Credit Card Companies: Worse Than Loan Sharks

From tomorrow's Washington Post (gotta love the internet):

Credit Card Sharks

There's a new law that forces credit card issuers to increase the minimum monthly payments borrowers must make. The good news is that borrowers will pay much less in interest over time. Nevertheless, many consumers might still be better off owing a loan shark money than a credit card company. Here are seven ruthless practices that credit card issuers engage in and loan sharks don't:

1. Loan sharks don't raise your interest rate if you're late paying a bill to another creditor. []

2. Loan sharks don't solicit. []

3. Loan sharks don't change the terms whenever they want. []

4. Loan sharks don't penalize you for paying off your debt. []

5. Loan sharks don't charge you for not borrowing more money. []

6. Loan sharks don't make you sign a document that says that you can't sue them. []

7. Loan sharks don't lobby the government to make it harder for you to go bankrupt. Banks and credit card issuers spent millions of dollars lobbying Congress in favor of the 2005 bankruptcy bill.

Last time I checked, loan sharking was still illegal. The banking industry's questionable practices are fully protected under the law. If ever an industry needed to be more tightly regulated, it's credit card lending. A shark is a shark, even if it wears a suit and works in a building with marble floors.

I watched a friend's credit destroyed in a little over two years. It started off innocently enough, just took out an extra card during the winter, when cash wasn't coming in, to cover the bills. The terms? 18% interest right off the bat; $29 late fee; $29 fee if your balance exceeded $500; interest rate increased if you had more than 2 late payments in 6 months. They wouldn't let him put a stop on the card; those monthly fees just kept adding up.

After two years and a few more of these "deals", my friend had balances of over $2,000 on each card, on each of which he had charged in total about $500, and he had paid over $1000 on each besides. He ended up declaring bankruptcy.

Now, under the new bankruptcy bill promoted by Cheshire Cat Joe Biden (D-MBNA) and others, he'd just have to work for the rest of his life to pay off those fees.

There oughta be a law that protects consumers, but our legislature is bought and paid for by the credit card industry. Shame, shame.