Arran's Alley

Watch what they do, not what they say.

Mick Arran

Mick Arran
Location
Portsmouth, New Hampshire, USA
Birthday
January 05
Bio
I've done everything from recycling to teaching in a pre-school. Most recently I was for 10 years an acting and theater teacher as well as a pallet builder. I read a lot and I'm an old man who remembers the distant past with somewhat more clarity than this morning's breakfast. I've been blogging for a decade and I don't do "light". If you're looking for recipes, self-promoting displays of items made for sale, titillating stories about how I was a pimp for an afternoon, or the beauties of toasters, you've come to the wrong place. Check the Front Page.

Editor’s Pick
MAY 13, 2009 6:36PM

Senate Dumps On Credit Card Interest Cap

Rate: 24 Flag

Just a little while ago our gallant Democrat Senate - and I quote - "easily" defeated Bernie Sanders' bill to put a 15% cap on credit card interest rates the same day that CBS did a segment on the banks' sudden raising of already usurious rates on some of their best consumer customers with no warning of any kind. The reason was - partly - that the Sens have their own bill almost ready for passage.

Despite complaints that banks and credit card companies are gouging customers by charging outrageous interest rates, the Senate on Wednesday easily turned back an effort to cap interest rates at 15 percent.

The effort by Senator Bernie Sanders, the Vermont independent, drew only 33 votes and needed 60, with a bipartisan group of 53 senators opposing it as the Senate pushed its credit card overhaul toward the finish line.

See, the Big Senate bill don't have no stinkin interest rate caps. Uh-uh. That was just too much for our bankster puppets to swallow. Or at least, that's what the Puppet Masters told them to say....

The banking industry, which had some heavy-weight representatives monitoring the vote off of the Senate floor, warned that an interest rate limit could cause a sour reaction in the financial markets.

Yah gotta love them Sens. Making sure their friendly neighborhood banking lobbyist was right in the corridor outside the Senate Chamber so they could get fresh new talking points if they ran into trouble selling waverers. Not that there were any. No no. This was a no-brainer. I mean, the Boss was right out in the corridor, fer dawg's sake.

See, the Old Market Rules say that when times is bad, interest rates go down because there's fewer people can pay em. But New Market Rules demand that profits stay way up even when incomes is way down, so they gots to have the ability - the right - to gouge consumers even deeper because, you know, us damn people just ain't borrowing as much on our cards as we used to. In fact, borrowing is waaaaay down.

Consumer borrowing plunged in March at the fastest pace in 18 years as Americans put away their credit cards and hoarded cash amid the worst recession in decades.

The Federal Reserve said Thursday that consumer borrowing dropped 5.2 percent in March, the biggest decline since an 8.1 percent fall in December 1990.

In dollar terms, consumer borrowing plunged by $11.1 billion. That's the largest dollar amount on records dating to 1943, and more than three times the $3.5 billion drop that economists expected.

The borrowing category that includes credit cards dropped 6.8 percent in March after a 12.1 percent plunge in February. The category that includes auto loans fell 4.2 percent after rising by 1.2 percent in February.

(emphasis added)

We ain't got no more money might be the problem what with wagez bein flat for a quarter century and all the money flowing, you know, to the top 1%.

Got it now?

  • Old Rules: Borrowing goes down, interest rates go down to attract more borrowers.
  • New Rules: Borrowing goes down, interest rates go up to keep the same high profits rolling with fewer actual borrowers.
 They used to call that a violation of economic law. Now it is the law.

Mr. Sanders said the card companies and banks were engaged in conduct that could get others hauled into court. He said one-third of all credit card holders are paying interest above 20 percent and as high as 41 percent.

“When banks are charging 30 percent interest rates, they are not making credit available,” said Mr. Sanders, who noted credit unions are limited to 15 percent. “They are engaged in loan-sharking.”

Yup. That's what it's called except thanks to Joe Biden, our new Veep, it's legal and you can throw people in debtors' prison if they can't pay up.

Oh wait. That's next year.

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Biden the Bankers' Friend. We have a LOT to thank him for.
I think this was how Teamster votes used to go down when Hoffa was in charge. Mafia is peanuts compared to the banker thugs, though.
Harry: Yah nailed that one, goombah.

jane: I feel your pain. In a year I'm not sure much of anything is going to matter.

