the prudent have to pay. no one else has any money.

That's like charging the solvent banks higher FDIC fees... Well at least there are other options - there is always cash - at least for now...

Already happening with the Chase Freedom Card. They are downgrading the cashback and adding a $30 annual fee starting June 30th.

You pay fees like that, you will be chasing financial freedom forever...

Okay. So if they do this they will have no more prudent customers. Good luck with those delinquency numbers in the double digits from here on out!

Does this mean mortgage debt will also carry an annual fee as well?

Tyler Durden had it right. Blow them all back to God.

(Yes, I just mixed "Fight Club" and "Raiders of the Lost Ark" references in one slightly angry post.)

ShadowInventory (profile) wrote on Mon, 5/18/2009 - 11:12 pm
You pay fees like that, you will be chasing financial freedom forever...

a ponzi by any other name would smell just as... sweet.

Left for you on the last thread:
Comment by energyecon from thread 'WSJ: Small Banks Face $100 Billion in CRE Losses'

Also, anyone know which recent Larry Niven book blackhalo referenced?

Good eve to all, past my bedtime...

I see this plan backfiring spectacularly.

dupe

"Also, anyone know which recent Larry Niven book blackhalo referenced?"

Escape from hell.

Blackhalo (homepage, profile) wrote on Mon, 5/18/2009 - 11:23 pm
"Also, anyone know which recent Larry Niven book blackhalo referenced?"
Escape from hell.

excellent. I'll be putting it on credit shortly

For anyone with heavy clay soil, look into "expanded shale." It's a newly discovered miracle soil additive that aerates and adds drainage to clay soil. It is cheap, it only needs to be added once, will be effective for generations, and will render most clay soils incredibly fertile and easily drained.

Rob Dawg...agree 100%.

Hoops...great tip! Thanks...

Good thing I just last week took BofA up on their offer for 45K at 2% interest till next March. What to do with all that unsecured cash now?

I'm just freaking out over this stuff. Set it and forget it soil amendment that busts your clay? And it's CHEAP? It's too good to be true.

“Those that manage their credit well will in some degree subsidize those that have credit problems.”

To be fair, those that manage their credit poorly have been financing my 5% cash back for some time.
sigh. I'm gonna miss that discount.

Washington...

Paypal has personally seized over $9000 of my friend's money. When they took the money, the process was totally arbitrary, and as far as I could tell, any review on their part was cursory and performed by low paid functionaries in India. The decision was made, they said, by a department which had no telephones and no fax machines. I asked them how they communicated with the world.. apparently they must order their evening pizzas by mail. I asked quite extensive questions after the representative claimed that the building containing the individuals who decided to take my money had no kind of phone, fax machine, or other modern communications. They know they can steal my money at a whim, and there is little or nothing I can do about it, so they steal my money at a whim. Welcome to America.

The way modern corporations stonewall their customers after thieving from them reminds me of wildcat banks in the depression era. Sure you can cash that check, but you have to go into the wilds of Appalachia to find the bank to do it. You can talk to the company that stole your money, but you have to a) be on hold for 3 days or b) mail some functionary that will give a non-responsive "response" or c) sue... unless you signed an arbitration clause.

Legalized theft. One reason I'm glad to be quitting the legal profession. The only dealings I want to have with corporate america is with a pitchfork and an enema bag filled with lye.

Hoop, This is a particular concern with Paypal. Some paypal operations are in India, and as a result, paypal users credit card information, bank account information along with wire transfer authorization, and personal information is stored in India for use by the low level and very low paid employees there. Maybe it's just me but I find that a little risky.

hoopajoops, ever hear of "stone meal?"

ground up rocks like granite for reestablishing micronutrients in soil

JP,
No rack up the other 8 cards of unsecured debt to the tune of 100k at 2% and use it to invest. I'm thinking of buying a house and pay 100% for it, No mortgage. Can they take the house if I don't flip it in time to pay the credit cards back?

oitshertz, stone meal isn't necessary for many heavy clay soils. I know that my clay soil is just packed full of nutrients; the only problem is the soil structure is of heavy, shitty clay. Stone meal IS great as a long lasting source of nutrients.

RobFDawg:

Years ago, I took an organic chemistry class and the professor was a guy who'd worked with Coca-Cola. According to him, the move to New Coke wasn't a screw up, but rather a purposeful move in order to handle a technical problem that had arisen.

Fascinating story, even if uncertain as to veracity.

How do you pay if you travel for more than a couple of days?

Debit card. Or cash.

Cheers,
prat

re: PayPal, EBay, truck rental...blah, blah, blah....

