Separating personal feelings from straight-up journalism is something MSNBC anchors have had trouble with in the past, and David Shuster is no exception.
During MSNBC's daytime news coverage on April 24, Shuster interviewed Bill Himpler of the American Financial Services Association. The discussion was nominally about the legislation sponsored by Sens. Chris Dodd (D-Conn.) and Chuck Schumer (D-N.Y.), designed to freeze credit card rates, it became more about Shuster's view that credit card companies are gouging their customers. Throughout the four-minute interview, Shuster threw out anti-business questions and occasional hyperbole.
Shuster asked Himpler, "Why are credit card companies raising interest rates continually?"
"Well, as the market progresses, we've dealt with new regulations from the federal reserve that just came out in December," Himpler replied. "Those will be in implemented over the coming months, well into next year. And they do contain restrictions that ultimately are going to lessen the flexibility that lenders have to price for risk."
"I understand that," Shuster shot back "They start in July. Isn't this then the case that you have the credit card companies essentially taking advantage of the window of opportunity, the first seven months of this year, before the regulations go into effect, to essentially raise credit card rates, sometimes as high as 28 percent. How do the credit card companies justify that given, as you said, this is not the time to be essentially squeezing credit?"
Although there has been a trend in increases of credit card interest rates, Shuster omitted the reality that many banks are facing. From the depressed housing market, loan defaults, credit card defaults and other economic travails, companies have been forced to reexamine risk. Their lower appetite for risk brings higher fees and rates. As Himpler pointed out, credit cards represent the highest risk banks face in terms of lending.
Himpler also stated that rate increases often stem from people taking out multiple lines of credit. To credit card companies, the more lines of credit a customer has, the higher the risk of default. Shuster could not fathom why these were risky borrowers.
"That's the thing. You can do - Bill, you can do whatever you want. You can get 100 lines of credit. If I loan you $100 and you pay me back, that's fine. That doesn't give me the authority to say, wait a second, Bill's getting other lines of credit, therefore I should jack up his rate to me."
Himpler merely replied, "It does make you a greater risk. It's that plain and simple."
This story originally appeared on the Business & Media Institute Web site by Edward Schatz.
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Shuster asked Himpler, "Why
April 24, 2009 - 19:03 ET by BlazerShuster asked Himpler, "Why are credit card companies raising interest rates continually?"
It's called capitalism Shyster. Take away an American's earning/spending power and watch the prices on credit and good's skyrocket, it's called inflation, shmuck.
Democrat good intention's usually result in disastrous unintended consequences. Taxing the internet comes to mind, great fooking idea.
"You will never find a more wretched hive of scum and villainy. We must be cautious. "
- Ben Kenobi on Liberals, and the MSM.
" The Cake is a lie."
Wow! Max Headroom showed
April 24, 2009 - 19:09 ET by RR GOPWow! Max Headroom showed emotion????
One of the 34% who thinks George W. Bush was a great President. One of the 61% who wants to bring back the stock and pillory (yep...approval for Congress now at 39%...do you believe that!?).
yeah I was a little surprised too.
April 24, 2009 - 19:13 ET by katainkent'animated' and 'shuster' generally don't fall in the same blog entry.
I love to help the helpless but I'm not gonna help the clueless ~Dennis Miller
Max Headroom is a great analogy.
April 25, 2009 - 06:54 ET by kg"DumbAssity of Dope"
good grief
April 24, 2009 - 19:12 ET by katainkentthis man's parents need to be taken to task for the complete failure of teaching him about money.
I love to help the helpless but I'm not gonna help the clueless ~Dennis Miller
I pay my credit cards off every month.
April 24, 2009 - 19:14 ET by upcountrywaterIs this MORON stating my rates are going up!!!
Fine I'll write checks where ever i go..
I'll only get screwed when i rent a car.
yes he's that STEWPID
Reagan VS 0bama
ucw... Yeah, I have
April 24, 2009 - 19:30 ET by bigtimerucw...
Yeah, I have posted here a few times about what is going on with the credit card industry, anyway, they saw what was coming about the same time I did with the congress-critters, so they started sending out all kinds of tiny little pamphlets alerting you of what was to come, you had so much time to reply blah blah, I watch the interest rate every month when I pay the bills, if I see a problem I immediately call within that week, get it worked out etc, don't want to get into all the BS they use at times, but we pay our bills, so they still do what they gotta' do, I knew once congress stuck their finger in the wind, we would be seeing exactly what we are seeing, our rate on one of our two cards jumped up 3 per cent, then the next month another three, I called, got it down to 9.99 but they only guaranteed that for three months, so we shall see what happens, but it would do people well to read all the dry drivel the credit card industry sends you, keep track each month of the rates, fees, etc...and by all means get in touch with them, if I told you everything they tried with me from the Libor rate to our credit rating somehow magically changing it would be a comedy show, but you have to know how to out-do them, politely of course, or you will get nowhere.