BBE: Thanks again. You're always there when I need you.
How long will it be before others on the left side of the aisle start listening to those of us concerned at the path the Obama admin is taking thus far. All the claims of "not squandering political capital" have to peter out at some point, right? How long is "long enough" until our concerns are acknowledged as valid? A year? Two years?

My feeling is that point will never come. Our civil liberties will continue to erode, the barons of capitalism will continue to rampage and it will all start circling the drain. There are just too many satisfied frogs in the slowly warming pot of water, too many who claim to be "liberal" when they are nothing of the sort.
I feel suddenly old and tired.
Ahh, so much for the Cheney style of 'democracy'. Corporations pulling the strings from another room...

How anything can be passed in a congress that is so totally, completely and tragically out of touch with ANYTHING outside of the pig bin they live in...

They (senator whores) need the money to stay in congress and we really need them out but the new boss is usually so uch like the old boss that it's getting rather pointless.
LOL, is any one surprised? Anyone with an ounce of common sense knows the banks have the senate (and most politicians for that matter) in their back pockets, bought and paid for!

RT
www.privacy-resources.us.tc
Did you even read what the article said about the senate bill that is likely to pass?

"The Senate measure would prohibit companies from raising interest rates on existing balances unless a card holder was 60 days behind, and then would require the rate to be restored to its previous level if payments were on time for six months."

That seems like a reasonable compromise to me. Keep up on your payments and they can't raise your rate. Miss a payment and you can reclaim your previous rate with 6 months of on time payments. I agree that credit card companies are evil and they certainly abuse their customers. They need to be regulated and I believe this senate bill is a good start.

In reality, why are you carrying a balance on your credit card anyway? Stop using them to finance a life style you cannot afford and you won't have a problem with them. Lost your job and used your cards to prevent eviction? Perhaps you should have saved an emergency fund so you wouldn't have to BORROW SOMEONE ELSE'S MONEY. Or perhaps you should have rented/bought a smaller place so you could save money.

95% of America's problem with debt is because people refuse to live within their means. No one forced you to buy that SUV. No one forced you to vacation to Hawaii. No one forced you to spend all that money on your wedding. No one forced you to buy that toy for your kid.

Stop spending, stop deluding yourself about what you can afford, and start saving so you can pay cash for the things you need.
Regardless of the interest rate it still does not stop the fact that people spend outside their means. Why should Congress regulate credit card companies when people will continue to do so?? If people spent what they could afford, it would not matter what the interest rate is because it will all be planned and accounted for.
Credit cards are a sucker bet even @ 5% interest. But I read the fine print in the come-on offers that arrive in the mail and I'm amazed that charging 25+ interest is even legal.

That Congress would fail to support people paying usury interest rates is sadly typical of our useless, failed, corrupt Federal government, is it not? The banks have stolen trillions of dollars via our spineless Federal representatives, but insist on continuing to nail people with insanely high interest rates? Can you find an investment vehicle offered by the bank that's going to PAY you 25%?
Great post. The Senate has a long history of being in the banking sector's pocket. It is not at all surprising that they would reject credit card interest rate caps.
Until massive numbers of people join together in a collective "fuck you" by simply REFUSING to pay ANYTHING on their credit cards for several months at a time, nothing will change. We have the ability to cripple these companies but there are still too many who are "afraid" what this kind of action will do to their credit rating. It's only a number. You can't take it with you. Sick to my stomach and digging and redditing or whatever the hell the proper term is. Definitely rated.
PS. I *love* your bio.
What I'm hoping is that this sinks the credit market faster than an elephant in a toy boat. I look forward to them scratching their heads in consternation as borrowing continues to fall.
You know who is deafeningly silent on usury? The Christians! Doesn't the Bible have a lot to say on that topic? Yes it does!
http://www.tentmaker.org/lists/UsuryScriptureList.html

Oh yeah, we must first defend against gay people obtaining secular rights!
Good post. Here's what I don't get: CC companies are raising rates even on good customers. Who will then migrate to somewhere else when they can. Leaving CC companies with people who may be paying high rates, but who are likely poor credit risks because they can't move somewhere else....

What geniuses over at CCHQ think that cultivating a wide base with shallow ability to pay is a good idea?