Use firewall accounts with debit cards.

Use firewall accounts with debit cards.

Or pay your credit cards on time and do not carry balances.

Highly likely that this will occur. Credit card users in US are blissfully unaware that the free and easy access to credit cards does not exist in the ROW. Perhaps there is a very good reason for immediate interest accrual, annual fees and other unimaginable horrible bank fees.

Btw, credit cards historically have been an important source of funds for start-ups (at the garage, "pre-angel" stage) and for many small businesses (in addition to traditional bank financing). These cases do rely on carrying balances and will be hurt by higher interest rates.

Interesting article at Debit card fees sneak up on shoppers - MSN Money regarding charges on debit cards. Here is one excerpt..

Using a PIN could cost you
In a survey by the New York Public Interest Research Group, 89% of the banks surveyed tack on a point-of-sale fee of anywhere from 10 cents to $1.50 for PIN-based debit transactions. While the survey looked only at New York-area banks, people all around the country are finding these debit-card fees on their bank statements.

Also, here is a link to information on debit card security. Very interesting reading. It starts out with..

"Debit Cards: Much greater liability risk than credit cards:

Credit cards have always been a greater convenience for the business rather than the consumer. I remember way back in my convenience store days that we still had that anachronism called receivables. We even had a few consumers besides the farmers and small businesses with charging priveleges. In retail, you lose a significant portion of the market if you can't finance the transaction.

MrM,

I'm not totally against credit cards. I can see having one for emergencies, or if there are significant rewards and if you are willing to manage the relationship. I'm terrible at stuff like that though, and always end up missing a payment here or there out of laziness or leaving a bill under a pile of papers. The stress of that always buzzes in the back of my head.

It's not you, CC issuers, it's me. I'm just not that into you.

People who spend all day cycling credit cards and looking for .1% deltas in CDs are free to take advantage of them, but I'd rather spend my time looking at old land cruisers and CR. 50 years from now, you'll have $100,000 more than me, and I'll have a better land cruiser. Tradeoffs.

Cheers,
prat

I see a fantastic opening for Paypal.

I don't. I see a fantastic opening for good old Amex Green Card, as long as they keep the rules the same. Charge what you need, pay it off monthly. If you can't pay it off monthly, don't charge it.

Here is the way out for most people....

Out of each paycheck (after taxes for you self employed folks)

10% to IRA/Investments/Retirement
10% to Savings for Goodies (like big screen TV's, new computers, new car down payment, vacation, etc..)
10% to debt reduction
10% to "fun" money (dining out, movies, entertainment)
5% to education/charity
55% to basic necessities (rent, mortgage, utilities, car payments, groceries, clothing)

Can't live on 55% ?? You need to downsize your lifestyle.

It's been a since I've need to, but are cc's (not debit cards) still required to rent a car in the states? That's been my major "use" for them.

TIA

Vermiculite is basically a mineral-glass-rock like substance that expands and creates air holes when exposed to heat. You throw the stuff in a kiln, pop it up like pop corn, then sell it as a soil additive. It is non-reactive and has a physical structure that adds air holes so roots don't drown and water drains better, for improving clay soil. The rub is that the stuff is fragile, and after a while it breaks apart and loses the structural features that make it beneficial, so if you depend on it to rescue your clay, you're basically committed to a back-breaking till every couple of years to amend more into your soil.

Added:

Making the prudent pay is just plain stupid, for all the reasons Rob Dawg mentioned. The prudent don't use their cards for much to start with. Penalizing them will just make them not use cards at all.

YES, LET'S PUNISH THE FEW PEOPLE WHO ARE ACTUALLY RESPONSIBLE AND PAY THEIR BILLS.

Geniuses. May all their stocks be downgraded to junk status.

Found this story on the Propositions amusing from the local electronic fish-wrap-cloud:
Moorpark resident Mike Alfred, 54, also marked his absentee ballot with six “no” votes. He said he’s glad California has some direct democracy, but he thinks it’s too easy to get a measure on the ballot. “People are just tired of it all,” said Alfred, an executive at an aerospace manufacturer. “If you have a presidential election every four years and a congressional election every two years, that should be enough.”
Kim Papenhousen, 28, a student teacher in Thousand Oaks, said she plans to vote yes on propositions 1A and 1B because they will increase education funding. But she hasn’t made up her mind on the rest, in part because she hasn’t seen much in the way of public debate about them. “Compared to the last election, I haven’t heard much — no commercials or anything,” she said.

It's the "other" 80%!