Doubling down on stupid is not a particularly good idea. ~Andrew Breitbart
I have paid off and closed
April 25, 2009 - 07:01 ET by kgI have paid off and closed 3 credit cards too because of rate hikes. Apparently they did not appreciate my business. The last two were because of tough economic conditions. I have two new ones and we will see what happens. What I don't agree with is the notices that are in such a fine print that you need a microscope to read them. They do not tell you the change but instead state their new policy which forces you to read and compare the whole thing.
"DumbAssity of Dope"
I love my credit cards. I don't use them...
April 24, 2009 - 19:32 ET by jawebster1very much, but when I do they come in handy. I also have an aversion to paying interest, so I pay my credit card bills in full each and every month no matter what the balance. Everyone should try it. Jim Webster
→ Me too Webster
April 24, 2009 - 19:39 ET by Cool ArrowI'm proud to be a deadhead. I appreciate going online and getting my purchases itemized free of charge.
It's hard to talk when you're teabagging - Anderson Cooper
jaw... I agree...but
April 24, 2009 - 19:41 ET by bigtimerjaw...
I agree...but sometimes things happen in life you don't expect and you can't do that every month...that's why I posted what I did above, until you can do so, pay attention, in the first place, lesson number one is to read the fine print, two, keep only one or two plastic cards, the govt. has basically made them a necessity...and whatever you do, pay them down as soon as possible...I fought my husband getting one in this household for over 20 years. ;-)
Doubling down on stupid is not a particularly good idea. ~Andrew Breitbart
We have 1, for emergencies
April 24, 2009 - 19:52 ET by general companyBut I dont think it has ever been swiped, we use debit. But I have been thinking about going back to cash.
My Gov. thinks I am dangerous, so be careful
"Television is a freak show" Bernie Goldberg
Hang Tough
April 25, 2009 - 05:57 ET by CaringwhiteguyYou're next. If it hasn't happened already, chances are your credit line will be reduced. For example, if you credit line is $10,000 but you only charge $500 a month and pay that balance in full, there's a good likelihood your card company will cut your line to $5000 - $7000. Bank of America has already done this to a huge amount of customers.
Why? You're a bad customer. You don't incur interest charges or late fees. The only money the card company is making on you is the spread it collects from merchants. Some card companies have actually cancelled credit worthy customers who just don't generate enough activity.
After your lines are cut, it's up to you to find if this has adversely affected your credit rating and FICO score.
Not a bad customer
April 25, 2009 - 06:38 ET by Kingfish17If your credit card company is making money from your transactions and activity you are not a bad customer. You may not be their best customer, but unless they are losing money on you, you are not a bad customer. A bad customer borrows money and doesn't pay it back.
There are many reasons why a credit card company may reduce your available credit line, but inactivity is going to be down on the list. If you have a low FICO score to begin with, and times get tough and our economy goes into a recession, the credit card company may view you as more of a risk of default, and may cut your credit limit or cancel your account entirely. You're FICO score is adversely effected by that type of credit line cut if you have debt outstanding. If your total debt to available credit ratio goes down, your FICO score will also probably drop.
But in your case, if you have no debt, your FICO score will be fine. Pay your bills on time and have no debt and have some assets in the bank, and you are a great potential customer for credit.........but I've just described someone who doesn't need credit!
I don't know if it's a case
April 24, 2009 - 19:23 ET by ConservativeRexI don't know if it's a case of the tail wagging the dog or MSNBC waiting for obama cues.
But I'll bet you a dollar for doughnuts Shuster didn't give a care about credit card rates until his master commented on them.
CRex... ...or...he is big
April 24, 2009 - 19:42 ET by bigtimerCRex...
...or...he is big time in debt with the plastic himself.
Doubling down on stupid is not a particularly good idea. ~Andrew Breitbart
Nothing new
April 24, 2009 - 19:41 ET by Prester JohnHere in the DC area there are radio ads for one of those debt reduction scams telling people that "if you have a mortgage or credit card debt, you're a victim".
I'm eagerly waiting to hear the ads that say these kids who go to the snotty nosed private liberal arts school at $35-40K a year are also victims when they graduate with $125k in debt because they wouldn't lower themselves to go to a community college and/or a public university.
O/t, but just where the
April 24, 2009 - 19:48 ET by BlazerO/t, but just where the hell is the captionfest. May I suggest Meghan McCain ? Fat girl jokes never get old.
