Time to regulate for this credit card scam??

rockofcashel

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It seems that Government pressure in the UK is about to force the UK's credit card industry to roll back on what is the greatest trick for earning money in the credit card industry, that being the "negative order of payment"

Unbeknownst to most, credit card companies make a fortune by taking payments off the "last payment first", and putting money withdrawls right back to the end of the queue when payments are made.

By only taking payments off the "last bill first", you accrue much higher interest payments on your CC bills that if you paid by paying off the "first bill first"

I know people will argue that you should pay off credit card bills immediately. And so do I. But the reality is that many Irish people are in trouble with credit card bills, so anything which could help them reduce the interest payment quickly would be a help.

Should the Irish Government now follow the lead of the UK Government in forcing the CC companies to look at changing this system of repayment as soon as possible

The credit card trick that won't die | Yahoo! Finance
 


Nemi_

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Aug 20, 2010
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Unfortunately, we are collectively exposed to our banks. Hence we've a vested interest in screwing credit card holders for every penny they've got.

I know you don't want to divert into the usual points of how credit cards are just a bad way of raising any kind of longer term debt. Yet, I really think that's the fundamental issue here. If someone has a large debt on their card, the first thing to do is to stop adding to it. The change you say the UK is making seems to provide the opposite incentive; it effectively entices people to keep current spending at an unsustainable level, as that extra spending is let roll into the next month.

I'm not sure I've put that well - but hopefully the point is clear. I think anything that distracts credit card junkies from the reality that they just must spend less is bad.
 

rockofcashel

Well-known member
Joined
Jan 23, 2005
Messages
7,998
Website
www.sinnfein.ie
Unfortunately, we are collectively exposed to our banks. Hence we've a vested interest in screwing credit card holders for every penny they've got.

I know you don't want to divert into the usual points of how credit cards are just a bad way of raising any kind of longer term debt. Yet, I really think that's the fundamental issue here. If someone has a large debt on their card, the first thing to do is to stop adding to it. The change you say the UK is making seems to provide the opposite incentive; it effectively entices people to keep current spending at an unsustainable level, as that extra spending is let roll into the next month.

I'm not sure I've put that well - but hopefully the point is clear. I think anything that distracts credit card junkies from the reality that they just must spend less is bad.
I see your point Nemi, but it would still help those trying to pay off their debt to do so. Perhaps I could propose an alternative

Say someone has CC debt of 10k, and are being crucified in interest payments because of the negative order of payment, could they agree with the CC company that they could begin paying off the debt in a positive order of repayment but that their credit limit would reduce in line with what they are paying off the capital (i.e non interest portion) of the debt, thus not allowing them to continue to rebuild debt after portions are paid off ?
 

Nemi_

Active member
Joined
Aug 20, 2010
Messages
252
Say someone has CC debt of 10k, and are being crucified in interest payments because of the negative order of payment, could they agree with the CC company that they could begin paying off the debt in a positive order of repayment but that their credit limit would reduce in line with what they are paying off the capital (i.e non interest portion) of the debt, thus not allowing them to continue to rebuild debt after portions are paid off ?
Maybe - just a thought. How is that different to just converting the outstanding balance into a normal loan?
 


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