New topic: Credit Cards

Credit Cards are the bane of human existence.

Credit Cards allow the user to have what he wants rather than what he needs. Credit Cards are a mortgage on ones future. Credit Cards make credit card companies huge profits.

I have a client who is on ODSP. ODSP stands for the Ontario Disability Support Program. It provides income of about $1050.00$ to developmentally, physically and mentally challenged individuals. The funds are not taxed and are exempt from seizure under any circumstances.

This client has a $2000,00 Sears Credit Card at 28.8% (2.25%/month) with a minimum payment of 5% of the balance. He has no problem with this card and treated it like gold.
While he was not the brightest bulb in the package, he understood what he had to pay on the card based on his statement. Realistically, he had no idea about interest or borrowing.

Sears Canada sold their credit portfolio to Chase Mastercard. Chase sent my client a replacement card... a mastercard... with a $2000.00 limit at 18.5% with a 3% minimum payment. If he card were used to the limit, the payment is $60.00 with $32.00 of interest. It would take my client assuming he never used the card again about 150 months of minimum payments to pay off the debt. If he paid the maximum payment of $60.00 and never used the card again, he would pay about $4200.00 over 48 months. By the way, any reasonable assessment of his actual expenses and the source / nature of his income would have determined he did not qualify for the credit card.

I sure you know what comes next. He used the card. Chase kept raising his credit limit eventually to $7000.00 and never actually spoke to the customer. Once other credit card companies saw her had a mastercard, they sent him preapproved cards hoping he would give them his Chase business. He got $5000.00 in other credit.

Now the Dr. Phil question: What were they thinking? Lets give $12000.00 to a person on disability welfare even thought he hasn't asked us for it.

One note; The majority of the $12000.00 in credit is interest and payments. My client used the cards to pay the cards.

Result: Client declares bankruptcy and credit card debt is discharged. At the date of bankrupty the credit card debts were up to date.

Post Bankruptcy Event:
Chase sues client in SCC for $1400.00 being the amount placed on the credit card in the 60 days prior to bankruptcy alleging that the he knew or should have know of his desperate financial situation at least 60 days prior to his assignment. Chase alleges that use of a credit card is a representation at the time of use of the ability to repay. The suggest that the client knew he could not pay, deceived them by not disclosing his true circumstances and represented that he could, they relied on the representation and suffered damages. They wanted the court to rule that this portion of the Chase balance was not discharged.

The matter went to trial and Chase lost. The judge concluded that since Chase never spoke to him either when he received the initial card or thereafter when the credit limit was increased he never made a representation to them. Each time he used the card he did not reaffirm any initial representation. The issue of a fraud does not deal with a person's ability to do something but their intent to do something. Ability does not equal intent.

A case in support of this view was introduced. A unemployed person owed $50000.00 in credit card debt. He has about $5000.00 left under his credit limits on these cards. He took the $5000.00 the local casino with the intent of parlaying the $5000.00 into $50000.00 to pay his credt credit card debt. He lost his $5000.00He declare bankruptcy. Credit Card sued him alledging he did not have the ability to repay the $5000.00 when he gambled with it. The court concluded that the bankrupt has no ability to pay. The court also concluded that the bankrupt's intent, however misguided, was to repay his creditors. The court concluded that the debt was discharged in the bankruptcy.

A credit card is a defective product much lile tobacco. It is legal to use. It can become addictive. It attacks in small amounts growing to a large dependence. In many case, the user cannot stop using it.

Let's talk about this

OK I regularly use my credit card for almost all my purchases. I pay the complete balance on a monthly basis and never pay interest .I accumulate points up the kazoo by doing so and have paid for my last 2 vacation's air fair utilizing this method.

Sorry, but its not only the card its also the user. Sure, cards are enticing and they can be addicting. But there are loads of people who manage their finances and credit responsibily.

Hello know:

Let's start our relationship by my telling you that I don't know squat.

That being said, I think a credit card is much more like alcohol than tobacco. Tobacco addicts virtually ALL its users, while only a small percentage of alcohol users become addicted.

When it became clear, through education, that tobacco kills people, HALF of the people who used tobacco stopped using it. IF people were educated in the proper use of credit, it would bite fewer people. But, there'll always be those who misuse a product.

Now, don't take that to mean that I excuse their sleazy sales pitches, and their usurious interest rates. I don't. But a citizen can certainly say no.

As misused as it is by some, that doesn't mean the product is bad. Far from it. In fact, if credit cards are used wisely, one can leverage them to one's own advantage rather inexpensively.

excon

Just to show the flip side, that credit card issuers are not all bad, I'll relate a recent incident. I have a BOA card where the balance is under a promotional rate for 3 years (about 26 months left). It was used to pay for a transmission repair.

I messed up earlier this month. I had thought I had scheduled payments before I went on vacation, but apparently I didn't complete the setup. So I didn't notice the payment hadn't been made. As soon as I did I immediately sent a payment but it was late.

When I got the statement and noticed they had jacked up the interest rate (which I expected) I called and they immediately gave me back the promotional rate. They didn't have to but they did.

So some do give consideration to customers.

If people only spent what they could afford they wouldn't be in this problem. Credit cards aren't the deep down problem it's the way people spend. Although credit cards don't help the situation with there high interest rates.

A credit card is like a package of cigarettes and it should have the same type of warning. The use of this product could be dangerous to your financial health.

Credit card industry wants you to use your credit card like a cigarette. Just use it. The negative consequences will happen to someone else.

