Wednesday, May 16, 2007

Guaranteed Car Lend

Tougher Fed Rules Equals Fewer Credit Card Approvals
By [http://ezinearticles.com/?expert=Aubrey_Clark] Aubrey Clark

Let’s face it, a lot of card companies are gluttonous and have unpredictable business practices and we still buy their products. Each year they find ways to change the rules, charge more fees and raise our rates, and each and every year they post record sales. Why would anyone in their right mind buy this product, wouldn’t they have to be stupid? The question is rhetorical because we all know the answer whether we want to admit it or not. Our patronage and their business is perpetuated because we are a nation addicted to credit and we are willing to believe the advertising they sell us to satisfy the addiction.





Do you seriously believe that interest rates are 1% on new mortgages? The advertisements say they are, so it must be true. I truly don’t believe people are that gullible. However, if you are in an adjustable rate mortgage that just caused your payment to increase $500 per month you stop and look at the 1% advertisement don’t you? If you are on a tight budget and your car just blew up you go down to the car lot to look for the advertised car that’s never there don’t you? We all want to believe the hype but know they are lying, and when they disappoint, still we buy. The relevant question here is, why?

The Fed has plans to change the notification period that credit card companies have from 15 days to 45 days before they change your agreement. Ed Mierzwinski at the Public Interest Research Group said this about the Fed’s plan to change the current credit card disclosures "Telling you that you are about to be ripped off is not a consumer protection…. Those fixes will not solve the fundamental problems in credit card marketing that allow companies to change the rules at any time and impose retroactive interest rate increases. Those practices need to be banned."

We believe Mr. Mierzwinski is right. Do you remember we put warning labels on cigarettes? Did that stop anyone from smoking? Picture a ten-year smoker sitting around the bar reading the warning label then announcing, “Hey! These things are going to kill me, I should quit”. It didn’t happen, and it won’t cause credit card holders to put down their plastic just because we make the asterisks larger. Look in your own wallet right now; did you really think the interest rate on that credit card was really going to be 1.99% forever? The truth is, that the buying public is really smarter than how the “Public Interest” pundits like to paint us.

This writer believes that most of us, yours truly included, haphazardly glance over the fine print in hopes that we get approved for that special card we are applying for. Most people enter into their credit card agreements with their eyes wide shut. Then we scream like hell when the scorpion stings us. Remember the old story about the scorpion and the frog? In the end the scorpion stings the frog and when asked ”why” the scorpion replies,” that’s what I do, I am a scorpion”. The answer to the credit card problem is the same answer to violence on TV. Change the channel if you don’t like it.

If the Fed puts tighter restrictions on credit card companies fewer people will get credit cards. This, in of itself, is not a bad thing. When the government dictates how banks can lend their money they will lend to less people, always. If the Fed makes the warnings on credit card applications larger we will simply have fewer people saying, “I didn’t know” in bankruptcy court. The reality is, credit cards used to be a privilege for those who showed the fiscal responsibility to handle them. Nowadays, we have credit cardholders whose credit score can barely rival a good batting average.

Seriously, if you use a credit card, read the fine print, use it wisely and keep it at home not in your purse or wallet. If we, as consumers, want change in how the credit card companies operate it begins with personal fiscal responsibility. Believe me, they will mirror our buying habits and just remember; a scorpion can only sting you when you touch it or when you are vulnerable.

Aubrey Clark is an Editor for Direct Banc [http://www.directbanc.com/dir/low_rates.html] Low Interest Credit Card Directory.

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