Americans Owe Less...

You have no doubt heard by now, or perhaps have experienced first hand, that credit is a lot harder to come by than it was just a couple years ago. This may, in fact, not be such a bad thing for American consumers, forcing them to live within their means and drive down debt balances.

In March 2009, outstanding non-mortgage debt in the U.S. was $2.54 Trillion. By March 2010, that number had dropped to $2.45 Trillion. That's just about $9 Billion, but it is a good start in the right direction.

There have now been 18 straight months that have seen the level of revolving debt drop, with $935 Billion in March 2009, down to $853 Billion in March 2010.

Also, there are 16% less Americans that are 90 days behind or more on their credit cards today than a year ago, and 20% less that are 60 days behind or more on a car loan.

You Are Part Of The Rebellion, Like It Or Not...

For my follow-up to Tuesday's piece on the new credit card bill, I am going to bring in another movie reference because while we may be experiencing the beginning of a minor version of the collapse of all of those bank buildings like at the end of Fight Club, it is not actually coming until August 22, 2010, so until then, America is going to be feeling a bit like Lando Calrissian. Remember in Empire when Dick Cheney kept telling Lando to pray that he didn't alter the deal further? If you are carrying any credit card balances between now and when the credit card reform legislation actually forces the credit card empire to lower your interest rates to reasonable levels on August 22, 2010, you are going to feel like going back to finish your Jedi training so that you can better fight the evil credit card empire.

Think of today's credit card times in the context of the six Star Wars movies. Today, we are in the midst of Episode 5 - The Empire Strikes Back. Episodes 1-3 are folklore, bits and pieces of mythological details - times long gone that came before you that witnessed the birth of credit cards, issued with low interest rates by small local banks to consumers who always paid their balances off every month, and then witnessed the early battles between the banks and consumers as the banks grew larger and the consumers were oppressed into submission over time, accepting higher interest rates and not paying off balances anymore, until at the end of Episode 3, when the banks had become a massive multi-national credit card empire in supreme control, bending consumers to their will, those consumers still taking on ever-increasing amounts of credit, feeding the empire's growth, not necessarily against their will, but in a complacent stupor. All of this came before you, but somehow, you are paying the price for it today.

Think of Episode 4 as your own personal New Hope that spanned from the day you were granted your first credit card until May 22, 2009, the day President Obama signed the credit card reform bill into law. It was a coming of age for you, where you learned how credit worked and began to see the evil credit empire for what it really was. People offered you credit card guidance through their own painful stories, but you yourself had to experience the pain first hand before you realized that it was time to do something about this evil empire.

So, at the end of Episode 4, we as consumers all banned together and forced our leadership into doing something to fight the empire. There was a glimmer of hope about the future as Episode 4 ended on May 22, 2009, the cameras fading away from President Obama as he signed the credit card reform bill and the credits began to roll to that famous march.

But just days later, we are realizing that there was a truly fundamental flaw in our attack plan at the end of Episode 4. We didn't actually kill Dick Cheney, but simply sent him reeling into space, where he will recover and come back at us harder than ever. You are currently living in Episode 5, which will span from May 22, 2009 to February 22, 2010 and prove to be nine months of absolute pain if you are currently carrying a credit card balance. While the Credit Card Reform Bill is good and strong, it is weak and inadequate in it's first nine months, giving the credit card empire that nine months to come into compliance with its laws.

So, what do you think the empire is going to do with that nine months? This is the "painful" period that I referred to on Tuesday where if you have a credit card balance, the credit card empire is going to pull a "Capital One" on you. Switch your current record-low rates to sky-high rates for the last nine months before the laws go into effect. Consumer groups are expecting these to be the highest interest rates that we will pay in our lifetime on credit card balances.

From now until February 22, 2010, credit card consumers that are carrying a balance are going to struggle just to keep their X-wing above water and make the sky-rocketing interest payments. Interest rates are going to soar, fees are going to soar, and the evil credit card empire will have full reign to do whatever it wishes. An unbridled Karl Rove giving us all a full, long, nine months to question why in the world the politicians in Washington gave the credit card companies this nine months to comply.

Again, on Tuesday, I praised the lawmakers and President Obama for the bill, praise which was, and is still deserved, but today I join the millions of Americans who are asking why in the world Washington has given the banks nine months to comply and thrown us all to the sharks like this. The banks didn't wait nine months for their taxpayer bailout money, did they? I don't think so.

I will, still, however, give Washington credit, but always question why they agreed to this nine month window where the American consumer with a credit card balance is going to take a hard hit, no matter whether they pay their credit card bills on time or not. I just cannot imagine what would have been so difficult to include legislation that mandated that the credit card empire not be able to raise rates on customers who are paying their bills on-time during this nine month transition period.

I guess we all have nine months to figure that out, right? Much like Episode 5, we will spend this time questioning the decisions that those who came before us made, resulting in the current fight that we are in, cursing them, but knowing that a better day is on the horizon.

On February 22, 2010, the major provisions of the Credit Card Reform Bill will actually take effect. The credit card empire will no longer be able to raise rates on existing balances, charge you over-limit fees, and subject you to universal default. This is the beginning of Episode 6, the final episode, Return of The Sane. The nine months of pain will be behind us, and though some people with credit card balances are going to be paying well over 20% APR, over 30% APR perhaps, the interest rate hikes will be over. The ability for the evil credit card empire to inflict an ever-increasing amount of pain on us will have ended. Episode 6 will run from February 22 through August 22, 2010, but if you pay all of your credit card bills on time and do not default on any debt during that time period, the law (with some help from the Ewoks) will force the credit card companies to lower your interest rate shortly after August 22, 2010, back down closer to where it was on May 22, 2009.