Oh yeah, the same geniuses who crashed the economee.

I swear I'm going to turn into the Crazy Old Lady with Signs on Her Car....and a pitchfork lashed to the roof...before this is all over.
Why is this written in half-honky? Trying to be funny?
did a cartoon on the subject on my blog here...lemme know whatchathink :)

http://open.salon.com/blog/songweasel/2009/05/14/credit_industry_wins_consumers_loseagain
15% interest is a disgusting affront to civil economic interaction between individuals in a free society. That Congress has refused to cap interest rates at that already exorbitant level, and permit the existing standards where predatory rates of 29% and even 39% are routine, is a disgrace to Democratic ideals and a real economic burden we will all be paying to the crooks and liars who make their living by indenturing hard-working American citizens.
I am with cartouche! We need to seriously hurt them by shutting down commerce with them.
Seven Years, No Cards. FUCK YOU Credit Cards
Borrowing is like any other product. It has a price. If you don't like that price, don't buy the product. Putting a cap on rates is like any other sort of price cap - it creates artificial scarcity by telling people "I don't care if you're WILLING to pay more, we're not going to let you." The natural result: shortages and a black market.

A credit card interest rate cap would essentially be a full employment act for completely unregulated off the books loan sharks. Don't like having Citibank come after you for that late payment? Think how it will feel when Vinny from around the corner comes to collect.
MTwilight: Ah yes. All the usual folderol. Even after all these years I still have to explain how otherwise responsible people can get trapped into using their credit cards when their jobs begin to disappear? How the credit card companies structure their rules to shove you deeper in debt so you owe them way more than you borrowed? The hidden fees? The ridiculously high late charges? etc etc etc?

They're victims, MT, plain and simple. Of both an economy that has been very deliberately shifted to favor the investor class and of cc company practices that ain't called "predatory" fer nothin. The Senate bill's provisions, which make sense to you most likely because you're not a predator, haven't suffered from them, and don't really understand how they think, have enough holes in them to run a train through. They don't even constitute a good beginning and will barely slow the theft down much less eliminate it. It is probably the weakest possible bill the Senate could consider and still call it "reform" without being laughed off the planet. Quit thinking like a naive consumer and start thinking like a thief. That's what you're dealing with.

Mr Jones, you clearly missed the point of this exercise. The rules you cite are OLD MARKET RULES. Things don't work that way in the new corporate-owned state. With the NEW MARKET RULES, everything flows to the top and the OLD MARKET RULES are reversed. Up is down, right is left, and day is night.

Plus, you might consider that you are essentially arguing for legalizing loan sharks. What's to prevent a vig of 100%/hr as long as a bank does it? You're saying that we should allow banks to charge any rate they want because, well, they don't break legs?

No, just world-wide economies. Otherwise, their tactics are the same as The Mob's but that's OK with you. You know, you really need to poke your nose out of your hot-wired bomb shelter a bit more. This is the real world here, not some Adam Smith 17th century fantasy.
Bob Jones says if you don't like the product, don't buy it. And I am not going to any longer. The best way to avoid this BS is to quit using credit cards completely. At least it is something we can avoid. At the very least, pay off the balance each time. Live within your means. Scale way back on spending. Since I started shopping in thrift stores, the glut of catalogs is not so enormous in my mailbox. Another bonus.
I think I'm as fed up with these two faced "senate puppets" as the next guy. Fifteen percent wasn't enough for their masters, wish i could get that return if i had anything left to invest.
anyway here is a link to see how the best whores money can buy voted for "us"
http://politics.nytimes.com/congress/votes/111/senate/1/191
Perhaps it is naive, but I thought these types of things affecting mainly the middle class, were supposed to get better with Obama?
I am not feeling the love. Disgruntled and confused how something like this could exist, further creating economic chaos for the majority of Americans. Before too long, Americans will be the ones fleeing the US and becoming illegals in other countries. Maybe not so far fetched. "Bring us your tired...bring us your weary..." I am pretty tired of politics as usual, regardless of who maintains the throne.
This one really pisses me off because BOTH of the Democratic Senators from my State, (Washington.. and that I voted for) voted NAY on this issue. No wonder that when I wrote them looking for help when US Bank was raping me, neither bothered to reply. They on the banker's payroll.
Until Reagan, we HAD usury laws. No one wants to remember that. The rates were capped at 9%.

