Credit Card Legislation Rant

Here is something I didn't really think would happen, but I've wanted it for a long time. I'm not planning to make this a political blog, nor do I want to promote any certain candidate for anything, but I'm really happy to see that there might be some changes in credit card law. Here's an article I saw today about the changes that might be coming: http://news.yahoo.com/s/ap/20090509/ap_on_go_pr_wh/us_obama_credit_cards, feel free to look if you want to know more than my summary.

The basic goal of the legislation is to restrict some of the hidden fees and deceptions that credit card companies trap people with, and it will make it illegal to give credit cards to people under 18. I'm really happy about this. Its amazing to me how much of the credit industry has become a subtle way of trapping people and taking their money, so I'm stoked to see some more regulation on it. I especially love the part about not allowing credit card companies to issue cards to people under 18; I think it's pretty much a no-brainer that if you are dependent on your parents you shouldn't be given credit. I think these are all things that should've happened a long time ago, but its better late than never.

I thought one of the arguments the lobbyists hired by the credit card companies was really funny. They said this will hurt consumers because it will make it harder for people to get credit. This sounds reasonable enough if you aren't aware that we're in an economic recession precisely because people have been buying things they can't afford, then borrowing based on those things, and then purchasing more things they can't afford. It should be harder for people to get credit.

I remember the first major credit loan I got. I bought something and my dad co-signed so I got a good deal: I had a super low monthly payment and no interest for 12 months. I wanted to pay it off well before the 12 months so I paid way more than the monthly payment, and one month that I was low on cash I didn't pay anything; I was several hundred dollars ahead on the loan, so I thought they couldn't penalize me for it. This was a bad assumption by an inexperienced person. They can, they did, and they used their retroactive interest to charge me something like $150. It would have been a lot more, except I was able to pay off the balance of the loan the next month (I got a new job the month I was low on cash, it takes about 2 weeks to get your first paycheck...). How did they make money on me? They took advantage of a nonsensical process that I misunderstood: I was late on the loan that I was hundreds of dollars ahead on. Retroactive interest on credit card debt is one of the things that will be made illegal in this bill as well, as long as it passes without significant changes.

I'm not trying to make this a political blog, but I just had to let my rant out on this one.