5 ms·

I understand that it's allowed. I'm wondering why not simply eliminate them since from the article they are trying to eliminate junk fees.

bombcar 3y ago
I suspect the banks were able to mount some form of "it actually costs us X" argument, which might even be understandable if you take into account mailing late notices, etc. Easier to get them to swallow a limit than a complete removal (which could come later).
- Alupis 3y ago
  The indirect outcome - credit card approvals will become more strict and offer egregious interest rates, effectively locking out lower-income and/or those with poorer credit history. Then in a decade or so, we'll be having an unnuanced discussion about how racist/classist/elitist credit cards have become. This discussion is not about the people who had a single missed payment in 5 years... this is designed to "protect" the people who serially don't make payments and ring up a huge amount of so-called "junk fees". The reality is the late fees act as an incentive to make on time payments and keep debt at a manageable level. After all, that is why you make your payments on time, right? Who actually wants to throw away money on fees? It's not difficult to not use a credit card. I don't understand why we're so focused on removing personal responsibility as-of late, including the discussion around overdraft fees. We need to encourage more "adulting" and less careless irresponsibility. Living on a credit card and missing payments is a very bad financial sign, and it should be discouraged.
  - endisneigh 3y ago
    Yes you are correct, which is why credit card companies should simply not allow for large balances to be accumulated. You are forgetting that prying on the irresponsible is the entire point.
    - Alupis 3y ago
      They generally do not. If you are low-income and/or have poor credit history, your approved credit will be relatively small. Even with a $500 credit line, people miss payments. Often it's the folks with huge credit lines and carry balances that never miss payments... > You are forgetting that prying on the irresponsible is the entire point. The credit card market is not inherently bad. Many (most?) people use it responsibly, even if they carry a balance. We don't need to make it harder on responsible people just because some people are irresponsible and don't care to become responsible.
      - endisneigh 3y ago
        No one ever said credit cards are inherently bad so I'm not sure what you're responding to. Anyway, credit cards are already harder to get without good credit. And yes it should be harder for people to get credit cards, but that's not in the incentive of the companies which is why they issue them anyways.
        Alupis 3y ago
        This policy seems to cover all credit cards, including those store-branded cards that sign up people with zero credit history and generally offer small limits. People miss those payments too. > but that's not in the incentive of the companies which is why they issue them anyways This is a good point. I do not agree we should do anything about it though. People need to learn responsibility, and it's not the government's job to prevent them from being irresponsible.
        endisneigh 3y ago
        I'm not sure what you're going on about with government preventing irresponsiblity.
        Alupis 3y ago
        FTFA: `Millions of Americans could soon see lower credit card bills after a federal rule that caps late fees at $8 a month was finalized on Tuesday by the Consumer Financial Protection Bureau, which estimates that the change will save households $10 billion a year.` This is the government enabling more irresponsibility.
  - muttled 3y ago
    While I agree there needs to be incentives to be credit-worthy, isn't that what the credit report is for? I think you'd probably argue the fees are better than it hitting their credit report, but I'm not sure those people would agree. Those late fees are then unable to be paid as well, causing further damage to the credit report than the actual debt. They get punished twice for it. I have a friend who's in that situation. Medical bills for his entire family have basically crushed him. Without the late fees, he'd be just scraping by with bad credit. With the late fees, he's still got bad credit. But now he's got late fees, too.
    - Alupis 3y ago
      > I have a friend who's in that situation. Medical bills for his entire family have basically crushed him. Without the late fees, he'd be just scraping by with bad credit. With the late fees, he's still got bad credit. But now he's got late fees, too. Whenever I hear these stories, I often think they're made up, or the person has spent zero effort attempting to remedy their situation (and therefore are being financially irresponsible). Has this friend contacted the hospital/insurer and worked out an affordable payment plan? Universally they'd rather work out an affordable payment plan and get on track vs. not get paid at all. Whatever this friend is doing right now is clearly unsustainable. What about securing a loan at an affordable monthly payment with longer terms to help lessen the monthly impact on their budget? There are many options to get back on track - and none of them involve perpetually stacking up late fees.
hammock 3y ago
How is being late on a minimum payment a junk fee?
- endisneigh 3y ago
  It's unnecessary since you are already paying interest. Why are you paying interest? Because you are late on paying your entire balance. If they want to collect late fees they should stop accumulating the interest. Of course they won't since that's the entire point.
  - Alupis 3y ago
    The outcome of this proposed policy would be interest charges immediately, instead of being assessed monthly. It's not actually free to loan someone money... which is what happens when you swipe your credit card instead of your debit card and float the charges until the end of the billing period.
    - endisneigh 3y ago
      There's no point of speculating - is what you're suggesting happening? You seem to be under an illusion that you cannot make money without late fees, which is false.
      - Alupis 3y ago
        Wrong, I'm saying late fees are not an issue for anyone who makes on-time payments. They're literally called "late fees". Heck, the late fees on my credit cards might as well be $1,000 per day or something - it doesn't matter because I make payments on time as a responsible adult. Late fees discourage irresponsibility. That is why movie rentals had late fees, libraries have late fees, utility bills have late fees, rent, mortgage, and credit cards all have late fees. It encourages you to be responsible. Therefore, reducing late fees increases irresponsibility.
        endisneigh 3y ago

bombcar 3y ago

I suspect the banks were able to mount some form of "it actually costs us X" argument, which might even be understandable if you take into account mailing late notices, etc. Easier to get them to swallow a limit than a complete removal (which could come later).