From here until August 22, 2010, the American consumer is going to have a hard fight, but that fight will ultimately lead to a better America, and a stronger American consumer. Credit is going to be nearly impossible to get during this time and the interest rate for credit is going to shoot up into space, and we are all going to pay the price for both what we have done, and sadly, for things that we had absolutely no part in. But, on August 22, 2010, the long fight will end and we can hopefully rejoice in having made it through such a ridiculous fight that we both brought on ourselves, yet at the same time, had so little effect on as a single individual.

We can only hope that things will play out differently, but with the law signed and the dates in place, there is nothing else that we can do but sit back and go for the ride that the credit empire and the politicians have just sent us on.

Time To Start A Fight Club...

If you have not seen the movie Fight Club, I urge you to do so. While there's a lot of crazy things going on in that movie that may not be to your liking or taste, there is one thing about that movie that every American should pay attention to -- the destruction of the modern American banking and credit system that takes place in the last couple minutes of the movie, all to a fitting song.

This is a bit of a long read, but if you have even one credit card, regardless of whether or not you carry a balance, you need to read it...

This past Thursday, I intended to sit and type out an article, praising the current legislature and president for their credit card legislation bill. No, you read that right -- I am praising the current Democratic-controlled House and Senate and President Obama on a fantastic credit card reform bill that was signed into law last Friday. Again, you read that correctly.

It is going to cause some pain upfront, especially if you hold a balance on a credit card right now, but in the long run, it is going to benefit us all. It reigns back in the run-away credit that banks had been dolling out without any sense over the past decade, which is what led to their industry's collapse and subsequent socialist bailout by the American government to try to fix the failing economy.

While I will still tell you about this bill and still praise the lawmakers that wrote it and passed it, there was a surprise in my mailbox Thursday afternoon that turned this article into an attack on America's banks and credit card companies.

First, let's talk about the bill. Bottom line, it makes it illegal for credit card companies to raise the interest rate on a balance that you already owe them, unless it is a promotional interest rate. This means that days of you charging something on a card at a 9.9% interest rate and having them raise the interest rate the next month before you paid it off to 17.9% for no reason are over. The problem is, that if you owed them a balance the day the law went into effect, there is a still a work around the credit card companies have (more on that later), but any debt that you accumulate after the day the bill become law must always remain at the interest rate that you agreed to, as long as it is a standard interest rate and not a promotional interest rate. This is a great thing for the American consumer and is decades overdue.

The bill also gives your more time to pay your monthly bill from the time the credit card company issues it -- You'll now have at least 21 days from the day your statement is generated until you have to make the payment. It also restricts the credit card companies to having the cutoff before your bill is late be during their normal business hours. A lot of times, you'll get a statement and the bill is due on Sunday, when they are not accepting payments, but will consider it late if you pay on Monday. They also have been doing this for holidays as well. That practice is no longer legal. These are also greatly needed improvements to the credit card contracts and a great win for the American consumer.

Another great win, and one that the banks fought tooth and nail to try to leave out of this bill is the fact that any money you pay over the minimum payment must now be applied to the highest interest rate balance that you owe them. Before, the credit card companies would apply that money to the lowest interest rate. So, say you owed for purchases at 15.9% and owed a cash advance at 23%, when you would pay an extra dollar to the credit card company, they would apply it to the 15.9% balance, not the 23% balance, which obviously gave them a clear advantage in making more money off of you. This new legislation forces them to apply that extra dollar to the 23% balance first, and the 15.9% balance once that 23% balance is gone. This is going to cost them billions and billion of dollars in interest rates. No doubt the banks are going to lash out at the American consumer to make up for this gap of billions (again, more on that later).

Another area that is going to cost the banks billions is a change in over-limit fees. You will now have to "opt-in" to an over-limit fee, meaning that you must request that the bank allow you to go over your limit and charge you an over-limit fee for doing so. If you do not "opt-in" the bank will not allow you to charge over your limit, thus completely avoiding over-limit fees.

Another great benefit to the credit card consumer in this bill is the banning of what is known as "universal default". Under universal default, a creditor is allowed to raise your interest rate that you have with them if you default on any of your loans, even if it is not one you have with them. For instance, if you defaulted on a car loan, it would allow the credit card companies to raise your interest rate to their default rate, even if you had never missed a single payment with them. Universal default is now illegal and is going to save American consumers billions of dollars in the first year alone.

An area that is of less prominence in today's credit card war, but will still benefit the consumer, is that the credit card companies must compute your finance charges on the current billing cycle - meaning, charging you an interest rate on the current month's average balance as opposed to last month's average balance. This was designed to hit you one last time when you paid off a credit card balance. Say, in February, you owed $200 and paid that off. In March, when your statement cycled, with a $0 balance for each day that month, you would still be nailed with a finance charge on the $200 that you owed the previous month. The new legislation makes this practice illegal.

And lastly, while not effecting the actual agreement you have with the banks, the bill requires your statement to cite how long it will take you to pay off your balance if you are making just the minimum payments. I know most American consumers do not want to be reminded of that every month, but it will help you make better financial decisions when it comes to credit, I guarantee it. The statement must also show you how much you would need to send in order to pay off the entire balance in 12, 24, or 36 months, adjusted, of course, for additional monthly interest. This will give you a guideline in paying off your balances in a much more timely manner. You can image the grimaces in bank boardrooms all across the country over this one.

And that's the basics of the bill. It is a good piece of legislation and will benefit America in the long run, however, now, on to the "more on that later" part I told you about earlier. This will show you how the banks are going to try to get around this new legislation and legally continue to stick it to the American consumer.

Bottom line, if you owed $0 the day this legislation become law, you are set. You will know the day you charge something at a regular interest rate, that interest rate cannot be changed once you have completed your transaction. However, if you owed anything on a credit card the day this legislation became law, you are still in a fight with that credit card company until the day you pay that balance down to $0. In short, they will still be able to change the interest rate on the balance that you already owe them, and believe me, the credit card companies have known for months that this was coming and they have already gotten the ball rolling on getting around it. This is how...

