The Checkout

Veto Halts Curbs on Credit-Card Policies

Last week, New York Gov. George Pataki vetoed a bill that would have made his state the first to take action against the credit-card "universal default" policies.

Consumer groups have been trying to get legislation passed in the U.S. Congress as well as state legislatures to restrict a credit-card company from raising interest rates on its customers, even those who are current in their monthly payments, because those customers may be late in paying other creditor (such as another credit-card company or utility) or have taken on so much debt that their credit scores drop. So far, all their efforts have been unsuccessful.

Credit-card issuers say higher interest rates (which are around 30 percent although some are as high as 35 percent) need to reflect their risks and the overall creditworthiness of the borrower. But customers have complained that they have little choice once the higher rate is imposed; if they want to continue using the card, they have to accept the higher rate. If they refuse, the account is closed, with the cardholder liable for the existing balance at the old rate.

Earlier this summer, the New York State legislature passed a measure barring credit-card companies from raising interest rates because a consumer had missed or made a late payment to another creditor. Pataki vetoed the measure last week, citing "a serious technical flaw." Pataki said "it is unclear whether a credit-card company would be prohibited from increasing the interest rate it charges based on a change to the consumer's credit score where such a change is attributable solely to the consumer's indebtedness or failure to make timely payments to any other creditor." That ambiguity, he added, "could result in the imposition of criminal penalties ... for conduct that heretofore had been lawful."

Linda Sherry of Consumer Action, a nonprofit organization that conducts an annual survey on fees and rates and that was pushing for the New York law, disagrees and said the governor's reasoning "was a poor argument for vetoing. ... The so-called ambiguity does not exist. The intent of the legislation was to prohibit a credit-card company from increasing a cardholder's APR based on their record with OTHER creditors. Yes, a deterioration in a person's credit score can be driven by negative reporting from creditors; however the intent of the legislation was clear. If no default exists with the card company implementing the hike, such an increase should be prohibited -- despite the fact the cardholder's credit score deteriorated."

By  |  August 21, 2006; 9:05 AM ET Consumer News
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Comments

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Universal default is a dirty trick.
Pataki is just another big business politican who needs the CC/banking industy for donations.
Disgusting, but not surprising he vetoed the bill.

Posted by: May | August 21, 2006 9:23 AM

Pataki is leaving office this year. I wonder what bank he will be working for.

Posted by: Steve | August 21, 2006 9:34 AM

Hm. "The intent of the legislation was clear" tends to carry an implied "...even if the language wasn't, particularly" addendum. The Consumer Action quote is the one that makes me wonder if there was, in fact, an ambiguity problem.

Posted by: Sheila | August 21, 2006 10:03 AM

OK lefties, prepare to fire all weapons at me, but....


Isn't this the market at work? I could see the problem if, once someone was late with another creditor then the CC company decided to retroactively raise rates on a previous balance - that would seem to be arbitrary and breaking a contract.

However, that's not what they do - they figure that if someone is not able (or not willing) to pay someone else what they owe, then they are then more likely to default on the CC balance, meaning higher risk, meaning a higher rate is justified. I can't see how anyone could argue that this isn't the case.

The consumer does NOT have to play ball if they don't like those terms - the old rate remains on their old balance. Nobody puts a gun to your head and forces you to use any specific card, or even to run up big balances and live on debt for that matter.

These companies are in business to make money, not to expose themselves to excessive financial risk.

Posted by: JD | August 21, 2006 10:11 AM

I think the bigger problem here is not what the interest rate is on the card, but the fact that people can't afford to pay their credit card bill AND their utilities? come one folks, it's called living within your means. the problem isn't the interest rate, but the fact that Americans have gotten so used to the more-more-more society that we're walking around with a $100,000 debt. now that's scary.

Posted by: Melissa | August 21, 2006 10:16 AM

Pataki is a disgrace - he had the opportunity to help consumers for a change and he just wimped out.

The issue is simple, if you had a car loan (mortgage loan, etc) with ABC bank - they do not have a right to raise your interest rate - if you for some reason you are unable to pay your utilities bills on time or your credit scores deteriorates.

Posted by: Dawn | August 21, 2006 10:59 AM

Using a car loan as a comparison is misleading. If I take out a car loan, I make an agreement with the bank or whoever about what the interest rate is. The loan is a single transaction.

With a credit card, you have multiple loans. Each time you charge something, the credit card company is giving you a loan. The convenience is that the terms are pre-arranged, I don't need to get the approval before I make a purchase.

