Friday, March 14, 2008

Banks bully congressional witnesses

This is how banks and credit card companies act these days: First they raise their interest rates on credit cards to confiscatory levels that can't be justified by any means. Even customers who pay all their bills on time and never go over the limit find themselves saddled with mind-boggling rate increases.

There's almost no regulation on credit card companies. I've been scorched myself, like when my credit card company lied when it said it would take less than a week to transfer money from my bank account. The credit card company was so slothful in transferring my money that I ended up paying much more for a purchase than I otherwise would have. So they lied and got away with it.

Now some of the hard-working folks who have been swindled by the banks have gone to Washington to testify about it before a congressional panel. But the banks that would have been exposed demanded that the people who wanted to testify sign a waiver allowing their personal financial data to be released to the public.

And of course, Republican members on the congressional subcommittee are backing the banks' demand. However, the witnesses refused to sign the waiver, because the waiver is as deceptive as the banks' practices that they planned to testify against. Because of the Republicans' influence in allowing the banks' intimidation, these witnesses weren't allowed to testify - even though the banks' testimony was permitted to be heard.

Thankfully, a new bill in Congress would crack down on banks' and credit card companies' deceit by stopping rogue rate increases.

State usury laws used to be enforced. But since the '80s, the federal government has illegally robbed the states of this power: Now the banks are bound only by the laws of the state where they incorporate, not the state where customers live - so banks simply incorporate in states with lax usury laws. We need to restore state powers to make banks follow their laws.

We also need to come down hard on credit card companies that lie about important things like the time it takes to transfer money to your account.



  1. Tim,

    Your bank controls how fast money is transfered to your credit card company. The credit card company sends a request for transfer, they can't actually withdrawal money from your account. The fine print of your credit card account will say the credit card company can't guarantee payment transfer times. you should always, always read the fine print. Especially when borrowed money is involved, as a lot of people are learning right now.

    Here's a tip for beating the credit cards at their own game -- IF and only if you're able and responsible enough to manage credit card debt:

    Get a credit card with no upfront or annual fees that has some kind of rewards program. Use that card
    to buy EVERYTHING, including things you'd normally pay cash or write a check for when possible -- groceries, gasoline, car insurance, utility bills, etc. Then pay the balance off in full every week. You'll never pay a dime of interest. Instead they'll be paying you. For example, one of the American auto manufacturers offers a fee-free credit card with an interest rate about the national average. It pays 5% back in the form of a rebate on the purchase of one of their cars, or 2% back toward most other cars. Other credit cards pay 2-3% cash back.

  2. Judging from bandit's account of things, the bank where he has his account isn't the party that promised to transfer the money within a was the credit card company who made this promise.

    If the credit card company says in the fine print "Oh we can't do it within a week" maybe they need to make that print bigger so people can find it.

  3. It's in the long user agreement you're asked to read when you sign up for online bill paying. It's written by lawyers and not as much fun as the Online Lunchpail, but you should read it before checking the box that says "I agree."

    It's also probably on the back of your credit card bill.