Let's talk about one of my credit cards. A Capital One card I got in college with an original whopping $500 credit limit in 1993, that has a whopping $1200 credit limit today. This card has not carried a balance in over a decade and is one of the cards that I keep open solely for the purpose of having old credit lines open to benefit my credit report scores. It originally came with a 16.99% variable APR that after about five years was changed to a fixed 12.9% as my credit history and good payment record lengthened. That 12.9% was in turn lowered to an unheard of (for a credit card, at least) 7.9% fixed rate in April of 2008 - the true pinnacle of the banks' "credit for everyone" days.

Last Thursday, I received a notice regarding a change in terms on this credit card, literally the same day that I read the MSN article on the fact that the credit card reform bill was on the President's desk. So, the credit reform bill changes it so that a credit card company can only raise rates on existing balances if it is a promotional rate. The notice from Capital One said that they were changing the standard 7.9% fixed rate on my card, a rate I have had for over a year, and a card I have had for over 16 years, to a new promotional rate of 7.9% fixed. Do you see what that does for them? The new law says they cannot raise rates on existing balances that have a standard interest rate, but they can raise interest rates on a balance that has a promotional interest rate.

So, the bankers at Capital One not only changed my regular rate to a promotional rate which is exactly the same rate I had before anyway, but they have also done it to every Capital One credit card holder. Since all Capital One credit cards now have this promotional interest rate, after a period of time, which in this case is about 12 months (April 2010), they can then raise the interest rates on their customers' existing balances to whatever the hell they'd like. In my case, an increase from a 7.9% fixed rate to a 17.9% variable rate. Thank God I do not owe a balance on this card, or my interest rate on that balance would literally more than double to start with the option for them to increase it even higher than that.

So, while the new laws are fantastic, you can see that the credit card companies took steps to ensure that they had a new agreement with you prior to the new bill being signed into law. You can opt out of the rate increases by closing your account and your interest rate will remain what it was before the change, and you can pay them back in the same monthly installments that you have been paying them back in already, but you lose the benefits to your credit report for that account once it is closed. In my case, with this Capital One card, I would lose a card account that has been open for 16 years and has a perfect payment record.

So, what to do if you do have a credit card balance that the credit card companies are raising the rate on before the law goes into effect, or by skirting the law like Capital One is doing? You really need to weigh the long term benefits of the card being open and having a good payment record on your credit versus the amount of money that it is going to cost you to keep the card open if you are carrying a balance.

Keep in mind that your payment record will continue to be tracked, it just won't benefit your credit score as heavily because the account is closed. The bottom line always remains that if you are carrying balances on your credit cards, you should be paying them off down to $0 as quickly as possible. Be sure that you are paying the most on the credit cards with the highest interest rates. If you pay a card off, take your monthly payment for that card and add it on top of the monthly payment for the next card, this way you are always increasing the amount of credit card debt that you are paying off every month as your finance charges decrease. It is very easy to want to pay the minimum, especially as that minimum amount due shrinks every month.

You may have seen yesterday that I provided you with a list of the banks that received bail out funds. It was so that I could make this point to you today. What really ticks me off about the bankers at Capital One and a lot of these banks is that they are raising these interest rates on taxpayers within months of having received billions (yes, billions, such as $3.5 billion for the bankers at Capital One) in taxpayer dollars from the federal government. In what world, on what planet, in what dimension, is this in any way, shape, or form fair, or right? Well, just keep this in mind every time that you go to put a balance on a credit card...Fair has nothing to do with it, and in fact, once you are in debt to one of these newly socialized banks, they no longer have to be fair with you at all, even with this new credit card reform bill on the books.

If you have been reading my articles regularly in the past nine years, then you know that I have spent a good deal of time fighting to shed light on the mysteries and evils of the credit card industry. I will continue to do so in the future...

Welcome Back, Now Get To Work...

Welcome back to work, America! I hope you enjoyed your day off. I sure did!

But, now it is time to get back to work because your portion of the federal deficit is $35,000! Wait until 2012 -- you're portion doubles to $70,000 by then.

The fed is going to expect you, the taxpayer, to come up with your share. Well, that is unless you're not one of those idiots out there like me, working so you can give away a total of 50% of your income in income taxes, and sales taxes, and car taxes, and gas taxes, and phone taxes, and pretty soon, I am sure, breathing taxes.

Don't worry, though, that $70,000 figure is based on numbers that are completely skewed and inaccurate that were contrived to undersell you on how much your portion really is, so chances are, you're probably into the fed's debt for much more than $70,000 by 2012.

While you're stewing on the fact that 50% of all that you earn, on average, America, goes to some form of tax (research it, keep track when you pay your bills and buy gas, and you're gonna be surprised), here is a list of all of the banks that got your money and are now going to be sticking it to you with higher interest rates on any debt that you have with them because America has not given them enough already:

10/28/2008 Wells Fargo & Co. San Francisco Calif. $25,000,000,000
10/28/2008 State Street Corp. Boston Mass. $2,000,000,000
10/28/2008 Bank of America Corp.1 Charlotte N.C. $15,000,000,000
10/28/2008 JPMorgan Chase & Co. New York N.Y. $25,000,000,000
10/28/2008 Citigroup Inc. New York N.Y. $25,000,000,000
10/28/2008 Morgan Stanley New York N.Y. $10,000,000,000
10/28/2008 Goldman Sachs Group Inc. New York N.Y. $10,000,000,000
10/28/2008 Bank of New York Mellon Corp. New York N.Y. $3,000,000,000
11/17/2008 Regions Financial Corp. Birmingham Ala. $3,500,000,000
11/17/2008 UCBH Holdings Inc. San Francisco Calif. $298,737,000
11/17/2008 Bank of Commerce Holdings Redding Calif. $17,000,000
11/17/2008 Broadway Financial Corp. Los Angeles Calif. $9,000,000
11/17/2008 SunTrust Banks Inc. Atlanta Ga. $3,500,000,000
11/17/2008 Northern Trust Corp. Chicago Ill. $1,576,000,000
11/17/2008 Provident Bancshares Corp. Baltimore Md. $151,500,000
11/17/2008 U.S. Bancorp Minneapolis Minn. $6,599,000,000
11/17/2008 TCF Financial Corp.2 Wayzata Minn. $361,172,000
11/17/2008 BB&T Corp. Winston-Salem N.C. $3,133,640,000
11/17/2008 1st FS Corp. Hendersonville N.C. $16,369,000
11/17/2008 Valley National Bancorp Wayne N.J. $300,000,000
11/17/2008 KeyCorp Cleveland Ohio $2,500,000,000
11/17/2008 Huntington Bancshares Columbus Ohio $1,398,071,000
11/17/2008 Umpqua Holdings Corp. Portland Ore. $214,181,000
11/17/2008 First Horizon National Corp. Memphis Tenn. $866,540,000
11/17/2008 Comerica Inc. Dallas Texas $2,250,000,000
11/17/2008 Zions Bancorporation Salt Lake City Utah $1,400,000,000
11/17/2008 Capital One Financial Corp. McLean Va. $3,555,199,000
11/17/2008 Washington Federal Inc. Seattle Wash. $200,000,000
11/17/2008 Marshall & Ilsley Corp. Milwaukee Wis. $1,715,000,000
11/21/2008 City National Corporation Beverly Hills Calif. $400,000,000
11/21/2008 Pacific Capital Bancorp Santa Barbara Calif. $180,634,000
11/21/2008 Heritage Commerce Corp. San Jose Calif. $40,000,000
11/21/2008 First PacTrust Bancorp, Inc. Chula Vista Calif. $19,300,000
11/21/2008 Nara Bancorp, Inc. Los Angeles Calif. $67,000,000
11/21/2008 Webster Financial Corporation Waterbury Conn. $400,000,000
11/21/2008 Centerstate Banks of Florida Inc. Davenport Fla. $27,875,000
11/21/2008 Ameris Bancorp Moultrie Ga. $52,000,000
11/21/2008 Taylor Capital Group Rosemont Ill. $104,823,000
11/21/2008 Porter Bancorp Inc. Louisville Ky. $35,000,000
11/21/2008 Boston Private Financial Holdings, Inc. Boston Mass. $154,000,000
11/21/2008 Severn Bancorp, Inc. Annapolis Md. $23,393,000
11/21/2008 Trustmark Corporation Jackson Miss. $215,000,000
11/21/2008 First Niagara Financial Group Lockport N.Y. $184,011,000
11/21/2008 Western Alliance Bancorporation Las Vegas Nev. $140,000,000
11/21/2008 First Community Corporation Lexington S.C. $11,350,000
11/21/2008 HF Financial Corp. Sioux Falls S.D. $25,000,000
11/21/2008 First Community Bankshares Inc. Bluefield Va. $41,500,000
11/21/2008 Banner Corporation Walla Walla Wash. $124,000,000
11/21/2008 Cascade Financial Corporation Everett Wash. $38,970,000
11/21/2008 Columbia Banking System, Inc. Tacoma Wash. $76,898,000
11/21/2008 Heritage Financial Corporation Olympia Wash. $24,000,000
11/21/2008 Associated Banc-Corp Green Bay Wis. $525,000,000
12/5/2008 Superior Bancorp Inc. Birmingham Ala. $69,000,000
12/5/2008 Manhattan Bancorp El Segundo Calif. $1,700,000
12/5/2008 East West Bancorp Pasadena Calif. $306,546,000
12/5/2008 Cathay General Bancorp Los Angeles Calif. $258,000,000
12/5/2008 CVB Financial Corp Ontario Calif. $130,000,000
12/5/2008 Bank of Marin Bancorp Novato Calif. $28,000,0002
12/5/2008 Oak Valley Bancorp Oakdale Calif. $13,500,000
12/5/2008 Coastal Banking Company, Inc. Fernandina Beach Fla. $9,950,000
12/5/2008 TIB Financial Corp Naples Fla. $37,000,000
12/5/2008 FPB Bancorp, Inc. Port St. Lucie Fla. $5,800,000
12/5/2008 United Community Banks, Inc. Blairsville Ga. $180,000,000
12/5/2008 MB Financial Inc. Chicago Ill. $196,000,000
12/5/2008 First Midwest Bancorp, Inc. Itasca Ill. $193,000,000
12/5/2008 Old National Bancorp Evansville Ind. $100,000,0002
12/5/2008 Blue Valley Ban Corp Overland Park Kan. $21,750,000
12/5/2008 Iberiabank Corporation Lafayette La. $90,000,0002
12/5/2008 Central Bancorp, Inc. Somerville Mass. $10,000,000
12/5/2008 Eagle Bancorp, Inc. Bethesda Md. $38,235,000
12/5/2008 Sandy Spring Bancorp, Inc. Olney Md. $83,094,000
12/5/2008 Old Line Bancshares, Inc. Bowie Md. $7,000,000
12/5/2008 Great Southern Bancorp Springfield Mo. $58,000,000
12/5/2008 Southern Missouri Bancorp, Inc. Poplar Bluff Mo. $9,550,000
12/5/2008 Southern Community Financial Corp. Winston-Salem N.C. $42,750,000
12/5/2008 Bank of North Carolina Thomasville N.C. $31,260,000
12/5/2008 Unity Bancorp, Inc. Clinton N.J. $20,649,000
12/5/2008 State Bancorp, Inc. Jericho N.Y. $36,842,000
12/5/2008 First Defiance Financial Corp. Defiance Ohio $37,000,000
12/5/2008 Central Federal Corporation Fairlawn Ohio $7,225,000
12/5/2008 Southwest Bancorp, Inc. Stillwater Okla. $70,000,000