With the interest rate hike, the company is intervening in between loans and saying future loans are contingent on this condition being met: you have to agree to a higher rate.

Getting back to the car loan analogy, it's like forcing a bank to give you the same rate for three consecutive $5000 loans despite the fact that your credit rating has plummeted.

I would say that it would be fair to force the credit card companies to maintain the initial rate on the exisiting balance and apply the higher rate to futre purchases.

Posted by: Rob | August 21, 2006 11:17 AM

There are two problems at work here.

1. The CC companies are in the business to make money from advancing money. I have been without a credit card for almost six years due to a decrease in employment. All my credit cards are closed and paid in full.

2. My brother is a CC company employee, when he tells stories of people calling up and asking why a credit card company is sending them a bill for their purchases and not grasping the concept of credit cards not being free money -- well, it seems that obviously some people are too stupid to understand a "credit" card gives you credit, which you may use, but need to pay back.

So while I was subject to higher rates, poor credit reporting etc. It was ultimately my responsibility to take charge of my credit.

And low and behold, I've purchased two cars and a house on credit and amazingly the fact I have no credit cards is of little consequence, though I still don't qualify for the teaser rates. And may never have an 800 credit score because I refuse to get credit cards again. But you know what, I'll give up the teaser rates to avoid unsecured debt.

And really doesn't a high credit score mean you're a great credit risk because the CCs can count on getting their interest from you in addition to the principle? I'd rather just pay in cash. And save literally the hundreds and thousands of dollars of interest charges. In this case tis better to get than give.

Posted by: Gimme A break | August 21, 2006 11:23 AM

I have had an MBNA credit card for 7 years and have NEVER, EVER been late or missed a payment to them. However, I did miss some student loan payments shortly after my grace period expired when I graduated. I ended up getting a deferment, but the late payments (3 total) had already been added to my credit report. MBNA then increased my APR to 31%. Yes, 31%. Up until that point, I had a 14% APR with almost no balance on the card. During that period of hardship in which I did not pay my loans, I had to use my MBNA card to buy necessary things - like groceries and rent. So, now I have the balance from those items at a 31% APR. Obviously, it was a temporary period of hardship - I couldn't find a job, etc, etc - but I am being punished very severely for it.

I am paying off the balance on the MBNA card as quickly as possible. I will never use MBNA again (which has now been acquired by Bank of America, I believe).

Posted by: Anonymous | August 21, 2006 11:37 AM

If people don't get penalized for being late with payments or defaulting, the it's not fair for responsible consumers who always make payments on time and are being responsible with their finances...someone needs to to take the responsibilites for all those bad debts..and why not people who made those..

The higher interest rates on your CCs are just a way of penalizing for being irresponsible..but the 30-35 % is definitely outrageous...

Posted by: George | August 21, 2006 11:51 AM

The problem, as I see it, is that we consumers are unable to get the information we need to intelligently take our business elsewhere. The market is way too chaotic to be able to make sense of it without a thorough study. I'd like to be able to show people who treat me badly that they must pay for that bad treatment (by losing my business), but I don't think that message gets through at all.

A market can only function properly if there is some order to it, and bankers have made sure there is none in the credit card arena.

Posted by: Gene | August 21, 2006 12:04 PM

Well, to all the whiners about how the rate got jacked up, they didn't know about the t's and c's, it's unfair, my aunt Tilly died and I had to fly out to the funeral, etc.:

1) If you don't understand the terms of the card, you are too immature to have the card
2) As Melissa said, live within your means or pay the penalties
3) Even if you didn't understand the situation, once your rate went up to 31% or whatever....why did you keep racking up charges on the card? Why didn't you get another card? If you were such a poor credit risk that you couldn't qualify for another card, well, doesn't that justify the company to boost your interest rate?
4) To 'Gimme A Break', I like your idea of not having a card to avoid temptation, but you're missing out on free stuff (I get Hotel points and casino comp points on my two cards, with no annual fee). Just pay the balance each month.

Posted by: JD | August 21, 2006 12:44 PM

This is for those who are NOT CC Company or Bank employees, like JD and Melissa. Really, JD, "more likely to"? Maybe I was wrong. You probably work for an Insurance Company. Instead of saying that you are more likely to pay late because you paid someone else late, what would be the harm (other than to their bottom line) in waiting until you actually do pay late to raise your rate?
My experience: I received a notice from Discover Card that they were raining my rate from 9.9% to 28% because my credit report showed two accounts in default. After getting a copy of my credit report, I called Discover and told them that the two accounts were not mine. They said to get it straightened out with the credit bureau and call them back and they would give me back my old rate. After about 60 days, while being charged 28%, I got it straightened out with the credit bureau and called Discover back. They had no record of the person I spoke with previously ever working there, and they outright laughed when I said I was told I could get my 9.9% rate back. They said the best they could do was 16%. I am one of the lucky ones who did not have too high a balance, so I was able to just pay it off.

