While in life we all need to take responsibility for our own actions there are some people who fail badly at making the right choice and/or resisting temptation.

Another fact of life is that there are predators out there who also know this and target the weak.

There are many credit card companies that deliberately target those who have historically shown poor judgement or lack of maturity in making financial decisons.
People with bad credit histories that clearly illustrate a lifetime of poor choices, teens who stereotypically have poor impulse control--college students....

Many companies and even banks have deliberately removed the limits imposed by account totals and allow persons to over extend and pay for something that their account cannot cover. Instead of being denied for insufficient funds the purchase is allowed and fines quickly leveled. A bonus for banks is that any transactions occuring at this time are all considered overdrafts and you are fined for every single one. A single small accounting error--such as forgetting to deduct a gas receipt --can quickly lead to massive penalties.

While we are all in the end responsible for ourselves should those that freely prey upon candidates that will default on repaying bills made on credit be allowed to profit from the weakness of others and even profit when the bill is passed on to the taxpayer?

Yes/No?

Should there be a minimum credit level or history of consistent fiscal responsibilty to even qualify for a line of credit?

Should the credit or account minimums be strictly enforced and allowing transactions not covered by the funds in an account be made illegal?

Should there be a minimum credit level or history of consistent fiscal responsibilty to even qualify for a line of credit?

Isn't this already the case? You might be thinking of college students or those applying for their first credit card. These are granted based upon the simple fact that these people are just entering the job market, and therefore entering into a period of marked income increase...in short, they, as a group, are excellent credit risks despite not having a history. Further, if they weren't given credit cards, how would they build a history?

Should the credit or account minimums be strictly enforced and allowing transactions not covered by the funds in an account be made illegal?

I've been burned by this myself before, and I would agree that it is done intentionally to accrue the fees. I think the solution to this would be to have the penalties applied after you've had a chance to correct the problem..ie, after you've received the bill. Before then, you are essentially being penalized for the banks mistake...they're the ones who in appropriately approved the charge. Before then, it's allowing the bank to print money (how many people really know the exact balance on their credit cards at any given time?)

Should there be a minimum credit level or history of consistent fiscal responsibilty to even qualify for a line of credit?

Yep, and that is how this works. The initial credit granted someone new (i.e., no credit history) is generally low and/or supported with a cash deposit. Keep in mind that the mailings stating pre-approval don't really mean that the credit will be granted. There's a disconnect here, and I don't understand why banks and mortgage companies do this sort of misleading mailing. Otherwise, in order to get credit, you need a good credit score. That comes from having a good history and not carrying too much unsecured debt.

Should the credit or account minimums be strictly enforced and allowing transactions not covered by the funds in an account be made illegal?

Sure. That would be an easy thing to program -- cash/check cards work this way, where the transaction is turned down if the supporting cash account doesn't have enough funds. In Colorado, the Visa cash/check cards now work like the credit cards -- if someone raids your account, you're only liable for the first $50 if you report the raid right away. This might be nation-wide.

One way to lessen the overdraft penalty hit is to connect a savings account to the checking account. There's still a fee involved usually, but it's significantly less than the overdraft penalty. A better strategy is to always keep more money in checking than needed, and keeping an eye on the account through the online services most banks offer.

I've found that if you have a bunch of credit cards that you're trying to control, doing a spreadsheet of balances, minimum payments, interest rates, annual fees and so on helps. As a bill comes in, update the spreadsheet -- or keep one for each month so you can see the balance being paid down, assuming that's the goal.

BTW, defaulted unsecured credit hits on lenders get reflected in higher credit card interest rates. Taxpaying doesn't get affected, so it's more accurate to use the term "consumers." And of course, the worse the credit score, the higher the interest rate. The benefit for being a responsible creditor is cheaper credit, both on unsecured and secured debt (car, mortgage).

And i would agree AM, except for having for a company that made its bones by targeting just such people. They offered cards linked to large sound companies--but had no clients other than the type of people that any reasonable intelligent person would have recognized as simply unreliable. Walking disasters--They had a hilarious gallery of letters sent in by people trying to explain why they were yet again unable to make a payment. Letters written on scraps of paper--in CRAYON!
Letters written on brown paper bags like you get at grocery stores. Some of the excuses were potential hall of fame material for the sheer idiocy.

Some were heartbreaking because you could almost physically sense that someone had made a mistake and that mistake--a missed payment because of job loss or some such type of uncontrolled event-- had them about to be swept under into just having all go to hell.

my point is there is a huge market for the credit impaired. Either through circumstances like financial woes to downright stupidity. Much of this debt gets written off and charged to taxpayers in one way or another. Ever look into Providian or companies like it. They go after the less than responsible. They will claim to offer a chance to rebuild one's credit but it comes off IMO like a drug dealer claiming his cocaine is the best cure for weight gain.
Sure it will make you thin, but the cost!

Debt is a problem in this country that may literally destroy us someday. As i have already said--We are in the end responsible for the decisions we make! no one else.

however I feel that predators that go after the weak should be made to shoulder some of the cost they incur by giving access to credit to people who shouldn't be given access to a ATM card let alone a line of "free money". i feel it violates the free trade principle as much as --and even worse than-- ponzi schemes and the like.

I am not well versed enough to properly explain the pshycology involved but such practices seem to try and exploit certain foibles and flaws we have. The religious version would be temptation.



The explanation I read for why the limit has been removed was basically that they wanted to remove the embarrassment of having people being declined in public.

Ain't they sweet
Check with your bank would be my caution. They all seem to have done this.

christopher,

I get your drift. Any links to information on the shoddy credit outfits? Hey, if I were king, these companies would be put out of business right quick, the assets seized, the officers put in the slammer, and the assets used to help poor folks -- maybe with credit counseling, maybe with debt pay down.

Personally, I have a good relationship with my bank. I know what's expected of me, and they know what I expect -- free checking, free money orders, free check/cash card, reasonable interest otherwise. I do feel sorry for people unable to handle the responsibility to be prayed upon by predators. I'm against this sort of free enterprise, or more accurate: highway robbery.