BF2S Forums Are the banks continuing to make a bad situation worse?

But I'm not talking about just the lending, that is the bad part of my thread title.  What I'm talking about now is that they are making that bad situation worse by gouging the shite out of people with balances on their credit card(s).

I think its a little ridiculous to complain about interest charges on credit cards, since basically its using money you don't have.  No one is forcing people to use credit cards, or better yet, pay off your card.

In fact, it should keep the amount people have as debt, which in the long run is a step further from insolvency.  Of course, in the short run, you're screwed.

Pug wrote:

I think its a little ridiculous to complain about interest charges on credit cards, since basically its using money you don't have.  No one is forcing people to use credit cards, or better yet, pay off your card.

In fact, it should keep the amount people have as debt, which in the long run is a step further from insolvency.  Of course, in the short run, you're screwed.

At this point, banks are also using money they don't have, from us... in the form of tax money.

So actually, these fuckers now owe us at least the decency to keep interest rates reasonable.

Of course, because our government is made up of corporate whores, accountability is a fucking joke.

I was thinking about how to characterize the relationship between the banks and the Federal Reserve and came to the conclusion that the Fed is a bank union.

The fed board is made up of the banks, like citi group, BofA and others. When the Fed makes policy or goes to Congress it is really advocating for the banks as their union agent. After all the Fed is a private institution.

Now would you want the govt handing over control of policy and policy execution to a union, especially where the member banks are insolvent and asking the tax payers to put up money to save their shareholders and bond holders.

You know that just as soon as the economy recovers, we are going to be hit with high taxes and the banks are going to thank us by screwing us over with high interest rates. We really need to push these banks over a cliff and let some of the other banks step up or have the federal government start a federal bank.

It would be a really good idea to have a government official or member of the cabinet sitting on all of the Feds discussions.

Pug wrote:

Agent_Dung_Bomb wrote:

Pug wrote:

I think its a little ridiculous to complain about interest charges on credit cards, since basically its using money you don't have.  No one is forcing people to use credit cards, or better yet, pay off your card.

In fact, it should keep the amount people have as debt, which in the long run is a step further from insolvency.  Of course, in the short run, you're screwed.

Yes, it is using money you may not have.  That doesn't justify doubling a customer's APR when their account is in good stand, especially after receiving billions in TARP money to get loaning again, and they don't, they can basically borrow money from the fed nearly free, then they do the one thing that may actually do more damage than good.

Don't forget that credit spending is what got the economy to where it was when things were supposedly so good.  Yes, people when on a credit spending binge and this is the hangover, but what BoA is doing is just plunging the toilet while we head down the crapper.

Ok, so if the credit card segment is not making enough profit the options are:
1) Raise rates to increase revenues
2) Keep rates same, continue losing money, hope for another taxpayer bailout
3) Discontinue credit cards

Of the three, I prefer #1.  Why?  Because personally, I do not spend more than I can afford, so I can pay off my credit card every month.  #3 is the second best option, as it seems that the US has debt problems already.  #2 is almost as good as the third option, except that I don't feel like I want to continue bailing the banks out, in part because of a failing part of their revenue stream.

As far as justification goes, has anyone here run a profit & loss on the BoA credit card segment?  Either you believe they are losing money, or you believe they are gouging.  I have a tendency to believe they aren't gouging because it's a fairly competitive market (people pay off credit cards by transferring balances to a lesser APR card), and once you receive bailout money, the feds are basically watching you closely.

If you can afford to buy everything outright, good for you.  However, the ability to borrow and pay over time is why our economy has grown the way it has.  Without that ability, we would be completely in the crapper.  Why do you think that freeing up credit markets is such a big deal?  It isn't just about financing large capital expenditures, it's about consumer level credit as well.  Yes, people have to make sure they can afford to pay for what they buy on credit, but without it, we wouldn't have an economy anywhere near what we have obtained.

As far as losing money on credit cards, I don't think they are, or they wouldn't continue sending out pre-approved mailers; I still get several each week.  You also have to look at what is a reasonable increase.  Increase it too much trying to increase revenue, and in this market where the jobless rate keeps climbing, all you are doing is pushing people into a payment they simply can't afford and increase the number of people defaulting on their payments.  It's like cutting off your nose to spite your face.

The new law coming in 2010 really should be pushed to this year.  The new law will allow the banks to increase APR's when people are late or default, or their credit to income ratio becomes too high, and they can do general rate increases, but they must also allow users, with accounts in good standing, to pay off charges incurred at the APR that was on the card when the charge was made.  This will prevent existing balances from being subject to massive APR increases like those from BoA.

Last edited by Agent_Dung_Bomb (2009-02-26 07:51:38)

Pug wrote:

Agent_Dung_Bomb wrote:

If you can afford to buy everything outright, good for you.  However, the ability to borrow and pay over time is why our economy has grown the way it has.  Without that ability, we would be completely in the crapper.

I agree with pretty much everything you said, but left one part to make a point. ^^^

Pretty much too much debt has fed into the current situation.  It's a "false economy" if the money isn't exchanged, aka when defaulting on the payments.  Credit leads to personal budget problems.

What I'd like to see is people have to go thru the same procedures to get a credit card to get a loan.  However, there's the problem of establishing good credit somehow to get that loan in the first place.

On a related point, totally outside of this thread...has anyone else noticed the number of debt consolidation commercials have drastically been cut?

Perhaps it's because they shifted advertising to the six states being hit the worst, but still it seems like I haven't seen one in months.

I agree that our previous growth was unrealistic in relation to how much people made.  I liken it to binge drinking.  It's all fine and dandy while your drunk, but now we are in the hangover phase.  I'm no economist, but I believe that this is inevitable, and while people may not be making new purchases, continuing to pay off existing debts, so they don't become more trash on some accountant's books, does still help the economy.  Right now people aren't spending, and they really should be trying to retire their existing debts before looking to spend again.

I still see quite a few debt reduction commercials, even though Utah is still holding up pretty well in relation to the rest of the country in terms of falling home prices, foreclosures, and job losses.

Fuck Credit Cards

*kisses wholesome god fearing debit card*