A question: Has anyone who has a CitiBank-issued credit card ever gotten a service rep who could speak English well enough to actually be of assistance to you? I have not. I don't begrudge anyone a job, whether here or in India, but if you are unable to do the job you shouldn't be doing it. Evidently, CitiBank disagrees, especially when it comes to the workers they get for $1.00 an hour.

The attitude of the Credit Card issuers is "What are you going to do about?" Governor Pataki showed everyone that there is, in fact, nothing you CAN do about it. I have always considered Pataki a bit of a dimwit, but never quite realized how hard a time he has understanding English.

Many of you may be old enough to remember that Senator Alphonse D'Amato from New York once tried to take on the credit card companies about their high interest rates. He was defeated in the next election. I'm sure that Pataki and the rest of the mute congress are old enough to remember.

Posted by: Bill | August 21, 2006 1:08 PM

"Using a car loan as a comparison is misleading. If I take out a car loan, I make an agreement with the bank or whoever about what the interest rate is. The loan is a single transaction. " True - but the next time you apply for a car loan - the bank can deny the credit or charge you a higher rate because of your credit card (but not in a middle of a contract).


"With a credit card, you have multiple loans. Each time you charge something, the credit card company is giving you a loan. The convenience is that the terms are pre-arranged, I don't need to get the approval before I make a purchase."

Well if you are making your credit card payments on time - why should you be penalized for other types of debt? If the credit card company is so concerned about your credit ratings - they can close your account and let you pay them off with the interest rate initially agreed upon. However, they want to MAKE MORE money off of you so they will continue to extend you credit and MAKE you pay "usury" rates. With the new bankruptcy laws (passed with the help of the credit card industry), there's no way you can discharge your debt completely.

Posted by: Dawn | August 21, 2006 1:36 PM

"1) If you don't understand the terms of the card, you are too immature to have the card
2) As Melissa said, live within your means or pay the penalties
3) Even if you didn't understand the situation, once your rate went up to 31% or whatever....why did you keep racking up charges on the card? Why didn't you get another card?"

1) I probably was too immature - MBNA sold me on the card during my first semester in college.
2)I would say buying only necessary groceries and paying rent and nothing else is about as much as anyone can do to live within their means.
3) I stopped using the card months before they hiked my rate to 31%. I did get another card, which I keep no balance on (always pay it off) - it has a 7% APR, so apparently I am not that much of a credit risk to some companies (Chase).

Posted by: Anonymous | August 21, 2006 1:44 PM

Also, I did transfer most of the balance of my MBNA card to my Chase card. It just infuriates me that CC companies are allowed to hike rates up to as much as 31%. It is tantamount to loan sharking. Maybe it is why some people cannot seem to get out of debt. It penalizes the poorest people.

Posted by: Anonymous | August 21, 2006 1:47 PM

My boyfriend has had the same Chase card for 8 years. In those 8 years, he has never paid late and never had a balance (always pays the balance off). Last month he was 3 days late in making his payment (he simply forgot and did not have auto-pay). To penalize him, Chase charged him a late fee ($35, I think) and imposed an interest rate on all his purchases for the next 2 months. Even if he pays off the balance at the end of the month, he will still have to pay interest on the balance he is paying off. He will not be using that card for the next 2 months.

Posted by: Christina | August 21, 2006 1:55 PM

OK Dawn, please calm down, deep breaths, etc. OK.

There is no way that a credit card company can 'make you pay usury rates'. It just can't happen without your permission and willing participation. As was stated earlier, if they went back and retroactively raised the rates on a balances racked up under previous terms and conditions, then OK, you'd have a gripe, since they're basically violating a contract.

If they raised the rates without telling you, again I think you'd have a valid complaint, something akin to a bait-and-switch.

However, we're not talking about that. What we're saying is, once you've *proven* to the world that you're not very good at paying your bills on time (for whatever reason), they will need some extra safety-margin money from you to make it worth the risk they are undertaking to loan you the money.