12/5/2008 Popular, Inc. San Juan Puerto Rico $935,000,000
12/5/2008 South Financial Group, Inc. Greenville S.C. $347,000,000
12/5/2008 First Financial Holdings Inc. Charleston S.C. $65,000,000
12/5/2008 Encore Bancshares Inc. Houston Texas $34,000,000
12/5/2008 Wesbanco Bank Inc. Wheeling W.Va. $75,000,000
12/5/2008 Sterling Financial Corporation Spokane Wash. $303,000,000
12/12/2008 Bank Of the Ozarks Inc. Little Rock Ariz. $75,000,000
12/12/2008 SVB Financial Group Santa Clara Calif. $235,000,000
12/12/2008 Center Financial Corp. Los Angeles Calif. $55,000,000
12/12/2008 Wilshire Bancorp Inc. Los Angeles Calif. $62,158,000
12/12/2008 First Litchfield Financial Corp. Litchfield Conn. $10,000,000
12/12/2008 Wilmington Trust Corp. Wilmington Del. $330,000,000
12/12/2008 The Bancorp Inc. Wilmington Del. $45,220,000
12/12/2008 Indiana Community Bancorp Columbus Ind. $21,500,000
12/12/2008 HopFed Bancorp Hopkinsville Ky. $18,400,000
12/12/2008 LSB Corp. Andover Mass. $15,000,000
12/12/2008 Northeast Bancorp Lewiston Maine $4,227,000
12/12/2008 Citizens Republic Bancorp Inc. Flint Mich. $300,000,000
12/12/2008 Independent Bank Corp. Ionia Mich. $72,000,000
12/12/2008 Capital Bank Corp. Raliegh N.C. $41,279,000
12/12/2008 NewBridge Bancorp Greensboro N.C. $52,372,000
12/12/2008 Citizens South Banking Corp. Gastonia N.C. $20,500,000
12/12/2008 Signature Bank New York N.Y. $120,000,0002
12/12/2008 LNB Bancorp Inc. Lorain Ohio $25,223,000
12/12/2008 Susquehanna Bancshares Inc. Lititz Pa. $300,000,000
12/12/2008 National Penn Bancshares Inc. Boyertown Pa. $150,000,000
12/12/2008 Fidelity Bancorp Inc. Pittsburgh Pa. $7,000,000
12/12/2008 Pinnacle Financial Partners Inc. Nashville Tenn. $95,000,000
12/12/2008 Sterling Bancshares Inc.3 Houston Texas $125,198,000
12/12/2008 TowneBank Portsmouth Va. $76,458,000
12/12/2008 Valley Financial Corp. Roanoke Va. $16,019,000
12/12/2008 Virginia Commerce Bancorp Arlington Va. $71,000,000
12/12/2008 Pacific International Bancorp Seattle Wash. $6,500,000
12/19/2008 BancTrust Financial Group, Inc. Mobile Ala. $50,000,000
12/19/2008 Community West Bancshares Goleta Calif. $15,600,000
12/19/2008 Summit State Bank Santa Rosa Calif. $8,500,000
12/19/2008 Santa Lucia Bancorp Atascadero Calif. $4,000,000
12/19/2008 First California Financial Group, Inc Westlake Village Calif. $25,000,000
12/19/2008 Pacific City Finacial Corporation Los Angeles Calif. $16,200,000
12/19/2008 Exchange Bank Santa Rosa Calif. $43,000,000
12/19/2008 NCAL Bancorp Los Angeles Calif. $10,000,000
12/19/2008 CoBiz Financial Inc. Denver Colo. $64,450,000
12/19/2008 The Connecticut Bank and Trust Company Hartford Conn. $5,448,000
12/19/2008 Seacoast Banking Corporation of Florida Stuart Fla. $50,000,000
12/19/2008 Synovus Financial Corp. Columbus Ga. $967,870,000
12/19/2008 Fidelity Southern Corporation Atlanta Ga. $48,200,000
12/19/2008 Heartland Financial USA, Inc. Dubuque Iowa $81,698,000
12/19/2008 Intermountain Community Bancorp Sandpoint Idaho $27,000,000
12/19/2008 Wintrust Financial Corporation Lake Forest Ill. $250,000,000
12/19/2008 Marquette National Corporation Chicago Ill. $35,500,000
12/19/2008 Bridgeview Bancorp, Inc. Bridgeview Ill. $38,000,000
12/19/2008 Horizon Bancorp Michigan City Ind. $25,000,000
12/19/2008 FFW Corporation Wabash Ind. $7,289,000
12/19/2008 Fidelity Financial Corporation Wichita Kan. $36,282,000
12/19/2008 Citizens First Corporation Bowling Green Ky. $8,779,000
12/19/2008 FCB Bancorp, Inc. Louisville Ky. $9,294,000
12/19/2008 Whitney Holding Corporation New Orleans La. $300,000,000
12/19/2008 Wainwright Bank & Trust Company Boston Mass. $22,000,000
12/19/2008 Berkshire Hills Bancorp, Inc. Pittsfield Mass. $40,000,000
12/19/2008 OneUnited Bank Boston Mass. $12,063,000
12/19/2008 Tri-County Financial Corporation Waldorf Md. $15,540,000
12/19/2008 Patapsco Bancorp, Inc. Dundalk Md. $6,000,000
12/19/2008 Enterprise Financial Services Corp. St. Louis Mo. $35,000,000
12/19/2008 Hawthorn Bancshares, Inc. Lee's Summit Mo. $30,255,000
12/19/2008 Monadnock Bancorp, Inc. Peterborough N.H. $1,834,000
12/19/2008 Flushing Financial Corporation Lake Success N.Y. $70,000,000
12/19/2008 The Elmira Savings Bank, FSB Elmira N.Y. $9,090,000
12/19/2008 Alliance Financial Corporation Syracuse N.Y. $26,918,000
12/19/2008 Mid Penn Bancorp, Inc. Millersburg Pa. $10,000,000
12/19/2008 VIST Financial Corp. Wyomissing Pa. $25,000,000
12/19/2008 AmeriServ Financial, Inc Johnstown Pa. $21,000,000
12/19/2008 Bancorp Rhode Island, Inc. Providence R.I. $30,000,000
12/19/2008 Security Federal Corporation Aiken S.C. $18,000,000
12/19/2008 Tidelands Bancshares, Inc Mt. Pleasant S.C. $14,448,000
12/19/2008 Tennessee Commerce Bancorp, Inc. Franklin Tenn. $30,000,000
12/19/2008 Plains Capital Corporation Dallas Texas $87,631,000
12/19/2008 Patriot Bancshares, Inc. Houston Texas $26,038,000
12/19/2008 Community Bankers Trust Corporation Glen Allen Va. $17,680,000
12/19/2008 Community Financial Corporation Staunton Va. $12,643,000