I've been squawking about this for years. Not only does it give banks far too much power over people already, but it drains investment capital from business that actually make something to "financial instruments" that don't. So meanwhile China buys or manufacturing setcor for pennies on the dollar and all we make are CEOs and baristas.
Mick Arran:"Ah yes. All the usual folderol. Even after all these years I still have to explain how otherwise responsible people can get trapped into using their credit cards when their jobs begin to disappear? How the credit card companies structure their rules to shove you deeper in debt so you owe them way more than you borrowed? The hidden fees? The ridiculously high late charges? etc etc etc?"

Let's consider it this way. If there were no credit cards and you lost your job, what would you do? You would certainly reduce your secondary spending (like eating out, toys, travel). Unless you have savings, you would be forced to move to a lower rent home, maybe share a room with a buddy, or seek assistance from friends/family.

Now what happens with credit cards? Americans still cut back on secondary expenses, but not their primary (housing). They use their credit cards as if it were savings so they can maintain their current housing standard. They dig a debt hole, effectively GAMBLING that they will get a job before their credit runs out.

That is NOT being responsible. A responsible adult would have 6 to 12 months worth of expenses saved. A responsible adult would consider moving to a lower rent home as their savings becomes depleted. A responsible adult would not use credit cards for anything except purchases that are paid off at the end of the month. A responsible adult places their financial health above their pride and social standing.

BOTTOM LINE: If you carry a balance on your credit cards, you are not being responsible. It's basic finance.

Now, I agree that credit card companies are evil and that they are predatory. I agree that we need more regulation. I agree that once you get into that debt hole, they milk you for all you are worth. But the problem has always been the use of credit cards instead of savings and then spending beyond your means.

You did not get TRAPPED into using their cards. You failed to budget properly, failed save adequately, and failed control your impulse to use the credit card in the first place.
I worked in subprime credit card risk management from 2000 to 2005. I tell people I would drive a cab before ever going back to it. I have many, many stories, none of them flattering.

At the time, I just needed a job, having finished grad school six weeks before my daughter died from cancer (I'd had to basically move to L.A. while in school to care for her 'til she passed away). I stumbled into the job via a temp agency looking for a tech writer. When they learned of my SAS chops, they hired me permanently.

In 2004 my bank got bought by a Wall St. "bad paper" firm, and a frenzy of "securitization" ensured forthwith. I knew this shit would go bad. See my main blog, bgladd.blogspot.com.

I'd had a Phillips 66 gas card for decades. It got bought by Citibank, who turned it into a Mastercard. They sent it to me, with a $10,000 credit line. Recently, they bumped my APR to 17.99%, notwithstanding my 800 range FICO and zero-derogs clean Bureau and way positive net worth. I sent their customer service an email: "You punish me, I reciprocally punish you: I will henceforth not use your piece of shit, I will pay the balance off to zero and keep it there (in the industry we'd call such people "deadbeats"). Neither will I cancel it. You will carry me on your books. I will not help pay for your corporate jets, particularly while you are taking bailout money."

They promptly ran my rate back down. Assholes. I continue to punish them. I am just lucky that I can. It mostly runs the other way.

I have many stories.
I'm very down on a lot of credit card practices. I think they have done some very shady things, that rates are way too high, that there are a million bad policies. And yet I think 15% as a maximum credit card interest rate is too low. I think if that happened, banks would immediately cancel a lot of people's cards. I'm not sure we want that effect. Over time, we might be able to get the maximum rate that low, but not immediately.

I think 20% would be a more realistic maximum. But what I really think we need protections on is change in interest rates. 15% might be reasonable if that was the rate when the card was acquired and if it was a choice of that or nothing. At that point, it's not bait&switch. (Yes, yes, I know the contract says they might do the switch, but those contracts are quite complex and there are myriad loopholes that people might not understand. They need to be simplified independently of this question.) The easiest credit card rule I can imagine would be something that (a) never allows any change in interest rate on money already purchased, (b) allows changes to future rates only with some link to federal borrowing rates, and (c) requires affirmative consent by the customer before the interest rates are raised, and (d) places a maximum cap on rates [where here I would say 20% might be reasonable as long as it only got there by market fluxuation according to well-regulated rules and not by greedy companies changing rates “because they can.”] I think if you go below some level like 20% with the maximum rate, all you'll really do is make it impossible for some people to get credit cards at all. And, I don't know, maybe that's not terrible. But I think before you try to make that decision for people, you need to involve them.