And you've chosen to accept these terms by continuing to use the card. Again, please go back and re-read the last sentence. You are doing this willingly (then complaining about it, how American)

As for Bill, no I work for a government contractor, not an insurance company. And I pay my balance in full each month, because paying even 7% non tax-deductable interest is stupid in the long run, to say nothing of 20% or higher. And Bill, your ID theft experience does show a weakness in the system. It seems, though, that you have a cause of action here for a small claims lawsuit, were you so inclined.

Posted by: JD | August 21, 2006 1:56 PM

Why is it everyone bashes the credit card companies for raising rates due to caluclated risk...but no one is complaining about the insurance companies, to which you pay your premiums for insurance for auto, home, life, etc. Those premiums are also caluclated risk assessments, and you pay more or less based mostly on the actions of other people in your coverage class, not necessarily because of an analysis of the risk you and you alone present. How is this any more acceptable than credit companies raising rates for the same reasons?

While I think credit card companies are greedy and many people get burned by them, I wish people would use reasonable logic when analyzing these things.

We can thank the failure of our public education system for people not being financially literate...I'm sorry, common sense literate. Gotta teach those state student progress tests instead of real life decision making skills! Ah, I digress...

Posted by: CyanSquirrel | August 21, 2006 2:31 PM

I usually do not post comments but here is a story where CC can be used to the consumer's advantage, although mine is a special situation. I was one of the people who spent beyond their means, racked up thousands of dollars in CC debt and made late payments and had interest rates high as 20% (four years ago).

Due to some help from friends, I was able to pay off most of the the previous balances on my CCs. Well in the four years, I made timely payments and used one CC for all purchases and paid the balance in full each month. The CC company knowing that I had a history of racking up high balances and being late with payments, offered a balance transfer rate of 1.9% for the life of the balance and no transaction fee. I used the balance transfers to consolidate all my debts at 1.9%. I alos no longer use that CC for purchases so I have a substantial loan that I am paying 1.9% interest. I also use another credit card to make purchase to rack up mileage and benefits which I pay off each month. Cannot get a better deal than that. As long as I make timely payments, the 1.9% rate stands and has for two years. Just an example that CC can be used to your advantage sometimes. By the way, my two years of paying all my bills timely no longer warrants the low interest rate. So this was a one time deal where someone who abused the use of credit cards, was being abused by the CC companies but now is paying back some of the abuse. The CC company never expected me to be responsible with my credit.

The CC companies like all companies function on supply and demand. As long as there are enough consumers who supply the CC companies the reason to raise interest rates to their advantage, then they will. If conusmers limit that supply and demand that we get better treatment or we will take our business elsewhere or find alternative ways, the CC companies will listen and treat consumers better.

And yes, this means that the fault of others (ones who live beyond their means and abuse credit) penalizes the onew who do not live beyond their means and do not abuse credit cards. It is not fair, but it is the reality of a large socieyt.

Posted by: JH | August 21, 2006 2:59 PM

As Dawn said "If the credit card company is so concerned about your credit ratings - they can close your account and let you pay them off with the interest rate initially agreed upon."

As JD touched upon, but did not state, you can too. You can close your account and they must let you pay off at the initial interest rate.

As JD said, only after you make another charge (a CHOICE by you) will the rates go up.

Posted by: Non-debtor | August 21, 2006 3:11 PM

Sorry, I should have said in my last comment that my four years of paying payments timely and showing responsible use of credit card no longer warrants any future low interest rate balance transfers. I still have the 1.9% on the old balance transfer and it will not change until I am late with payments to the CC company that it is with. The rate will not change even if I am late paying to other vendors.

Posted by: JH | August 21, 2006 3:12 PM

JD says, "As was stated earlier, if they went back and retroactively raised the rates on a balances racked up under previous terms and conditions, then OK, you'd have a gripe, since they're basically violating a contract."

JD, you're the one who apparently needs more real-life experience, since under the universal-default clause in many credit-card agreements that's exactly what they've given themselves the right to do. In my own case with Chase Mastercard a couple years back, I noticed that my APR had inexplicably been hiked from 9.99% to 29.99%. I knew I had never been late with a payment and called to find out what had happened. The person on the other end told me that because I had been delinquent on paying a debt to another entity, Chase was raising my interest rate (and yes, that was most definitely on my EXISTING BALANCE, not just FUTURE PURCHASES). I asked them to identify this so-called entity, and they were only able to tell me it could have been another creditor, a utility company, or maybe an unpaid tax bill or parking ticket. As it turns out, after checking my records, I had NO deliquent payments to any of my creditors or utility companies, but I had two parking tickets that were a couple months late in getting paid (and as anyone in this region can attest, that's hardly a rare occurence these days). Now I ask you, realistically, is that a reliable basis on which a credit-card issuer should be able to unilaterally TRIPLE a customer's interest rate? These folks are indeed the lowest of predatory bloodsuckers.