Enjoy socialism! It's already here..."Whether you like it or not..."

Time To Start Checking Your Credit Reports

As of December 1, 2004, California residents are entitled to view their credit report from each of the 3 big credit bureaus, free of charge, once every 12 months.

I recommend that you get one of the three reports every four months so that over the course of the year, you see all three reports, but are monitoring your information once every four months.

You can begin the process at www.annualcreditreport.com.

Be fair-warned, though, while the reports are free, you’ll have to pay about $6 to actually see your credit score.

The good news is, though, you can dispute the inaccuracies that you find right then and there online.

Be sure to call your creditor yourself to dispute as well...don’t rely on the credit reporting bureau to do it all on their own.

Truth About Credit Cards: So, In Conclusion...

So, as we sum up this look at the credit card industry, what have we learned?

There are no laws in existence today that limit how high your credit card interest rate can go. There are no laws in existence that limit the number of fees that the credit card companies can charge you, nor the dollar amount of those fees. Even though you can avoid fees by paying your credit card bill on time, all the credit card company needs to do to raise your rate is declare that you are in Universal Default and once that happens, they can amend their agreement with you however they wish.

If you feel that you are being ripped off, the only place you can turn to is an inept federal agency that isn’t going to do anything. We have learned, that in essence, the credit card companies can do whatever they want, when they want, and there is nothing that consumers can do about it.

So, why then, do millions of Americans keep running up credit card debt? Why do we all refuse to learn the knowledge that we need in order to make the right financial decisions when it comes to credit, especially these evil monsters known as credit cards?

It is because it is so easy. A piece of plastic you carry around with you that allows you to buy things that you don’t have the money to buy. It is instant gratification without any concern for the long-term effects of that instant gratification. If that does not define humanity, then I do not know what does.

There is an industry in this country that has perfected its methodology of legally extorting more and more money from the consumer over the course of the past 40 years that is working against us and we refuse to even be bothered with such chores as reading a credit card agreement from start to finish.

We all know smoking is bad for us, but there are still smokers out there. We all know that credit card debt is bad for us, but 90 million of us are Revolvers. 90 million of us at one point had $0 in credit card debt and knew long before we charged dollar one that credit card debt was a bad idea and was going to cost us in some cases over 100% more than the actual purchase price of whatever it was that we could not live without, yet we still handed that piece of plastic over to the cashier.

They get us with late payment fees, over-limit fees, minimum payment fees, cash advance fees and interest rates that are completely ridiculous, especially when compared to deposit interest rates, yet we keep begging for more.

7 million bankrupt families worth of it over the past 5 years alone.

If you owned a 1979 Honda and a 2005 Ferrari and I bought the Honda from you for $300, then came back after the fact and told you I thought I paid $300 for the Ferrari then took you to court, we all know I’d be laughed out of there by the judge.

Yet, we “sign” open-ended credit card loan agreements that allow the credit card companies to change the deal after the fact however and whenever they want, and we keep screaming for more.

Everyone is up in arms about those damned evil cigarette companies that knowingly sold us poison for years, but how many of us are calling our government representatives about the credit card companies and the lack of laws and regulations that govern what they do to us?

How can a FICO score determine the home we get, the car we are able to drive, the very interest rates on everything that we borrow, yet be something that is a complete and total mystery to us?

How can we be surprised that a multi-billion-dollar-a-year industry has no concern for us on an individual level and be surprised when after making ten years worth of on-time payments, turn around and raise our interest rate and penalize us after just one late payment?

Whether we learned that fire could burn because our parents told us, or we found out the hard way, we only had to learn once that fire could burn and you can bet that we stay the hell away from it.

Why, if we all know that credit cards burn, do we all keep touching the flame? 

Let me close with some final words...a quote from my Bank of America credit card agreement:

“If at any time during any rolling consecutive twelve billing cycle period you fail to make two Minimum Payments on a timely basis or exceed your Credit Limit twice, we may elect to increase your Purchase, Cash Advance and/or Balance Transfer APRs to the Penalty APRs.”

For my purchases on that particular card, that means going from an interest rate of 13.24% to 29.24%.

And that, is why the credit card companies love Revolvers so much...

Truth About Credit Cards: Universal Default

Universal Default. Sounds scary, doesn’t it? Well, it is.

When you apply for a loan for a car or a home, there is an agreement between you and the bank over the interest rate. In some cases, the rate is fixed for the life of the loan and in other cases, the interest rate may fluctuate as the prime interest rate fluctuates.

Either way, you do know what your interest rate is and there is an agreement between you and the bank that spells out what it is and how it is figured. Not with credit cards, though.

You may even have a fixed rate credit card, but even the interest rate on that card can change. A credit card is a short term loan, designed to be paid off each and every month. A credit card limit and a credit card interest rate are assigned to you based on what your credit score is at the time that you apply, just like with any other loan.