"You will never find a more wretched hive of scum and villainy. We must be cautious. "
- Ben Kenobi on Liberals, and the MSM.
" The Cake is a lie."
Shuster Gets Emotionally
April 24, 2009 - 20:01 ET by BlazerShuster Gets Emotionally Animated Over Credit Card Interest Rates
By emotionally animated, I assume you mean paying fealty to his overlord and master, the ultimate healer and savior of mankind.
"You will never find a more wretched hive of scum and villainy. We must be cautious. "
- Ben Kenobi on Liberals, and the MSM.
" The Cake is a lie."
Shuster asked Himpler,
April 24, 2009 - 20:05 ET by MidAmericaShuster asked Himpler, "Why are credit card companies raising interest rates continually?"
hhhmmm... I smell a strong odor of irony here. What the credit card companies do is when the default rate goes up they charge the people who do pay more interest. If people who do pay did not subsidise the risky borrowers then the risky borrowers would be unable to get a card. The credit card companies are spreading the wealth around. Isn't this the premise behind obama's higher taxes? The better off help the 'poor'.
great clip
April 24, 2009 - 21:50 ET by lookGreat clip. Let's hope this type of comedic gold from MSNBC doesn't get too popular. Sometimes I put on MSNBC for a quick laugh... then I feel guilty about helping their ratings.
Your sounding just
April 24, 2009 - 22:45 ET by racer148Your sounding just like the Left always thinking you have to agree when a Conservative site puts on a video. I have credit cards and I just went through a divorce and have medical bills. And I have to use it and can't pay it off every month.
And I just got letters saying the interest is going up 6%. Both were flat rate but the bank changed it to an adjustable rate. Out of the blue, even though they recieved money from us. So yes for the first time I agreed with David. Don't always have to be a follower like the Liberals you know.
Credit Cards a Not a "Free Market"
April 25, 2009 - 08:50 ET by allanfCredit card companies have the legal right to change the terms and condition of your loan by sending you a notice or alerting you online to that notice. If you have an outstanding balance and object to the new terms, you balance can come due immediately.
Another industry practice is "universal default". Let's say a report of a late payment to another lender shows up on your credit report. It may even be misreported. Under universal default, your credit card company raises your interest rate. Sometimes the interest rate hikes are significant enough to make it very difficult to do anything but pay off the loan immediately.
An interest rate of 26% makes a default almost inevitable. In fact you may default after you have already paid back all the "principal", but it was classified as interest under terms of the loan.
Given this power disparity, you can hardly say "a deal is a deal" or that the behavior is consistent with free market capitalism. It is an industry that need to be regulated.
Free Market Capitalism
April 25, 2009 - 09:20 ET by Kingfish17Free market capitalism gives you the right to put together a consortium of investors and create your own credit card company that will offer a better deal to people who want to use credit cards. Just think of all the money there is to me made by extending credit to all the people who have been screwed over by the existing cabal of evil credit lenders.
You could undercut all the existing competition by offering lower rates. You could promise all your customers that you will give them up to a year to pay off existing balances before you would raise their rates.
In fact, I'm surprised that no one has thought of offering a better deal to the credit card consumer allready. This idea has to be a goldmine in the waiting.
(And yes, regulation does and should exist for credit card lenders, to protect both the lenders and the borrowers.)
Consortium of Credit Card Companies
April 25, 2009 - 09:30 ET by allanfWe need to distinguish between Visa, MasterCard and Discover which are "credit cards", and American Express, Diners Club and Carte Blanche which are charge cards.
The fact that nearly all banks issue cards through one of the two consortiums, Visa or MasterCard is indicative of the tremendous barriers to entry in this business.
American Express has a
April 25, 2009 - 10:56 ET by Kingfish17American Express has a credit card.
And Visa and Mastercard do not control the interest rate or terms that the banks charge. In fact, Visa and Master Card can be viewed as more facilitators of doing credit card business, instead of barriers to entry in this business.
Let's face facts though. Capitalism creates competition. The credit card business is extremely competitive. If there was a huge gap somewhere because ALL the credit card companies were charging rates that were too high and ripping off their customers, someone would have filled that gap allready. People are only fooling themselves if they think that this competition doesn't allready exist.
card companies
April 25, 2009 - 10:30 ET by jessieHJessie R. Hamby I hope all credit card companies go broke. I never had one, will never use one. The interest rates are way to high. They sell your info to others.
The name of the game is
April 27, 2009 - 12:11 ET by rbosqueThe name of the game is money. If people slowed or stopped their credit card use, interest rates will go down. Period.