Posted by: KR20852 | August 21, 2006 3:14 PM

I too have been victimized by Chase Mastercard. I even sent letters to members of Congress on the appropriate banking committees. To no avail. I had a $100,000 mortgage with Chase at one time, that had been paid off and was I was in good standing on my credit. Chase upped my interest from 16.9 to 29.99% because of my credit score and other creditors while at the same time I had never, ever been late with a payment to Chase. They're criminals and the Governor of New York should resign in discrace.

Posted by: michael nine | August 21, 2006 4:19 PM

Well KR, sounds like you've got a problem that hadn't been discussed either in the original news item or from any of the posters. The fact that they are allowed to go back and retroactively up your rate....

So you immediately paid off the balance to clear out that high-rate liability and cancelled the card? Or have you been living beyond your means?

I don't know about the other folks on this board, but I get 4 or 5 credit card offers a week; clearly the companies are hard-up for clients, you would think that you'd have your choice, giving you the ability to get away from companies that engage in such shenanigans.

Posted by: JD | August 21, 2006 4:56 PM

I think the risk stated is BS. The car payment might have proven to be too much after a decrease in income.

But the credit card payment may have been met just fine.

If the user returned or sold the car, they may well have become richer after the problem not poorer.

Just an example.

My logical approach is in terms of relationships. I'm more likely to try harder to pay those that I have a relationship with.

When the CCCo. changes the iterest rate, especially on an entire balance, they are changing the terms of the agreement is signed.

Since they no longer value the years in which I've been a good customer, I no longer feel as obligated to hurry, since I'm being spanked anyhow.

If not for the interest, I might have had the money to pay it off too.

Posted by: Debra | August 21, 2006 6:19 PM

JD says "Well KR, sounds like you've got a problem that hadn't been discussed either in the original news item or from any of the posters. The fact that they are allowed to go back and retroactively up your rate...."

On the contrary, that was the point of the legislation that Pataki vetoed. I don't know how you inferred that the jacked-up interest rates only apply to future charges rather than existing balances, but as I already pointed out, universal default allows a creditor to unilaterally increase a customer's APR on ALL existing balances and future transactions based on the slimmest of justifications. And I don't understand your use of the word "retroactive" to describe this practice, since the new APR rate only applies to the unpaid balance going forward from that point. If they were to "retroactively" apply the new rate, that would mean they would go back over the account and charge additional interest on that part of the balance that had already been paid off at the lower rate.

"So you immediately paid off the balance to clear out that high-rate liability and cancelled the card? Or have you been living beyond your means?"

This is one of those false dichotomies that Karl Rove would love. So if I couldn't pay off the balance in its entirety at that point, it would mean I was living beyond my means? By your logic, no one should use credit, because we should all be able to pay off our debts at the drop of a hat anyway, so where's the sense in paying it off over time and be charged interest instead? In reality, of course, the vast majority of Americans can't afford to pay cash in full for mortgages or cars or home improvements or major appliances and take on debt in exchange for the convenience of immediate use. Intelligently using credit when required, and setting up a household budget that accounts for making payments on debt, is part of being a responsible adult. However, when a creditor unilaterally and without prior warning triples the interest on that debt, you seem to think that the fault must somehow still lie with the customer. Why is it that sleazy and predatory business practices used to be called un-American, but now they're all too acceptable by so many amoral pro-corporate apologists?

Oh, and for the record, of course I paid the slimebags off, although it did entail the sale of a couple hundred shares of stock from my Ameritrade account. And no, I didn't close the Chase account because doing so would adversely affect my credit score. (You are aware of that, right?) Besides, now the jackoffs are wasting their money on postage and printing trying to get me to transfer my balances BACK to Chase. Fat freakin' chance!

But I'm one of the lucky ones. Think of all the hundreds of thousands (if not millions) of senior citizens, single-parent families and just plain middle-class working folks like myself who don't have the financial flexibility to dump these vultures and are going to be paying upwards of 30 percent for years to come. Is it any wonder that the GOP pushed through that anti-bankruptcy bill to protect the banks' interests? They've now got a federally protected gold mine there.