I definitely think that the present thing where a small error in credit card maintenance leads to a giganto spike in card rates should be eliminated as a possible way of doing business. It's the sudden spiking, I think, and not the fact that a particular rate is allowed, that's the problem. I don't see a problem with offering a card at 18% to someone who wants it, it's changing an 8% card to a 28% card on a whim that bugs me. I don't see a problem with an 18% card drifting to 20% (for future purchases only) if interest rates tighten up, but I do see a problem with an 8% rate jumping to even 18% just because the credit card company needs to make up profit somewhere or because they contrive some major offense where there really was none.

The reasons for permissible rate changes need to be regulated, and the rate at which rate changes are allowed to occur need regulation as well.
We the people, being of sound mind, must hereby declare that the price of renting money has broken from market pressures. Accordingly, the companies engaged in the money rental business are now diverting an unfair share of economic activity from purchases to debt service.

Therefore, we hereby declare the next 24 months to be a usury-free period. We will place all current credit cards (save one with a $5000 limit for emergencies, car rentals etc.) in a credit counseling program which will reduce the interest amounts.

We hereby pledge our sacred credit scores, and insatiable urge to consume to the service of a save then spend economy, with layaway and similar services restored.

We assert our right to deny usurious banks the benefits of Governmental protection and commensurate outrageous fortunes. Should these banks fail to adjust their practices, rates and consumer relations, it is the people's right to revel in those banks failure.

If the market really works, credit rating companies will wither and die, while banks extend moderate amounts of credit at reasonable rates. This will leave more money in their coffers for other high risk/high reward financial transactions such as funding new business start-ups which may actually help our country.

Coda: Bank of America must remove the name and imagery of the United States of America, unless it reorganizes as a wholly-owned entity of the USA.

Please sign below.
You're an idiot.
People need to understand this... if your interest rate is currently above 15% (based on your risk of default), and interest rates are then capped at 15%, you WILL NOT receive a credit card in the future. History is littered with credit card companies that failed or had to sell because of high defaults (like, more than 10% of customers not paying back).

So, since there are people who have a credit card with greater than a 15% interest rate, it is an indisputable fact that they want or wanted the credit card. And that a 15%+ rate is a superior alternative to no credit, which is what would happen if this bill passed.

People do not understand the cost to banks of operating a credit card account and the risks involved. Charge-off rates are often in excess of 10%. That means, 1 out of every 10 don't pay back. Further, CC companies have to pay for customer service and support, statement printing, card printing, transaction processing (every single transaction you make has a cost to the CC company), and the list goes on.

Further, capping credit cards at 15% will only push people towards more shady lenders, like pawn shops and loan sharks.

This is a terrible idea and yet another example of how Congress has no idea what its doing and that the effect this would have on the economy would be reduced consumer spending, GDP contraction, and a bunch of people getting 100% loans from payday lenders and 500% loans from loan sharks.

Every single person on here who is up in arms about this "evidence" of Congress being in the Bank's pockets, should educate themselves. Uninformed socialists, like most Dems in Congress, have ruined many a country.
Rance Spergl: "Good weed, huh?"

Appropriate response for this blog. Instead of reasoned debate or clear counter examples, we get Ad Hominem attacks and ridicule.

No matter what you say, the reason you are in debt is no one's fault except your own (barring identity theft or serious tragedy).

How about some simple finance questions?

1) Did you buy a car with a loan? Why? You could purchase a working vehicle for around $4,000. A reasonable adult can save $4,000 in one year. Therefore you could have saved and purchased a vehicle without going into debt. Answer: You have poor impulse control, a lack of patience, or too much pride to walk/ride a bike/take a bus/car pool/buy a lesser vehicle. You justified going into debt with a bad investment (cars never appreciate).

