Note to all: If you care about negatively affecting your credit record, don’t ever ever cancel a card unless you open a new card before. Even then you’re gonna take a hit albeit a smaller one. And even before that, you call them and tell them that company X is offering you a better deal and you’re gonna jump ship unless they at least match it. Period. Canceling a card only shows them that you are trying to break free from the matrix. They don’t want that. Nobody wants to be a debt slave, but the entire system is based on debt (i.e. money that is created out of thin air), and if you project that you are not down with the system and that you want out, its only a matter of time before they make life difficult for you and/or take you down (metaphorically or literally). That being said, let it be known that I support anyone who wants to be truly free and works to do so. People just need to open their eyes to both the macro and micro level and be prepared to get down and dirty with the beast.

1) I have perfect credit. No late payments, no bad reporting ever on anything.

2) Credit scores in the mid 700s. They were much higher until I ignorantly closed a bunch of old accounts I was not using. Didn’t know that would have an ill-effect.

3) Debt to income: pay off credit cards every month. Basically have no debt other than a single low car payment. Earned about quarter of a million last year. Owe virtually nothing.

4) Had prior credit with BofA – credit card I closed that had had 15,000 limit and was paid perfectly in full.

5) Have a current credit card with Capital one with limit of 20000, high balance of 16500 and it has always been paid off completely every month, regardless of the balance (yes, including the 16500 in a single month.)

Go figure.

Regarding the age limit for credit cards, I agree that there is too much coddling of our youth. First I don’t think a parent or anyone should cosign for a loan / credit card for anyone (not saying there should be a law against it, just saying I wouldn’t recommend it). But if a person between 18-21 meets the same criteria that someone over 21 is “required to meet” for being able to afford the card, they should be able to get the card. Interestingly the CARD Act specifically says that under the age of 21 they must be able to prove the ability to pay for the card. Why wouldn’t this be a requirement that a lender has for borrowers of all ages?

Realize that card companies can be split into two categories, those that are designed to make money from users versus make their money from revolvers. Companies like Discover, Bank of America (formally MBNA) and American Express were originally built to make money from all the interchange fees. Companies like Chase, Capital One, Citi and HSBC were designed to make money off revolvers (i.e. interest charges) and fees.

Some of the changes I agree with but one of the unintended consequences of not allowing “minors” to have credit cards without a co-signer, will be a large gap in establishing credit between the have and have nots. Those who have parents that can co-sign will always get a card yet those who are on their own will be coming out of college with little credit experience.

I do wish they would have indexed rates to either libor, prime or fed funds. Part of the problem is that congress was trying to cap rates at to low a level. While some things were predatory poor credit risks should be paying more. I see nothing wrong with jacking up rates to a max of 29.9% for the worst offenders. All that will happen (if I held a balance that is) will be to increase my rate to make up for the losses on the more risk customers. I am sick of subisidizing poor risks.

What most people don’t realize is that prior to the 90’s only the very best credit risks got a credit card. Unfortunately credit cards are so ubiquitous that it is hard to live without one these days. You need it for car rentals and plane tickets. This will also force borrowers to the worst offenders when they need money, the check cashing and over night lending places on the corner.

Our kids will continue to be kids as long as we treat them as such.

For me, the best answer is simply no credit cards. I find my life is a lot more simple without an open link to these companies. Clearly, the next best solution is to be ‘one of the good ones’ and always pay off your balance early, but it’s also likely the perks will be dwindling as these companies already know they aren’t making any money from the smart people.

In the end, the legislation isn’t bad, but it seems rather pointless.

“Personal responsibility is an important lesson that should be learned prior to opening a credit card account. Paying attention to your own finances may alleviate 80% of the headaches pertaining to credit cards. But as customers get savvier, the industry finds ways to make dealing with them more difficult for the issuer, hiding rules deep in the twenty-page pamphlet of fine print and changing those rules on a whim.

I expect that credit card issuers will continue finding new ways to make money off of customers who either don’t pay attention to their finances or find themselves in financial distress due to external or unforeseen circumstances, and I expect that responsible users will continue to find moderate and reasonable rewards for good credit behavior.”

Yeah, some changes have been made, and they’ll generally help out – but the responsible credit card users will still pay off their balances and not be affected by much of it, and those who aren’t so responsible will still find their way into trouble…

We are already seeing cuts to rewards programs, Chase and AmEx are the most recent. My Costco Business AmEx just went from 5% on gas to 4%. Is it coinicidence that this is happening at the same time as the bill? I don’t think so, but others argue that rewards programs have been slowly cut over the past few years.

Credit card companies make a lot of money off fees and interest, this bill cuts and limits that money, so how will the companies make up for that loss? That is the big question moving forward.

I’ve stated here before that I’m against this bill. The “unfair” practices of credit card companies are layed out in the terms and conditions. Credit cards are a revolving loan that consumers sign a contract to use. They should be reading the terms and conditions before signing or borrowing anything. If you do not, I don’t believe you have the right to complain when your interest rate skyrockets because of universal default:

From Citi:
“We have the right to change the rates, fees, and terms at any time, for any reason, in accordance with the cardmember agreement and applicable law. These reasons may be based on information in your credit report, such as your failure to make payments to another creditor when due, amounts owed to other creditors, the number of credit accounts outstanding, or the number of credit inquiries.”

There are extenuating circumstances, but a majority of consumers that carry balances simply bought more stuff than they could afford, and they signed a contract for the loan to buy that stuff.

Other than that things seem OK, and I have no doubt credit card companies will be able to maintain profitability long term.