If the minimum payment on a credit card were 10% of the balance and the interest rate were 12%, the credit card industry would go bankrupt, A $5000.00 balace would have payments of $500.00 per month and the interst would be $50.00. Debt gone in no time.

We see the fallout of easy credit right now on Wall Street. A 3% payment on a credit card at 18% is a recipe for disaster. And the industy doesn't give a sh*t.

Hey Know it all... :) (kidding)

I'll weigh in here because I have received about 5 credit card offers... for my two-year-old daughter. While I agree with the others that there should be responsibility on the part of the borrower... sending credit card offers to a two-year-old? There is something definitely wrong in America. But it's not just credit cards... it's the whole culture of credit that we've created.

Here is something interesting I heard while listening to the news the other day... People in China don't use credit cards. They pay for everything with cash, while Americans are largely sustaining their lifestyles and a nation on imaginary money or credit cards. Imaginary money that they use to buy products by and large produced... in China.

What's more deeply disturbing is that China is also loaning us money to pay for the war in Iraq and now they are loaning us money for this bailout. Some of the money for our tax rebates even came from China. Many people cashed the check, and instead of paying off their credit card, went to Wal-Mart and guess what... the money went right back to China. The deficit doesn't even fit on the board anymore and most of the money... we owe to them.

It leaves me wondering what this means exactly for our country. And is it wise to elect a leader such as McCain who is going to indefinitely continue a losing war on borrowed money from a fascist country with horrible human rights violations and 5 billion people? Wake up republicans.

Now think about it . If there was no strength in the American economy why would they invest so heavily in it ?

What pisses me off is that our pockets were picked to add liquidity to the economy and instead the financial institutions say they will hoard the money for at least the next quarter .

Credit is a good thing if used properly . I don't pay interest and get cash back so not only do I get the service virtually for free ;but they pay me to use the service How great is that! It makes tracking my expenses real easy and some of my purchases are insured by them. My last two vacations had cross country flights paid for by the card issuer.

Perhaps it should come with a warning ;but to equate it to cigarettes is exaggerated .

Tom-- I commend you for using your credit cards wisely but you are in a minority when you look at the real figures of people's debt to income ratio. I have also purchased international tickets with my points. Unfortunately I bought a crappy American car and I have a cat with diabetes which keeps my balance hard to pay off... :)

I think the point is more about draining the strength. When America loses its financial power we lose our position in the world and also our ability to make decisions that benefit our country.

I think you miss the point here. Granted Tom is in a minority because he takes advantage of the credit card system instead of letting it take advantage of him. But that just reiterates that the problem is not the system but the way people use it.

No I don't miss the point at all. I know that most republicans espouse the idea of letting the corporation do whatever it wants to make the fattest profit possible. They think that the strength of the individual and letting people decide for themselves is the best course of action. I agree with you to a certain extent. Prohibition is an example of this. Alcohol is legal, but most people aren't alcoholics. I personally enjoy drinking a beer but I'm moderate about it. I don't feel that just because a minority has a severe problem that I should do without. But if alcohol were as addictive and detrimental as heroin where a mother leaves her baby in a crib for months in the same diaper... weeeelllll I feel a little differently.

If most people were like Tom I would say suck it up and deal with it. The reality, though, is that credit is a black hole many college students fall into that they can't get out of. A lot of it has to do with predatory lending and people receiving 3 - 5 offers for cards daily. That's about how many I get. Blindly sticking up for corporate practices while ignoring reality seems pretty foolhardy especially when our country's interest is at stake.

So the answer is education and some controls. Not damining the system.

So you would suggest that we educate the greedy Wall Street traders and put in some more controls to prevent the financial catastrohe that we are in. This is about greed. The system is damned.

Why don't we take it further :)

Lets eliminate all forms of advertising. :eek:

For cars, clothes, furniture, appliances, techno gadgets, restaurants, etc...

After all are they not enticing us folks to spend money that we don't have?



Better yet, and this is no knock against them, lets us live like the Amish and make all our clothes and food and ride buggys ? :p


PERSONAL RESPONSIBILITY is the key.

Exactly. I think it should be illegal for credit companies to offer credit that exceeds a percentage of a person's income. Because what happens is the person files bankruptcy and the people who use their cards responsibly end up absorbing the costs in fees. THEN the person who filed bankruptcy just goes to the next tier of credit lending which is high interest legal loan sharking.

I think credit is a great tool... but by maintaining some control on these banks we also protect the people like Tom who end up paying the price for predatory lending.

I was slightly shocked recently when I got a letter from one of my cards (a store card administered by a major bank) that they were reducing my credit line. The reason given was solely because I wasn't using anywhere near the line I had been given so it was to my advantage to have a lower line.

If we were to hold those greedy wall street traders personally responsible for the financial cricis, there would or should be no bailout. But we are bailing them out. What lesson do they learn?

I agree with you. I think people should be personally responsible. Should they be the only ones responsible and corporations can do whatever they want? No. And yes, let's talk about advertising. Because in trickle down economics, that's where the money is trickling to. The CEOs pocket big checks and the people working at the bottom continue making minimum wage while BILLIONS go into advertising during the superbowl. People want more things, they use their credit card, they get in debt, both parents have to work, the kid sits in daycare 9 hours a day five days a week. People complain about lack of morality as being the death of the family... well I say turn off the TV. It's pretty astounding to me that many here think that setting reasonable rules for a credit card company is socialism. You going to defend car insurance companies next? Well I've been effed in the A by both and I know you have too. Where do you people come from??