"I don't know about the other folks on this board, but I get 4 or 5 credit card offers a week; clearly the companies are hard-up for clients, you would think that you'd have your choice, giving you the ability to get away from companies that engage in such shenanigans."

Guess again. Go back and read the fine print on those offers and tell me just how many include a universal-default clause. BTW, you may have to actually apply for the card first, because those mailings often don't include a complete credit-card argeement with all the terms spelled out. But be careful, since applying for too many cards to get the ones you want will also lower your credit score.

And you never did answer my question: Based on my experience, are a couple of late-paid parking tickets a reliable basis on which a credit-card issuer should be able to unilaterally TRIPLE a customer's interest rate? Regulation is most definitely needed in this area.

Posted by: KR20852 | August 21, 2006 6:34 PM

Debra says, "My logical approach is in terms of relationships. I'm more likely to try harder to pay those that I have a relationship with.

When the CCCo. changes the iterest rate, especially on an entire balance, they are changing the terms of the agreement is signed.

Since they no longer value the years in which I've been a good customer, I no longer feel as obligated to hurry, since I'm being spanked anyhow."

Debra, that's probably the very reaction that those slimebags want you to have. They WANT you to pay the minimum amount. The longer you carry a balance with them at those ugly rates, the more money they'll make in accrued interests.

It may not feel quite as satisfying at first, but you'll be better off paying as much as you can to the vultures (to get them out of your life sooner rather than later) while sending only the minimum to the lower-rate civilized types. Don't let those bloodsuckers have a cent more in long-term interest than necessary.

As for the relationship thing, remember that paying less to the responsible low-rate creditors is actually rewarding them, because they'll get more interest from you in the long term too.

Posted by: KR20852 | August 21, 2006 6:58 PM

Ah, you misunderstand, probably my fault.

Short term, I paid off the card. I dipped into savings I don't normally touch to do it, but it got done.

I just didn't want to pay that COMPANY anymore.

So I canceled not just my credit card, but moved all my savings, checking and other banking items for myself, separate ones for my husband, and had my grown children do so as well and cancel THEIR credit cards with that company.
And I know my daughter told her friends too, one of whom didn't notice their rate had gone up.

So that company is no longer getting paid.

Relationships DO matter.


Posted by: Debra | August 21, 2006 8:19 PM

I always enjoy the term "amoral pro-corporate apologists."

Because I largely agree with JD, I guess I'm an "amoral pro-corporate apologist" like him.

This "amoral pro-corporate apologist" is careful with his money and savings in spite of my low income (because I'm a student). I invest my money in a number of funds and companies that includes a large number of financial institutions. So when the credit card companies profit off of you and your name-calling ilk because you can't manage money / keep an open credit card without a balance, I make money. Hah!

So you can keep defaulting calling us names, and I'll keep taking your money. Or you can be a bit more responsible, and I won't keep taking your money. Really, the ball is in YOUR court, not mine. You can keep blaming corporations, but someone owns those corporations, and they're out to make money. And I appreciate that, because I take pleasure in watching my meagre savings grow.

Incidentally, that's not to say I don't offer sympathy when it is due (this includes almost everyone who deals with a phone company). For poster Bill, who had inaccurate delinquencies on his account, I have tremendous sympathy. I hope he has an open, blanace-free credit card so he can dump those punks who inappropriately raised his interest rate and deny them his future business.

I save my concern for people who are affected by incidents outside of their control--not people complicit in their own situations.

Posted by: Yeah | August 22, 2006 10:26 AM

Sometimes it's luck over responsiblity.

Sometimes it's responsibility to family over responsibility to a corporate juggernaut.

The issue for me is that the causal relationship is NOT near absolute, heck, it's not even logically solid.

I can sell or turn in that expensive car.
I can move to a less expensive location.
I can find others ways to make money.
But making money doesn't always happen overnight.

These increases in costs can happen overnight, and can hurt someone's chances of making things better.

My driving record is perfect and has been, even when I was poor, and unemployed, and had to use my credit card to cover emergencies.

My emergencies became greater, except that I changed auto insurance companies to one who didn't find such a relationship.
Still no accidents, even in the 3 years it took me to make everything better financially.

These companies are just looking for another IN. It won't cause a greater rate of payment for anyone who is really a risk. If they are, they will default on every account that does this because they can't afford more than they did before.
It's just math and they are at the bottom of the earnings necessary.

It will hurt everyone else, though.

Posted by: Debra | August 22, 2006 5:35 PM

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