Credit Card Bill passes the Senate

By
Mortgage and Lending with National Credit Fixers - Matt Listro

Credit Card Bill passes the Senate

 The new credit card bill passed the Senate today by a margin of 90-5.  The bill contains a provision to limit the practice known as "universal default rate".  The universal default rate is a practice whereby a credit card company would increase your interest rate (usually very high) for being late on either that card or ANY OTHER debt you have.  Under the new bill the credit card companies would not be able to raise your rates until you are 60 days past due and even then they would have to restore the lower rate if the consumer makes 6 months of minimum payments on time.

The new bill would also impose restrictions on credit cards for people until 21.  Under the bill, credit card applicants who are under 21 years of age would be required to prove their ability to pay or have a parent or guardian co-sign the account.

I personally applaud the legislative part which puts a stop to the "universal default rate" practices but I do not like the provision which restricts cards to people under 21.  let me get this straight.  At 18, you are a legal adult.  You can sign a contract, buy a car, buy a home, but you still need Mommy and Daddy to co-sign for a credit card?

Tell me what your thoughts are on those two provisions of the new bill.

:)
Matt

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Posted by

Matt

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Comments (8)

Tere Rottink
CoastalVa Realty Inc - Virginia Beach, VA

I have to agree with the bill regarding the age limit.  Driving at 16, or making mayor decisions at 18 is way to young.  I remember when I was 18, still a baby. Tere

May 19, 2009 01:20 PM
Matt Listro
National Credit Fixers - Matt Listro - Vernon, CT
Your Credit Repair Expert

Hi Tere: I agree that not everyone exhibits adult behavior at 18 but where should we make the line?  If at 18 you can legally enter into a contract, you can buy a car, you can buy a house, yet they pass legislation that you need your parent or guardian to sign for a credit card.  I think they either need to change the age of adulthood to 21 or let it be 18.  I even agree with the move to reduce the drinking age to 18.  I don't think the drinking age at 21 stops drinking, I just think it makes it more covert.  I feel that you are either an adult or you are not - period.  None of this "well you are an adult for this but not for that stuff.  I say draw a line then stick with it 18, 21, whatever.

:)

May 20, 2009 03:13 AM
Terry Haugen STAGE it RIGHT! 321-956-2495
Stage it Right! - Melbourne, FL

Matt, I think this answers your question:

Under the bill, credit card applicants who are under 21 years of age would be required to prove their ability to pay or have a parent or guardian co-sign the account.

Buying a house or a car requires good credit, and those under 21 with bad credit would not qualify.  The problem has been, even high schoolers under the age of 18 have been given credit cards.  This provision will prevent college kids from incurring credit card debt, unless they are working and can prove their ability to pay, or if their parents co-sign.  It was no different when I was young.  I'm glad to see this reform, especially since people like me who have a credit rating in the 800's have been screwed by the credit card companies by jacking my interest rate from 5.9% to 15.94%.  If they think there is any way, shape or form I am using a card with rates that high, well they will understand what they did when we quite using them.

May 20, 2009 07:56 AM
Matt Listro
National Credit Fixers - Matt Listro - Vernon, CT
Your Credit Repair Expert

Hi Terry: I am 1/2 with you here.  I think the credit card companies should not be issuing cards to "kids" who can not pay.  That should be a "business" decision of the credit card companies.  but to legislate that a person who is a "legal" adult can't get one if Mommy or Daddy won't sign is just plain silly.  the credit card companies shouldn't being extending credit to anyone who doesn't have a job - why does "big goverment" have to tell them this?

:)

May 20, 2009 08:23 AM
Terry Haugen STAGE it RIGHT! 321-956-2495
Stage it Right! - Melbourne, FL

Well Matt, we've seen what happened when we left it up to the credit card companies to make the rules.  Sometimes unruly children can only learn to behave if the rules of play are legislated.  In this case, I agree.  The credit card companies knew full well they could make money on unsuspecting people.  In this case people who were straight out of college, with little or know understanding of how credit cards work, i.e. that you need to make payments and pay on time, otherwise suffer serious financial consequences.  If this is the only way to see to it CC companies can't continue to screw people, then I'm all for it.

May 21, 2009 02:51 AM
Matt Listro
National Credit Fixers - Matt Listro - Vernon, CT
Your Credit Repair Expert

Hi Terry:  I 1/2 agree with you (have I said that before - lol).  Here's what I think.  If you are going to legislate this then stop pussy footing around and go all the way.  Tell credit card companies that ALLapplicants have to prove their ability to pay - not just those that are under 21!  What I don't understand is why the credit card companies have never asked for a W2 or pay stub before handing out credit - wouldn't that be a prudent thing for everyone involved!

:)

May 21, 2009 03:16 AM
Russel Ray, San Diego Business & Marketing Consultant & Photographer
Russel Ray - San Diego State University, CA

Unfortunately, there's no cap on the interest rate. Why can credit card companies charge me 39.99% but when I make a loan to a friend, I can only charge 18% under the usury laws. Something's not right here.

May 25, 2009 05:03 AM
Matt Listro
National Credit Fixers - Matt Listro - Vernon, CT
Your Credit Repair Expert

Hi Russel: I agree - Uncle Vitto's vig is looking pretty good these days!

:)

May 26, 2009 02:14 AM