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How the Credit Card Bill Helps Good Card Holders

I just got off the phone with an Oregon radio show that was doing a segment on the credit card bill. "Will this hurt our listeners who pay their bills," they asked? This is not a wise way of thinking about the issue. The world is not divided into bad credit card holders and good credit card holders. Rather, there are some people who will never miss a bill, some people who will frequently miss their bills, and then a lot of people who will occasionally miss a bill. And it's not easy to predict who falls into that middle category. A "good" credit card holder who loses his job, for instance. Or whose bill gets lost. There are plenty of reasons you might miss a payment that don't include "you're a bad and irresponsible person."

A lot of the provisions in the credit legislation will bear on these folks. The "there but for fortune" class. And in that way, they help the people who pay their bills. The provisions make sure that a single slip or an aberrant run of bad economic luck won't open the door to wild malfeasance by the credit card companies. The Senate bill, for instance, says that if the credit company hikes your rates due to a missed payment, they have to restore them if you pay every bill on time for six months. In other words, it forces the credit card companies to return to treating you like a responsible card holder if you return to acting like a responsible card holder. That's the sort of thing that helps "good" card holders.

By Ezra Klein  |  May 20, 2009; 4:25 PM ET
Categories:  Economic Policy  
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This is nice, but it leads me to two conclusions:

1. A card from a credit union is a better deal and

2. A debit card is better still.

If you do not have the cash, do not spend.

Posted by: GaryEMasters | May 20, 2009 5:20 PM | Report abuse

So Congress passes a bill that might help those of us who pay bills on time, and they tell the credit card companies "Stop doing that - but not for another nine months." Its funny how they can pass a bill raising taxes or increasing "fees" that takes effect immediately, but when it affects big business it is put off. Anyone care to explain this to me in plain, simple language?

Posted by: Ex-Fed | May 20, 2009 5:38 PM | Report abuse

I dont see where raiseing the interest rate would help any one to pay thier bills ,u would think the bank would lower it for a while and help you get back on thier feet. if u still did not catch up after a time then shut it off for good, that makes sense.

Posted by: babybexar1 | May 20, 2009 5:47 PM | Report abuse

ezra never heard of you. but you write like a speech writer fora politican or big corporation. what a bunch of spin you put into this soon as a responsible card holder misses a payment it will be reported to credit report and that wont come of in 6 mos.

Posted by: donaldtucker | May 20, 2009 6:00 PM | Report abuse

Ezra Klein writes,

"This is not a wise way of thinking about the issue. The world is not divided into bad credit card holders and good credit card holders."

...yet Ezra Klein has used precisely these terms in past essays: "Are Good Credit Card Users Good Credit Card Customers?" and "The credit card industry, in recent years, has developed something of a tiered model. Good customers are treated extremely well."

Does Ezra Klein believe the Ezra Klein of yesterday and the day before, or the Ezra Klein of today? or does it depend on which point of view is most convenient to bashing the credit card companies?

(NB: I'm all for bashing the credit card companies, but at least do it consistently.)

Posted by: exile_from_virginia | May 20, 2009 6:02 PM | Report abuse

Mr. Klein,

Don't pee down my back and tell me it's raining. I pay my full bill on time each month and only spend based on my budget, which is based on my income. Don't tell me this is good for me because of what might happen; the annual fees I may get now will not be helping me.

I'm all for going after the abusive practices by the companies, but don't tell me that adding fees I don't currently pay is good for me.

Posted by: RMS70 | May 20, 2009 6:33 PM | Report abuse

Let's turn this around. There should be two lists, Good Credit Card companies and then the bad Credit Card companies. For those who pay their credit card statements on-time, we should be rewarded and have low interest rates for being responsible and loyal customers. For those who procrastinate and miss a payment or two, those are the customers who should be with the Bad Credit Card companies who want high interest rates and lots of fees. Having a credit card comes with responsibilities. You should be rewarded by your payment history and not be thrown into a mixed bag.

Posted by: GoodandbadCreditCardCompanies | May 20, 2009 7:21 PM | Report abuse

I recall the first and only time I exceeded my credit limit by $12 one month due to a payment in transit which cleared the day after the overlimit. It had never happened before or since. Years of good payment history, but I got a ridiculous rate increase and a penalty fee.

When I called customer service and asked how a charge could be approved if it was over my limit, the response: we leave it to you to decide how much to spend. Very kind and very deceptive. They want you to go over the limit so they can invoke the penalties and up your rate.

Stupid, really. They lost my business as a result. CC companies used to decline a charge which would push you over your limit. They should keep doing that.

Posted by: Matthew_DC | May 20, 2009 7:25 PM | Report abuse

Credit card companies don't want to help you pay off your balance. Their goal is maximal profit within the law and nothing else. We only have our Congressmen and women on our side, IF they are actually on our side.

Posted by: dummy4peace | May 20, 2009 7:41 PM | Report abuse

I am in the process of cancelling all of mt CC to improve the BofA, Chase, WF, Discovery Toxic asset rations. My Platinum AE card is being dumped for a freebee CostCo AE card. If the CC companies disdain the CC fees they collect from merchants for my purchases, I am sure I will find someone who will do so gladly!

Posted by: Chaotician | May 20, 2009 7:42 PM | Report abuse

Chaotician, you're a fool if you cancel your credit cards all at once. That'll send your credit rating into a tailspin, since you won't have as much access to credit. It'd be better to cut up the cards, and let the banks cancel them as they realize you're no longer using the accounts.

Posted by: Heron | May 20, 2009 7:47 PM | Report abuse

Sometimes I wish for the good old days or at least some of them. Probably 20 yrs ago I was checking my bank account and realized that a $300 payment to MBNA had not cleared my account. I called the company and told them I had mailed the check and they should have received it. A man took my info and made a note of the call. I told him I would send another check and please destroy the 1st one if it showed up. I never got an increase in my rate and was not charged a penalty. My good track record probably helped. This is the way it should be today.

Posted by: mitch661 | May 20, 2009 9:18 PM | Report abuse

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