The Federal Reserve received around 56,000 responses from angry credit card customers with regards to the new rules it proposed against abusive credit card practices. The rage over arbitrary hike in interest rates based on factors apart from the consumer’s credit history is apparently pretty wide spread.

A long list of factors is contributing towards making unethical or usurious practices in banking industry the norm. The consumer rights bill sponsored by House Financial Services Committee Representative Carol Mahoney moves toward preventing credit card companies from arbitrarily raising interest rates on a balance incurred under an old rate or for unrelated reasons.

One of the major factors motivating abusive lending is the trend of larger and larger corporations. The big banks such as Bank of America, Citi Group and Chase that issue most of the credit cards can take credit risks and absorb the damage in the form of spiked interest rates and sale of bad debts.

Another factor is the focus of the company management solely on meeting the expectations, unrealistic as they may be, of the stock holders who pay them. The interests of the customers are being compromised for increased ROI’s and salaries of the upper echelons.

Not to entirely absolve the consumers and the government, the practice of encouraging expenditure in the absence of liquidity with unsecured credit cards has ruined all hopes of economic stimulus through conspicuous consumption. These lead to abusive lending practices which is another source lost for ready cash like the time when the subprime mortgage crisis hit us.

So, credit card reform is most definitely overdue but first and foremost we need a pool of people who make enough money to cover their basic needs and still have some left to spend on consumer goods. These will require some systemic changes that cannot be accomplished without bloodshed.

The bill is a good start to all of this, but the banks are ferociously fighting the bill, despite its fairly modest restraints. This resistance by the industry makes me wonder- “Has the banking industry completely lost whatever moral compass it might once have possessed?”

Okay, this one is a real off the track post. I read a press release online that suggested that credit card spending habits are influenced by star sign.

The release at thriftyscot.co.uk says that, “New research by the credit reference agency Equifax has shown that your star sign could have some impact on your spending habits.”

It seems Capricorns are the worst when it comes to credit card debt and The best star sign for not getting into debt however is Aries, although they do not like to risk any of their money in investment schemes…

Check out the entire press release at
http://www.thriftyscot.co.uk/Credit-Cards/122006/credit-card-spending-habits-influenced-by-star-sign.html

The Miami Herald describes the Cons of having store credit cards in their article “Store credit cards are not your friends”. You can read the article at http://www.miami.com/mld/miamiherald/business/personal_finance/16151792.htm

To summarize, the author talks about people who get enticed by discounts in the holiday season and end up buying more. Many of these people do not off their credit card bills in January and end up in debt. He says that credit cards offered by retailers typically carry a high interest rate — 20 percent or higher.

Further the author justifies that there is always a catch in the holiday offers that most retailers offer.

Worth a read…

There are tons of credit cards out there. Each card offers great deals, rewards, cash backs, balance transfer rates, discounts, etc.

How do you select the best credit card out there?

Well, the best credit cards for you are the cards that offer what you’re looking for and what you most require. e.g. - If you’re a frequent flyer, an airline mileage credit card that offers you the most bonus points for airline miles and lets you fly whenever you want (No blackout dates) would work best.

For a small business, a business credit card, that offers add on cards for employees and the ability to set individual credit limits would work best.   

First came the credit cards… then the silver cards followed by the gold cards… platinum cards… titanium cards and God only knows what other metal cards!!!

It has always baffled me about the difference that the color of the card makes?

We ask our readers if the “precious metal” category that your card belongs to really makes a difference?

Leave your opinions… Let the world know if it really matters if you have a silver or a gold credit card and we will compile and put them up on the site.