$4,000 working Taurus 88k miles: http://www.lemonfree.com/35841223.html

2) Did you ever carry a balance more than a month on your credit card? Why? You could have saved money for X months and purchased whatever item for less (by not having credit card finance charges). Answer: You have poor impulse control, a lack of patience, or too much pride to not "keep up with the neighbors".

3) Did you spend more than 30% of your income on your housing? Why? You could have accepted less space, a longer walk/drive/bus ride, or a less prestigious neighborhood. Answer: You have poor impulse control, a lack of patience, or too much pride to admit that you cannot afford it.

4) Did you purchase a new TV/furniture/vacation/toy prior to having 6 months of expenses saved? Why? You could have saved for a while longer, purchased the same item, and built a financial cushion first. Answer: You have poor impulse control, a lack of patience, or too much pride to admit you cannot afford it.

Notice a pattern? You have poor impulse control, a lack of patience, or too much pride to admit you cannot afford it.

I suppose there is another reason, but I don't like to put it out there. Given the responses on this blog though, I will give an Ad Hominem of my own. You are too stupid to properly manage your finances.
Rance Spergl:
Go ahead and continue to blame others for your financial problems. Unless you've had serious bad luck and tragedy (which sounds likely--and, btw, is a tiny fraction of those in credit card debt), then your debt is entirely your fault.

But you want to hear how "shit happens", so here is my life in summary.

Born in 1970, unremarkable childhood to low-middle income divorced parents. Until 9th grade, that is, when my best friend was diagnosed with Autoimmune Liver Disease. His family did not have insurance and he decided it was better to shoot himself in the head than put his family into hundreds of thousands of dollars in debt. That shaped my life immensely.

I graduated in 88 and entered junior college, paying for it by working the night shift at a local grocery store. I graduated with an A.S. in Computer Science. I subsequently enlisted in the United States Marine Corps, found myself deployed to the middle east for Operation Desert Shield (I MEF, 1st Marine Division, 1st CEB), spent a lot of time cleaning sand from my boots, and finally returned home to Camp Pendleton in the summer of 91. It wasn't long until my unit was again sent out, this time to Somalia in late 1992. I don't ever want to return to Somalia. I finished my enlistment in 1994 as a Corporal.

During my Military career of four years, despite the low pay, I managed to save 40k. I made use of the G.I. Bill and enrolled at UCF to get a Bachelors in Computer Science, completing it in 1996. I worked part time, but was not able to build up any extra savings.

After graduating I got a job, 34k/year, managing networks (Novell 4.11). I also met my future wife, we dated for 2 1/2 years before tying the knot in early 1999. I got raises (to 44k in 1999), I continued to save, having around 62k prior to getting married. We used it wisely, had a simple wedding, and put 50k down on a 110k house. Things were great until late 2001. I had rebuilt my savings to 15k, but I lost my job. A short time later, so did my wife. We eeked by until the summer of 2002 when she got pregnant and I took a lower paying job (36k) for the insurance.

2002 and 2003 were rough years. My mother passed away in late 2002, and in the spring of 2003 we lost our first child to severe Gastroschisis. Insurance covered part of it, but not all, and I refinanced our house to get the equity and cover the medical bills. I switched jobs in late 2003, landing a good position in IT Management at a local research company paying 46k. My wife took a while to recover, so we remained single income, but eventually she got pregnant again and we had our second child in 2005 (healthy), followed shortly by our 3rd in 2007 (also healthy... both boys btw).

I am making a good wage (53k now). My wife takes care of our children, we live simple, and I have rebuilt our savings to nearly 40k. I have never carried a balance on my credit cards, I refuse to use them for more than gas and groceries. We could easily make it a year on our savings.

During this same time I have watched friends earn more, spend more, buy ridiculous houses, buy overpriced cars, drink excessively, and ultimately end up jobless and in a half million dollars of debt. I have no sympathy for them, but I help them when I can afford it.

I have been through plenty and still have zero credit card debt. I attribute my success entirely to my mom instilling good financial understanding and to my early 20s of saving money instead of blowing it on fancy cars, silly toys, or 100k college loans. Also, not spending large sums on our wedding and purchasing a smaller, affordable house have been instrumental.

So yes, I understand how "shit happens". RIP, TW-1984, JMP-2002, BRP-2003.
I don't even know what to comment anymore about shit like this, except to say that there is a hatred brewing...I can feel it, anyway. Some are going right back to spending. Others are sitting in basements (like me) and getting really, really pissed.
Hello America. This is Reality calling.