The difference between a credit card loan and other types of loans is that a credit card company views their terms with you as short terms and can re-evaluate you each and every month if they wish.

How do they evaluate you? They run your credit and look at what your score is doing. Say you applied for a card and had a 750 and landed a 12.9% fixed rate. Pay your payments on time and in full and keep your 750 and there is no problem, but if your score goes down, you have made a change in the terms and the credit card company can raise your rate based on that.

Also, if they give you credit based on a good payment history and find that a year later, even though you have been paying them on time, you have been making late payments elsewhere, they can find that you no longer have a good payment history and raise your rates.

This change in your credit score and payment history is the concept called, Universal Default. You have not made a late payment on your credit card, but a late payment on anything anywhere else, or a drop in your credit score can put you in Universal Default.

All credit card agreements site Universal Default as a justified reason for raising your interest rate, even on a fixed rate credit card. All they have to do is give you 15 days notice before they change your rate and they can raise your rate to whatever they want.

Truth About Credit Cards: Watch Your Due Dates

So, they can do whatever they want to? Why yes, they can. Take a look at your due dates.

You might find that some of your cards have due dates that change each month.

There is not a wide fluctuation, like say from the 3rd to the 23rd, but it may move a day or two here and there.

So, what this allows the credit card companies to do is put your due date on a Sunday or a holiday here and there in the hopes that you might get a little too busy and forget to make your payment on time.

It might sound a little trivial, but they make millions in extra revenue each year by doing this and it is all perfectly legal...

Truth About Credit Cards: No Laws On Fees, Either

Just like there once was a limit to how much the banks could charge in interest on credit card loans, there once was a limit to the fees that they could charge you as well.

Then, a court decision, Smiley vs. CitiBank went in CitiBank’s favor and it removed all of the limits on fees.

Back in the 1970s and 1980s, a late payment fee was usually around $5 and all that happened when you reached your limit was that your card stopped working.

Today, the high late payment fees hover around $39 per occurrence and are expected to creep up to $49 pretty soon. Today, your card still works past the limit for a little bit so that when your statement cycles, you can be charged an over-limit charge.

All fees and charges go on your balance and can result in even more fees and charges. All of this is perfectly legal because thanks to Smiley vs. CitiBank, there are no limits to fees and the number of fees you can be charged.

Today, compared to twenty years ago, fee income for credit card companies has more than doubled. This is where the credit card companies really make their money today.

Thanks to Smiley vs. CitiBank, there have been no aspects of the credit card loan interest and fee rates that have been regulated by law since 1986.

This means that these credit card companies can charge us whatever they want to, when they want to and it is all nice and legal...

Truth About Credit Cards: Minimum Payment Scam

Now, let’s talk about minimum payments. Back in the 1970s when banks wanted you to pay your credit card balances down to get their money back because they really didn’t make that much from the capped interest rates, it was actually the norm for the bank to expect you to pay - on average - 5% of your total balance due as your monthly payment.

This average of a 5% minimum payment each month was the norm for many years, that was until the credit card companies turned to a man named Andrew Kahr, who today very rarely grants interviews, and will only do interviews if reporters promise not to reveal what part of the country he lives in and who his clients are and were.

As the big banks were turning into credit card companies because those pesky credit card interest rate caps were gone, those companies brought in Andrew Kahr to see how they could squeeze even more money out of the consumers they were now charging 20% interest.

Andrew looked at the psychology behind America’s emerging lack of financial responsibility in the 1980s and came up with a theory. Andrew felt that the 5% minimum payment was requiring the debtor to properly manage and worry about the amount of debt they took on, but that if the credit card companies lowered that minimum to a mere 2%, the debtor would have a much smaller minimum payment to worry about and would feel free to become relaxed about their debt management.

Not only was Andrew’s theory correct, it resulted in a fringe benefit for the credit card companies. See, at a 5% minimum, it would take you much less than half the time to pay off the debt that it would at a 2% minimum, and on top of it, the people making the 2% minimum still would think they were being financially responsible because they were not missing payments.

Today, the 2% minimum is industry wide and consumers take on a larger amount of debt because their monthly minimum payments are lower, and all the while, it is taking them more than twice as long to pay off their debt, giving the credit card companies more chances at late payment fees and over-limit fees.

Truth About Credit Cards: Are You Friend Or Foe?

Some of this may be hard to hear, but believe me, it is important for consumers to know and understand this information. I've explained how the banks became credit card companies and I hope that we can all agree that someone who would borrow a dollar from you at 0.25% interest, then turn around and loan you that same dollar at over 20% interest, is not a friend.

So now, let me ask you if you are a friend or a foe of the credit card companies?

Don’t answer just yet...let me give you some more info first.

55 million Americans pay off their credit card balances down to $0 each and every month. The credit card industry calls those people “Deadbeats”. 90 million Americans do not pay off their credit card balances down to $0 each and every month. The credit card industry calls those people “Revolvers”.

Deadbeats are foes of the credit card industry and Revolvers are friends of the credit card industry. So, now, answer...are you a friend or a foe of the credit card industry?

Deadbeats are foes because the credit card company does not make any monthly interest off of them and does not make any fee income off of them with over-limit fees and late payments fees.

Though credit card companies make a small percentage from the merchants that the Deadbeats purchase from, that is all they ever get from Deadbeats.

Revolvers are wonderful friends of the credit card companies because they are able to make monthly finance charge income that, in turn, goes on top of the credit card balance, compounding to a point at which even the interest can result in over-limit and late fees. Revolvers are much more prone to miss payments or not make minimum payments, generating late payment fee income, again, which also compounds on top of the credit card balances.

So, now, answer...are you a friend or a foe of the credit card industry?

Truth About Credit Cards: Interest Rates

I have always considered myself in-the-know when it comes to credit and pride myself on what my little three-digit number is, but I just learned some very, very interesting things about credit cards that I am anxious to share.

First and foremost, today, we are going to take a look at credit card interest rates and how they became the monsters that they are today.

