA, Masters, and half complete law degree had not prepared me for the ensuing fees, interest payments, and balance adjustments. I am not alone, as two articles in the Sunday Washington Post made clear.
In the Sunday Business section, the paper discussed the national changes coming to credit card rules. The Federal Reserve recently required credit card companies to make some changes that will begin to take effect in mid 2010. Among the highlights of the rules, credit companies will no longer be able to allocate payments to the balances with the lowest interest rates first, allowing balances with higher interest rates to continue accruing. The rules will also impose new notice requirements for interest rate increases. More information is available here.
Happily, my own state Delegate and the rest of the General Assembly are not just waiting for the feds, as discussed in the Metro section. The House of Delegates recently passed Delegate Bill Frick’s HB 1048. The legislation amends state contract law to limit the ability of credit card companies to:
1. Reserve the right to change material terms. Under current law, if a credit card company reserves the right to change material terms of the agreement, they can increase the interest rate on an existing credit card balance without an explicit provision allowing them to do so. If a cardholder cannot pay off the balance immediately, they are stuck with the new interest rate on the existing balance. HB 1048 would require the credit card companies to be more explicit if they are reserving the right to alter the rate on existing balances.
2. Trigger a default penalty based on another obligation. Currently, credit card companies can apply penalties to one credit card bill based on problems you have with other credit cards. So even if you pay your Visa bill each month, if you default on your American Express bill Visa can apply a default penalty.
Delegate Frick’s bill passed the House of Delegates 136-1 and now heads to the Senate for action. But it is not without controversy. There are questions about whether state action is preempted by the federal government in this area. But some legal uncertainty is no reason to oppose the bill. In 2006, Maryland passed breakthrough healthcare legislation requiring employers with more than 10,000 employees in the state to demonstrate that 8% of wages be applied towards employee healthcare. Courts found that the law was preempted by the federal government, but it helped advance the issue. One of the companies affected, Wal-Mart, has since revamped its employee healthcare practices. Although not perfect, their current policies are a major improvement of their old policies.
Similarly, even if Delegate Frick’s bill is later struck down by a court, credit card companies need to feel the pressure that their customers are tired of practices that abuse and confuse us. The new Federal Reserve rules and HB 1048 will increase the pressure on credit card companies and convince them to rein in their practices.
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