Financial Planning Pointers
(c)  copyright 2009  Walter O. Smith, CFP, ChFC, CLU  All rights reserved
A Rose of Sharon Publication

Noitce:  The content of this newsletter is intended for purposes of consumer financial education only.  The content is not, nor intended to be accounting, tax, legal, or financial planning advice of a personal nature to readers.  If you want, or need, professional advice, you are advised to consult a properly, qualified professional.  The author is solely responsible for all content.  This newsletter is a free benefit to members of GMAX1, a faith-based consumer financial educational organization. 

"Credit Card Protections Come With Some Holes"
See Best Credit Card for Low Rate
Issue #4

6/1/09

As I said in the last issue of the newsletter, on credit cards, I decided not to address the new credit card legislation to "protect us" in that issue of the newsletter until the effects of it become clearer.  We didn't have to wait too long.

I don't take credit for the title of this issue of the newsletter.  It's the exact title of the article on this new credit card legislation published in USA Today on Thursday, May 21, 2009, the day after Congress passed the legislation. 

If you're thinking that title tells the story of the effect of this credit card legislation to "protect you", you're right.

The Point Summarized   I can't improve on what Adam Levitin, a Georgetown University law professor had to say about this legislation, so here it is: (this was in the USA Today  article) 
"I'm torn because the legislation has its heart in the right place.  It just doesn't address the hydraulic nature of the market.  If you block one avenue, the market's going to circumvent it".  How true.  In fact, the banks have already started.  First, it was things like changing annual fees now for credit cards.  I gave it a little time.  Sure enough, it showed up in USA Today on Thursday, 5/28/09, in their front page headline article:  "Banks Find New Ways to Increase Fees", appropriately sub-titled, "The Credit Trap".  The Their Latest Target: Checking Accounts".  Basically, the banks are signficantly increasing checking account fees, increasing minimums on intrest-bearing accounts, etc.  Similar, in principle, to their credit card pricing/cost policies.

Which is what the rest of the USA Today article goes on to outline in how they'll do it to us.  Painfully.

In summary, don't expect this legislation to actually help you.  It won't.  In a way, it's sort of ironic:  On the same day USA Today published that article (Thursday, 5/21/09), the Fox Network announced a special program to be aired on that date on how to get out of excessive credit card debt.

I stand by the content of the last issue of the newsletter on credit cards.  If you need help, you better get it.  It won't be coming out of either Washington, or the credit card industry.  On the editorial page of the Philadelphia Inquirer on Thursday, 5/21/09 was an article titled "We Never Had This Conversation".  The sub-title was what got my attention: "But between us, credit cards are giving loan sharks a bad name".
The loan shark's complaint wasn't the interest rates credit cards charge.  The loan shark's complaint was about their fees.  That, plus, "These banking guys, they stick it to your credit record -- you're hurting for years!  Maybe for always".  What could I possibly add to what Rocco said?  (the loan shark);

I discovered this later in the day.  According to Kiplinger's Personal Finance, the best credit card for low rate is the Farm Bureau Bank Platinum Mastercard for its 5.24% interest rate and no annual fee.
www.farmbureaubank.com   It's worth a look.

Til next time.  My best regards to each of you,

Walt