I don’t know if this stuff is new to all of you, but it was to me. Though it is hard to imagine in today’s world where the average American family has $8,000 worth of credit card debt at average interest rates that tower over 20%, there was once a day when credit card companies were real banks and were regulated like banks.

Let me take you back to the early 1970s for a picture of the credit card industry that is unimaginable today. See, back then, your bank and the bank that issued your credit cards made money from loaning money out at a higher interest rate than it paid on deposits.

Just like today, right? Well, not exactly.

Back then, there were state laws in place called Usury Laws that, in order to protect consumers, capped the interest rates that people could be charged on loans from banks. There was a limit for the rate for a new car loan, a limit for the rate for a used car loan, a limit for the rate for a mortgage, and yes, a limit for the rate for credit card loans.

Though we tend to forget today, that credit card balance is a loan. Credit cards were a small business back then and the credit card powerhouses of today were just banks that offered credit cards as one form of a loan.

So, what in the world happened? Well, in the late 1970s and early 1980s interest rates were skyrocketing. Credit card issuers, like CitiBank, were being forced to pay nearly 20% on its deposits to keep competitive with the market, but the New York State Usury Laws capped credit card interest at 12%.

Do the math and you’ll see that CitiBank was going to run out of money and run itself out of business with high interest rates on deposits and low interest rate caps on loans. With conditions like this, capitalism did what it is supposed to do and created an opportunity.

With Usury Laws capping loan interest rates in all 50 states, what if you were the one state that turned things upside down by eliminating the caps on interest rates, allowing banks to charge higher interest rates on loans?

Bill Janklow was elected governor of South Dakota and immediately asked that question. He, in a matter of mere weeks, pushed through legislation that revoked all Usury Laws in the state of South Dakota. So, long story short, CitiBank moves its credit card division to South Dakota and begins charging a rate higher than the going interest rate being paid on deposits in South Dakota. Shortly thereafter, other banks moved their credit card divisions to South Dakota, and then, seeing South Dakota’s new-found success, a few other states dropped their Usury Laws.

As bad as this was for consumers in these states who were once protected by Usury Laws, the final nail in the coffin on Usury Laws that capped loan interest rates came in the early 1980s with a court decision called the Marquette Decision that allowed all U.S. banks to export the non-capped rates of their home state to all other 50 states, thus, in essence, rendering all the Usury Laws in all the states null and void as long as a bank’s credit card headquarters was in a state without credit card Usury Laws.

So, in essence, following the Marquette Decision, there were no more caps on what banks could charge their customers for loans through credit cards. 

Needless to say, that as interest rates on deposits deflated and came down over the years, the banks never adjusted their credit card loan rates back down and today, while you get a 40-year low of 0.25% on a savings account from a bank, that same bank will charge you over 20% on the credit card you have with them.

With the Usury Laws null and void, it is perfectly legal for the bank to do this. 

The mass of income that this has generated over time as Americans became less and less responsible with their credit and personal finances turned those banks like CitiBank into credit card companies with credit card interest being their main money-maker.

Attacking Credit Card Debt

There are far too many Americans asking themselves how they can attack their credit card debt.

The first thing you need to do is to stop charging things!

Now, I know how difficult this can be, but it really is the only way. You will need to get out of the red before you attempt to better your financial standing. If you absolutely have to use your cards, then you’re not ready to get out of debt yet.

Trust me, you won’t get out of debt unless you want to and you won’t do it by continuing to charge things.

Once you’ve stopped charging, take a look at your accounts and their interest rates. Transfer all that you can to the lowest rate cards, then once you’ve done so, call every credit card company you still have a balance with and ask for a lower interest rate.

When you are denied, threaten to transfer your balance with them to another card and they will usually comply. I was able to get Capital One to drop my card from 18.9% to a fixed 12.9% in just a single phone call.

Once you’ve gotten your interest rates as low as you can, determine how much you can send towards the credit card bills each month. Make sure you can make at least the minimum payment on time for every card to avoid late fees and penalties.

Attack the highest rate card first with as much money as you can spare after you have made your minimum payments on everything else. Be diligent and dedicated. It will take time, but if you can avoid charging and attack your balances, even if it’s only one at a time, you will win the war against your credit card balances.

What’s In My Wallet, Huh? Cash, You Damned Vulture...

Gold cards are out and platinum cards are in. Credit card companies are already working on their next wave of smoke and mirrors to rope people into the “prestige” of high-end credit card patronage. Titanium cards allow you to carry a balance of $100,000, have no annual fee, and perks like free internet access and magazine subscriptions. The vultures are trying to market titanium cards to law and medical students who they are hoping will rack up large bills now, but have the earning power later to eventually pay them off. If that’s not enough, ultra-elite cards like diamond, quantum, infinite, and black are also making their debuts with credit lines that start at six figures. American Express Black has benefits like roadside assistance and guaranteed airport parking, but carries an annual fee of $2,500. My advice on credit cards? Whether your card is gold, platinum, titanium, or Ukrainian, don’t carry a credit card balance, and always try to get cards without an annual fee. If you’re looking for a status symbol, how about being able to say you have no credit card debt in a nation where the average household carries $35,000 in credit card debt? If you need to carry a balance, look for a low-rate card, which is not necessarily going to be a “metal” or “element” or “smoke and mirrors” card. Watch out for “rebate” cards. Sure, you might get a free tank of gas every month, but are you paying $300 in finance charges instead of just spending your own $30 on gas? Always pay your minimum due and pay it on time...if you don’t there are clauses in the credit card application you signed that are there just to stick it you. Always be firm, almost a problem customer to your credit card companies. Be courteous, of course, but also demanding, and always threaten to take your business elsewhere. Call your credit card companies and tell them you are going to transfer balances away from them if they don’t lower your rate. You’d be surprised at how quickly they may lower your rates if you scare ‘em.