Exacting Revenge On Credit Card Companies
This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
Just because the new CARD Act is operational, consumers shouldn't count on the rules for protection. If anything, it's more important than ever to comb through each statement to thoroughly understand what's going on, because there are lots of loopholes that still exist for the card companies. (Warning: there's still likely to be plenty of fine print (think 401 (k) prospectus!), so make sure you have a magnifying glass and some time to plow through the information.)
Lots of people wrote to me yesterday, arguing that debtors are responsible for their sorry states and I should stop being so hard on the credit card companies. Here's a comment that was posted on cbsnews.com:
Gee, imagine that, credit card companies putting the fire to the feet of delinquent card holders. Ooo, forcing them to pay a fee for being late. Ooo, raising interest rates if they're late sixty days. Ooo, having to show the card holder how long it will take to pay off their incurred unsecured debt if they just pay the minimum. Sounds like whining on the part of the card holder. If card holders don't like the rules, then they should consider not incurring the unsecured debt in the first place. It's that simple. Living beyond one's means definitely has its downside.
We get it - there are lots of irresponsible people out there and they should pay for their excessive behavior. I was a financial planner for 15 years and of course preached financial responsibility and the evils of credit cards. But I don't like the nasty, preachy edge to some of the comments about individuals who end up in a bad financial condition. We don't know the circumstances that led to each situation. In some cases, there was recklessness while in others, there was bad luck. This is akin to the foreclosure issue that created an endless flow of electronic moral judgments.
How can we help people dig out from the piles of debt and at the same time exact revenge on some of the sleazier aspects of the credit card industry? The good news is that although America remains addicted to debt, a funny thing happened as a result of the Great Recession: consumers are waking up and nursing their credit hangovers by paying down outstanding balances.
According to the most recent Federal Reserve report, in 2009 consumers slashed their credit card debt levels by nearly $1,700 per household. They did so by reducing their credit card debt for a record 15 consecutive months, eliminating $109.2 billion in credit card debt.
The declining credit trend is probably the best outcome of the painful recession and it has the added benefit of rebuilding consumer balance sheets; satisfying moralists; and exacting revenge on credit card companies, whose business models rely on consumers' remaining mired in debt.
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