I just love it. One guy things direct democracy is stupid; and doesn't realize the measures were placed on the ballot directly be legislators (full disclosure I'll sign just about everything that people ask me to put on the ballot, even those Lew Rockwell folk). I think far too few people utilize the proposition option and there is a potential to get something good through, even if none of the stuff that gets on the Propositions is ever all that great.

The young lady doesn't even realize that Propositions C and D are the ones needed to help this years budget... or doesn't realize that most likely all these propositions will increase education funding. Also she doesn't care enough to even spend 5 minutes understanding what they are voting on.

I guess it also means the unions must be getting their election budget depleted trying to fight off all of these special elections...

I agree with that statement IF you're the type of person who doesn't routinely review your transactions.

If you do, you haven't much to worry about.

No, you have plenty to worry about. Pin numbers are not remotely secure. Just because you review your transactions doesn't mean the bank is going to jump all over it. A fraudulent transaction on your bank account is your problem, not the bank's. A fraudulent transaction on a credit card is the credit card's problem, not yours.

Big difference.

mp, impractical for garden uses. I don't know if you've ever tried to till under brick-thick clay by hand, but it is miserable, miserable labor.

Also, buying a ton of vermiculite every two years gets expensive, as opposed to spending once for expanded-shale.

Years ago, I took an organic chemistry class and the professor was a guy who'd worked with Coca-Cola. According to him, the move to New Coke wasn't a screw up, but rather a purposeful move in order to handle a technical problem that had arisen.

I've always suspected that New Coke may have been a way for Coca Cola to move from cane sugar to high fructose corn syrup without causing a ruckus about it. Coke prior to New Coke was made with cane sugar while Pepsi was made with HFCS. Cane sugar is more expensive and much sweeter. When Coke Classic was reintroduced, it was made with HFCS, not cane sugar. Not quite so classic...

I've never had a credit card, never will.

I have only been in debt once in my life, for a car loan. I will never do that again either.

I do not care about my credit score. I will never check it again. If a business screws me I will not hesitate to not pay my bill, I do not care if it goes on my credit report. I've only done this twice, once for a cell phone bill, once for a city water bill(city employees not there during business hours, left a card saying they had left early...1.5 hours...)

Out of principal I intend to never be in debt to anyone.

I use a debit card and keep my account balance as low as possible to avoid ever losing money for whatever reason. I do check my statements but not as often as i should.

I have rented a car and cannot remember a time when I could not use my debit card in place of a credit card.

Zerohedge:
"“Something strange happened during the last 7 or 8 weeks. Doreen you probably can concur on this -- there was a power underneath the market that kept holding it up and trading the futures. I watch the futures every day and every tick, and a tremendous amount of volume came in a several points during the last few weeks, when the market was just about ready to break and shot right up again. Usually toward the end of the day – it happened a week ago Friday, at 7 minutes to 4 o’clock, almost 100,000 S&P futures contracts were traded, and then in the last 5 minutes, up to 4 o’clock, another 100,000 contracts were traded, and lifted the Dow from being down 18 to up over 44 or 50 points in 7 minutes. That is 10 to 20 billion dollars to be able to move the market in such a way. Who has that kind of money to move this market?"

A year ago, I would laugh it out. However after all of "the magical" events I witnessed last year, I just don't know anymore. Scandalous. : (

http://www.foxnews.com/video/index.html?playerId=videolandingpage&streamingFormat=FLASH&referralObject=5036977&referralPlaylistId=undefined

On the bright side, reading about market related cover operation run by Treasury, FED, CIA (rofl), will be a lot of fun number of years from now.

thanks, CashOnly. I appreciate your approach. With a student loan paid off in the eighties, if I were even to possess a credit score, I wouldn't know it since these scores are a newer invention than the only debt I've had. And if the day comes for repatriation, I'd like to take my cue from your moniker when it comes to buying a place.

You betta' back up to the counter and guard your wallet...cuz' you are about to learn the three R's of life. Ripped...Robbed...and...Reamed

Just starting reading the actual NYT article, and went into shock after reading:

"Banks used to give credit cards only to the best consumers and charge them a flat interest rate of about 20 percent and an annual fee. But with the relaxing of usury laws in some states, and the ready availability of credit scores in the late 1980s, banks began offering cards with a variety of different interest rates and fees, tying the pricing to the credit risk of the cardholder."

Now most of this paragraph seems to be correct. But when I first got a bank credit card issued in CA (during late 70's or early eighties?) yes, there was an annual fee, but the interest rate was only about 11-14%. And bank savings interest rates were also very high back then. It wasn't till YEARS later that cc interest rates crept up to over 19% and I remember being shocked that it had gone so high and wondered, " Are there no usury laws anymore?" I am pretty that the usury laws limited them to so many percentage points above the prime rate.

