May 19, 2009

Usury is OK, and Guns in Parks...

The Senate passed its version of credit card reform today. Several current tricks of credit card issuers will be out of the future....eventually...when the rules finally come into effect. But if your card issuer just hiked your rate in a big way, well....

Current usurious rates aren't even on the table. 18%, 25% or 29.99% are all just fine.

One article mentioned that about 1/5 of card holders pay over 20%. Was that data from today?

One of our rate hike notices, which arrived a few weeks back, will raise one card of ours from 12% to about 19%. While these hikes won't affect us much at our house, it's quite easy to imagine the effect on other households. But compare this to the above seemingly reassuring statistic. Our new rate will be below 20%, and isn't in effect yet.

In 6 months, we may find that the above statistic of 1/5 has increased....

The elephant in the room is the question of the rate hikes that have just recently occurred or are on the way, since the card industry could see the new rules coming for miles. Card rate hikes are on the way, notices already sent, and these will slow the economy.

You can check out how your own Senators voted on the question of how many more of your dollars should go to the card industry right now, instead of, for instance, to local businesses where you live. If you are just now starting to pay an extra $40 or $80 a month in interest (a 12 percentage point rise in interest rate on an $8000 balance costs $80/month), will you spend the same amount on local goods and services that you have recently?

If you pay $40 a month more in interest now, will you tip the waiter the same amount? For that matter, will you cut back on eating out even further?

But, while usurious rates are OK with Congress, it's still up in the air whether the guns we need in parks can be loaded:

One amendment attached to the Senate bill by Senator Tom Coburn, Republican of Oklahoma, would restore a Bush administration policy allowing loaded guns in national parks. That provision is not in the House version, so there may be discussions between the two chambers over the issue.

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