Alupis 3y ago
The indirect outcome - credit card approvals will become more strict and offer egregious interest rates, effectively locking out lower-income and/or those with poorer credit history. Then in a decade or so, we'll be having an unnuanced discussion about how racist/classist/elitist credit cards have become. This discussion is not about the people who had a single missed payment in 5 years... this is designed to "protect" the people who serially don't make payments and ring up a huge amount of so-called "junk fees". The reality is the late fees act as an incentive to make on time payments and keep debt at a manageable level. After all, that is why you make your payments on time, right? Who actually wants to throw away money on fees? It's not difficult to not use a credit card. I don't understand why we're so focused on removing personal responsibility as-of late, including the discussion around overdraft fees. We need to encourage more "adulting" and less careless irresponsibility. Living on a credit card and missing payments is a very bad financial sign, and it should be discouraged.
- endisneigh 3y ago
  Yes you are correct, which is why credit card companies should simply not allow for large balances to be accumulated. You are forgetting that prying on the irresponsible is the entire point.
  - Alupis 3y ago
    They generally do not. If you are low-income and/or have poor credit history, your approved credit will be relatively small. Even with a $500 credit line, people miss payments. Often it's the folks with huge credit lines and carry balances that never miss payments... > You are forgetting that prying on the irresponsible is the entire point. The credit card market is not inherently bad. Many (most?) people use it responsibly, even if they carry a balance. We don't need to make it harder on responsible people just because some people are irresponsible and don't care to become responsible.
    - endisneigh 3y ago
      No one ever said credit cards are inherently bad so I'm not sure what you're responding to. Anyway, credit cards are already harder to get without good credit. And yes it should be harder for people to get credit cards, but that's not in the incentive of the companies which is why they issue them anyways.
      - Alupis 3y ago
        This policy seems to cover all credit cards, including those store-branded cards that sign up people with zero credit history and generally offer small limits. People miss those payments too. > but that's not in the incentive of the companies which is why they issue them anyways This is a good point. I do not agree we should do anything about it though. People need to learn responsibility, and it's not the government's job to prevent them from being irresponsible.
        endisneigh 3y ago
        I'm not sure what you're going on about with government preventing irresponsiblity.
        Alupis 3y ago
        FTFA: `Millions of Americans could soon see lower credit card bills after a federal rule that caps late fees at $8 a month was finalized on Tuesday by the Consumer Financial Protection Bureau, which estimates that the change will save households $10 billion a year.` This is the government enabling more irresponsibility.
- muttled 3y ago
  While I agree there needs to be incentives to be credit-worthy, isn't that what the credit report is for? I think you'd probably argue the fees are better than it hitting their credit report, but I'm not sure those people would agree. Those late fees are then unable to be paid as well, causing further damage to the credit report than the actual debt. They get punished twice for it. I have a friend who's in that situation. Medical bills for his entire family have basically crushed him. Without the late fees, he'd be just scraping by with bad credit. With the late fees, he's still got bad credit. But now he's got late fees, too.
  - Alupis 3y ago
    > I have a friend who's in that situation. Medical bills for his entire family have basically crushed him. Without the late fees, he'd be just scraping by with bad credit. With the late fees, he's still got bad credit. But now he's got late fees, too. Whenever I hear these stories, I often think they're made up, or the person has spent zero effort attempting to remedy their situation (and therefore are being financially irresponsible). Has this friend contacted the hospital/insurer and worked out an affordable payment plan? Universally they'd rather work out an affordable payment plan and get on track vs. not get paid at all. Whatever this friend is doing right now is clearly unsustainable. What about securing a loan at an affordable monthly payment with longer terms to help lessen the monthly impact on their budget? There are many options to get back on track - and none of them involve perpetually stacking up late fees.

hammock 3y ago

How is being late on a minimum payment a junk fee?

endisneigh 3y ago
It's unnecessary since you are already paying interest. Why are you paying interest? Because you are late on paying your entire balance. If they want to collect late fees they should stop accumulating the interest. Of course they won't since that's the entire point.
- Alupis 3y ago
  The outcome of this proposed policy would be interest charges immediately, instead of being assessed monthly. It's not actually free to loan someone money... which is what happens when you swipe your credit card instead of your debit card and float the charges until the end of the billing period.
  - endisneigh 3y ago
    There's no point of speculating - is what you're suggesting happening? You seem to be under an illusion that you cannot make money without late fees, which is false.
    - Alupis 3y ago
      Wrong, I'm saying late fees are not an issue for anyone who makes on-time payments. They're literally called "late fees". Heck, the late fees on my credit cards might as well be $1,000 per day or something - it doesn't matter because I make payments on time as a responsible adult. Late fees discourage irresponsibility. That is why movie rentals had late fees, libraries have late fees, utility bills have late fees, rent, mortgage, and credit cards all have late fees. It encourages you to be responsible. Therefore, reducing late fees increases irresponsibility.
      - endisneigh 3y ago