So this statement in the Times, making it look as if rates have always been 20% or more is pure b*sh.

"HARDASCRAPCLAY"

That, of course, is a technical term.

OT article; but maybe not
Smooth operators: How the Poor Spend Wisely
PAYING interest on your savings will strike most people as odd. Yet some poor people in the developing world do just that. In West Africa, for example, some people pay roving susu collectors a fee amounting to a -40% annual interest rate for looking after their deposits.
...
These features are what economists like to call “consumption smoothing”—spreading spending out in a way that ensures that what you eat one day is not determined by what you have earned that day or the day before. The subjects used a combination of loans and savings to ensure that their lives were not, literally, hostage to fortune. Hardly anyone lived utterly hand-to-mouth.
The research provides evidence of the sophistication with which poor people think about their finances. They are acutely aware, for example, of the importance of some psychological phenomena whose effects behavioural economists have only recently begun to explore. For instance, they purposefully seek out commitments to help ensure that they meet their saving goals. Many of the South African women in the study joined several monthly “savings clubs” in spite of having bank accounts. They found that the extra discipline the clubs provided was valuable in itself, because it compelled them to save no matter what.

Article is very paltry on details regarding how poor people use loans + savings to ensure they are not "held hostage to fortune". I guess the assumption is if you aren't paying someone 40% interest than you yourself would spend that money in some way? Hence, these susu collectors are actually the ones who have discipline in finance and are able to charge 40% for that financial discipline? I'm not sure I would call it a "feature"; anyone else understand some of the concepts in this article?

Just thought it was an interesting read in my print copy... wanted to share... carry on with banter about super-soil. Damn I shouldn't have called it super-soil prior to getting a registered trademark so I could market it... maybe it would be called superclay? Super-clay, super-clay, it's super-clay-ey!

COH, most of the industrial metals were up a bit for the day too. Sometimes I wonder if I should order a few pallets worth and start my own "schindler's toolroom" like mp.

What the hell is worth going long on these days? Like investing or something. I'm sure the traders are having a blast, but I want to park my money some place productive and go build shit instead.

What in the world is a "firewall account".

The free credit cards for all phenomena, is I suspect another result of loan securitization. I think if you tracked their availability versus the banks abilities to sell loans of you'd find there was a pretty strong correlation.

Checking in after another absurd Dickie Betts concert for 300 people. It's just not fair.

Never endorsed a product, no tour sponsors. You can't mass produce genius.

Thank you, Hoops.

Back in the day (actually not that long ago since I am only a genXr), my very first credit card which happened to be a Bank of America Visa charged a $20 annual fee. Each year I had to call to have the fee waived and eventually they got rid it altogether. I still have the card since it's my oldest and I have heard that you should never give up your first born. It doesn't give me any miles, points or cash back, but it serves its purpose of providing me with a high FICO score or so I've been told.

There is not a chance now that I would pay an annual fee for a card unless there comes a point where you can't make airline reservations or rent a card with a debit card. Even then, I might consider never taking another out-of-state or country vacation again.

No sense of humor tonight, I see.

I suppose it's the credit card subject matter.

california should take every penny it has in pension, lottery, or whatever accounts and buy bank stocks on margin. can't lose. budget problem solved.

Why am I not surprised that the commentariat here at CR tends to pay off their CC bill every month, get the rewards/cash back, and pay no annual fee.

Have to agree with the poster above who said that we have been getting subsidized by the irresponsible borrowers. But that was the way the system worked so why wouldn't you take advantage of it?

I think it's likely that we'll see more fees (especially for rewards programs / cash back), but I seriously doubt that they'll impose immediate interest accrual on purchases. They know that that would drive away a significant portion of their customer base and exacerbate the delinquency/default issue. They have more of a self-survival instinct than that.

It's more like a $10m insurance policy on your neighbor's $600,000 house.

Bob_in_MA (profile) wrote on Tue, 5/19/2009 - 8:10 am

Needless to say, if they end these programs they'd lose us as customers, but I doubt they would miss us.

Don't kid yourself, they make plenty off the vigorish from the merchant.

Byzantine_Ruins (homepage, profile) wrote on Tue, 5/19/2009 - 8:10 am
It's more like a $10m insurance policy on your neighbor's $600,000 house.

Byzantine_Ruins ,

Actually, I have seen analogies like this before -- which only serves to make the whole thing more bizarre.

broward,

I'll take that as a snark. Meanwhile, duh, I sit and drool in my oatmeal ....