Average savings rates have been negative for the past few years. This means that on average, Americans have more credit card debt then they have savings. During that time, with the help of the Federal Reserve, banks have continued to pump easy credit into many markets. This has caused many bubbles in your economy which have now burst and sent your economy into a downward spiral.

In a real market, this would not occur as you can't lend money that you don't have. Savings were negative so interest rates *should* have been high for the last few years as the banks had no money. But again, because the Federal Reserve was pumping artificial credit, your government created the perfect storm for a bubble.

I know you would like to apathetically turn away and ignore me, but I think my absence in the last few years has caused problems. So, I am going to stick around for a while. I know you would like more easy credit so you can act like everything is OK, but the banksters know I would whip their asses if they ignored me again so they aren't going to play that game anymore. The fact of the matter is, credit is scare because there is no economic savings to back it up. When credit is scare, interest rates are high. That is how it is when I am around. If you don't like it, go hang around with George Bush for a while. He never seemed to be too connected with me.

-Reality
MyTwilight
Good for you. Did you know that most Americans that use credit cards are supporting families and inflation is not kept up with by income. I would love to not have any debt as I am sure the majority of American would tell you. However, as a single parent supporting my household I have had to buy the luxurious grocery and toilet paper from time to time. Oh, and when the ex fails to pay child support and separate maintenance and the courts fail to force the issue and I work seven days a week I guess I should stop feeding my kids so I can save 12 months worth of income so I can survive without credit.
I am sure you never thought about people that live from paycheck to paycheck b/c circumstances dictate we do. However, I pay all my bills early and over the required payment amount, so how does that give Chase the right to increase my interest rate to 111.48%?
Riddle me that, Twilight!
@Rance Spergl: Pompous? Fine, it's your opinion. I certainly don't feel pompous for living within my means while many people do not. I don't have a fancy new car, new phone, or new TV (just an old 25"). I don't have a fast computer, big house, or cable TV. I don't have a fancy watch, name-brand clothes, or many restaurant dinners. I don't have a maid, a gardener, or a gym membership. I don't (often) waste money at the movie theater, go to $100 concerts, or vacation more than a few hundreds miles from home. But many Americans consider one or more of those things to be "necessities"... and then still have the nerve to complain when they end up in debt.

@Elizabeth Ridings:

You are correct in that income has not kept pace with inflation in recent years. But what are you trying to say with this statement: "Did you know that most Americans that use credit cards are supporting families..."

The studies I could find show that 43% of Americans pay their cards in full each month and only 25% carry a balance month to month*1, That would seem to imply that most Americans are NOT using their credit card to support their family, at most 25% are. That 25% needs to cover a wide variety of people that may carry a balance, not just those supporting their family. For example, College students, the unemployed, or those who make poor financial decisions.

*1: http://www.gallup.com/poll/107833/Nearly-OneThird-Americans-Hold-High-Credit-Balances.aspx

"ex fails to pay child support and separate maintenance and the courts fail to force the issue and I work seven days a week I guess I should stop feeding my kids so I can save 12 months worth of income so I can survive without credit."

Without knowing more of your story, I can't comment accurately, but I would ask why you didn't save BEFORE having children? Why can't you move to a more affordable home now? Why can't you relocate to a more affordable city? Why can't you get help from friends, family, or local charities? 7 days a week, really? You obviously have time to peruse the internet and read obscure blogs.

"how does that give Chase the right to increase my interest rate to 111.48%?"

It does not, and Congress is enacting a law to limit it... as I pointed out in my previous post:

"The Senate measure would prohibit companies from raising interest rates on existing balances unless a card holder was 60 days behind, and then would require the rate to be restored to its previous level if payments were on time for six months."

Check out this link for a decent breakdown of what the CC Act of 2009 contains: http://www.stopbuyingcrap.com/personal-finance/credit-card-act-2009/
I am astonished by the figures listed here "In dollar terms, consumer borrowing plunged by $11.1 billion. That's the largest dollar amount on records dating to 1943". And then you add to it the fact the law now enables the banks to basically rob consumers via their interest rates.
good article..good writer, thanks.