Visited two HD's and one Lowes last week. Both HD's had one checker open and a long line. Most of us where forced to use self check out or endure a very long wait. Lots of customer grumbling. Not my idea of customer service after the product selection has been made to endure an unreasonable wait. Lowes had less business and more checkers with one to two people in line. HD still has a way to go in my opinion.

Cap'n,

The credit card shields canna hold on much longer, and we're running a wee bit low on de-riskium crystals

Did Mr Anderson become Hank Hill?

Chainsaw (profile) wrote on Tue, 5/19/2009 - 8:21 am

George Orwell has got to be proud of the Financial Media in this country.

They know their master's voice.

Licenses make them slaves of the state. Advertising revenues make them slaves to corporate interests. A populace collectively ignorant enough to be manipulated into "Dixie Chicking" anyone who disagrees with the person with the megaphone to their mouth makes the manipulation work.

The result is as clear as the manufacture of the Iraq war.

Ultimately "the prudent" are the only place to turn to make things work. They'll be paying for banks, AIG, Medicare... if you're smart you won't be one of them.

It is truly breathtaking watching so many companies use the old Cisco Systems ruse of massaging the numbers until they beat analyst "expectations" by one or two cents. Semiconductor companies were especially proficient at pulling the scam this quarter.
Down is definitely the new up.

Americans like free lunch even if it cost them. CC companies that will charge the holder fee's means you don't meet their profit model and want you to go away. They will raise the merchant fee to keep them out of the consumers face. Twenty buck annual fee is not thing compared to a fraction of a percent raised to the merchants over a year of spending.

starts down 12.8%, more progress on working through inventories, I consider that good news.

Starts down, good news, working through inventories. Starts up, good news, things getting better.

AAA = American Assignat Assets

Yesterday I inquired if anybody studied monetary history?

Interestingly enough, the only countries that used paper money to a great extent in the 18th century, were us (Continental Currency) and the French. (Assignats)

France issued it's paper money in 1789 to 1796, the 1st instance of fiat money in the country.

We had nothing to lose by printing up paper money, being a fledgling entity @ war with England, as there was no history of our money having any value, but France was a different story...

Wait till web sites such as Amazon hear about Immediate interest. We should see a steel cage death match between banks and web sellers. Let's set some odds at the Great Casino on who will prevail if the banksters follow through with their threat. HeeHah!.

Bankers will win, duh. They looted the Treasury, you think they won't push over amazon?

I never understood why debit and credit cards were separate. Why not pay you interest if you have a positive balance and charge you interest if you have a negative balance ?
One account much easier to keep up with the transactions.

See what happens? See what happens Larry...when the government gets involved and tries to save the day?!

Does anyone remember the old Beavis & Butthead episode where Mr Anderson, the next door neighbor, is wandering for hours in "Home Labyrinth"? And the whole time he's trying to find someone to help him?

=============

YES!! "Where the heck are them spanish tiles? Damn hippie clerk, I could've walked to Mexico by now!"

also Mr Anderson is clearly the forerunner to Hank Hill

For "Home Labyrinth" try IkEA sometime. They have a generous returns policy and you will use it frequently if you have to order delivery. They hire people in the warehouse that can't read.

Expanded shale great stuff but it really isn't new and actually quite expensive

They probably figure enough people have internet accounts that they can get away with this. Figuring people won't switch their amazon.com or netflix accounts. PayPal will wind up being a big winner if this becomes widespread.

Don't forget the merchants that PAY 3% of the transaction to take credit cards. If your gross margin is 10%, then you are paying the credit card company 30% of your gross margin.

It's insane. The credit card industry need wholesale changes.

The CC companies committing financial suicide by charging annual fees and interest immediately upon transaction, that will certainly stop me from using a card.

Personally... I've said for a while if the 25% APR suckers ever wake up and stop using their cards as an alternative to loan sharks, who may have better morals and lower interest rates, there'll just be all hell to pay. The CC co's have to go back to a margin business 3% transaction fees, with huge volumes being your source of revenue & no nice monthly sucker fees to live on.

• splat

This is no different than paying 3% more for everything to cover theft at a retailer.

The CC market will fracture...

Group 1 - Folks that borrow and can't pay...
Group 2 - Folks that must borrow, can pay and cover the costs of group 1
Group 3 - Folks that are savvy, don' use credit cards and don't pay for group 1

Once the CC companies are down to group 2 as their bread and butter, look for retailer fees to rise and then look for retailers to offer cash discounts.

Cash will be king again! All hail king cash!

(I still get weird looks when I whip out $500 cash at Sam's club... won't be that way for long)