Credit Cards Raise Minimum Payments

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WTF? Two things:

1.) Every effing day I work out because it de-stresses me after work. I own a standard weight set, an olympic weight set, and a bowflex. Oh, and a treadmill and an eliptical machine - so yeah, I have thousands of dollars invested in my workout area - thank you very much. While I generally prefer free weights, I must concede that there are certain exercises where the bowflex gives better muscle isolation. Specifically, I think the bowflex is better for lat pulldowns, tricep extension, flies, crunches and most exercises that involve any of your back muscles (of which lat pulldowns I suppose would qualify).

2.) I'm married, and my wife likes to work out too. An olympic weight bar weighs 45 pounds, which is too heavy for my wife to do anything with. I do have adjustable dumbells as well, but there are some exercises that you cannot effectively substitute dumbells for a bar. However, the bowflex allows you to do all sorts of exercises, and you can set the resistance to as little as 5 pounds, so she uses the bowflex as much as I do.

I've worked out for years, and I consider myself fairly knowledgable about weight training, so I'm not going to knock the bowflex. Of course, it's all about what kind of results you are trying to acheive. I'm better off doing 5 sets of 12 rep 150-lb pulldowns, than 5 sets of 5 rep chinups or pullups for example.

Do I look like the guy in the commercial? No. Did I expect to? Of course not. Realistic expectation my friend. (I'm also rather surprised by your uncharacteristic mocking, HB.)

EDIT: Oh and to add something on topic: If the terms of a credit card can change any day, what is the purpose of setting terms at all, and pretending that everyone is going to abide by them?

 

Aldeth - Who is foolish enough to believe the terms are locked if it is not stated in the agreement? That's the issue. A lot of people who get involved with lenders don't know what they are getting themselves into. That's their fault, not the lenders. They just see that big envelope in the mail, with a "5.9% interest" stamp on the cover. Getting involved with creditors takes some brainpower. My wife had a lot of credit debt built up before we were married. She definitely didn't think things thru prior to using her plastic. So I consolidated her debt for her. I moved balances to other cards that had really low transfer-balance rates for the life of the transfer, dependant upon you were never late, otherwise they creamed you with a real high rate. Or I got a loan thru the bank at a better rate and paid off her credit debt, which is usually the best way to go. That loan will be foolproof, pretty much anyway. It's all about responsibility with credit. You have to monitor it monthly and constantly look for better ways to cut your interest. You can call the creditors(not that you are Aldeth) thieves, crooks or whatever, but the bottom line is they are helping you out. Without them, lots of people would be sh*t out of luck when they want something they can't afford. I would really like a juiced up system to play on, but i can't afford one right now. So what do i do? I bite the bullet and play on my 7 yr old Gateway. Just like everything in life, be responsible and don't give in to temptation.... WOW, that sounds like I'm preaching, holy crap! I usaully like to play the Warrior, not the Priest.

 

I get that Blades. I just try to put myself in the other guy's shoes. I know credit cards change their interest rates, I know that credit cards charge late fees, and I know if I don't pay at least the minimum payment on time, I'm going to get dinged. However, in my entire life of using credit cards, the minimum payment has always been 2 +/- 0.5%. Therefore, I do not think it is unreasonable to assume they won't change the minimum payment, because they have never done that before.

I'm not a novice on credit. The combined limit on the two credit cards I carry in my wallet is nearly equal to my annual household income, I pay the cards off every month, and the only real debt I have is a mortgage and a car payment. While I cannot say what minimum payments on credit cards have always been, but it's been right around 2% for the 15 years or so I have been using credit cards, so raising the minimum payment is not something I would have anticipated. As a result, I think that this is something that people who are not as conscious about their credit use would have failed to anticipate as well.

It's not like they're doing it out of the kindness of their hearts - they are making a ton of money in the process. (And that's the key - they make their money on interest and late fees - which is why I find this decision curious. If the people can make the payments, then they are making less interest, as the people will pay the loan off in a shorter amount of time. If they cannot make the payments, and default, then the creditors stand to get nothing...)

 

Sorry, Aldeth. Around here, the Bowflex is a classic example of a corny infomercial product that gullible people buy, use for a week, then put in the attic along with their elliptical trainer, yoga video, abflex, and vibrating plate machine. If you are one of the people who actually uses and gets their money's worth from this thing, then that's awesome.

Back on topic, the terms of a credit card can and do change all the time, because that is the sort of product that it is. It is a continuing arrangement, not a fixed term one. If you want a product whose terms don't change for the term, then you get a term loan. The problem here is not with Chase, but with the financial naivety of their customers, who think they can have all the flexibility of a credit card without expecting the bank to have the same flexibility.

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Not entirely true. The card issuer also makes a load of money out of interchange fees every time a customer does a transaction. So a bank can make money even if the customer pays off on time every month.

 

You beat me to the punch HB. I was just typing up the same response. Also, Small business owners welcome all business, but they prefer cash transactions, as you don't have to cough up a percentage to the lender. In today's world of plastic money, it really adds up. Plus, it's alot easier for the small business owner to avoid charging sales tax and keeping it off the books, avoiding the tax man at the end of the year and surviving against bigger competitors. If your, ahem, an unscruplous sort of course. I would never do that...ahem...

 

I was unaware of that. So when I go to a gas station to fill up the tank of my car, and I swipe my Chase card through the reader, a percentage of my purchase goes to Chase? What kind of percentage are we talking about? I'd asume it has to be a relatively small pecentage or stores would charge cash paying customers less than customers paying with credit.

 

It is a small percentage and i believe, but am not a hundred percent on this, that it is illegal to charge less for cash. But even a small percentage will eat into a small business's profits. Especially if they are not selling high-end items. But it still beats not making the sale though.

 

IIRC the percentage depends on the value of the transaction, I think the less the value the higher the transaction. In many countries shops and even restaurants will not accept credit cards for payments less than X value. In Canada many shops will actually charge you significantly more (it was something between 5 and 8% depending on the shop) if you use a credit card, as opposed to a cash payment.

 

Actually, it depends on the terms of the seller's Merchant Account. As a general rule of thumb, businesses who do more volume pay a smaller percentage per transaction. Merchants don't always pay a flat percentage per transaction. Sometimes there is a cap, sometimes the merchant pays a flat fee per transaction, sometimes there is a minimum fee in addition to the flat percentage, and sometimes the merchant pays a flat percentage and a monthly fee and has a minimum fee per transaction. Smaller companies are almost guaranteed to be stuck with a monthly fee for the privilege of accepting credit cards while really large businesses like Walmart almost certainly will not be assessed such a fee. Such large companies also pay a surprisingly low percentage per transaction.

Visa, MasterCard, Discover, Amex, Diners Club, etc all have different methods for determining their fees. For issuing banks, MasterCard is the best deal since ownership is shared. Visa is owned by Bank of America, so regardless of your cards issuing bank, Bank of America gets a cut any time you swipe your Visa. Cards like Discover, American Express, and Diners Club charge their merchants much higher fees than either Visa or MasterCard. (Last I checked, Diner's Club charged as much as 7% per transaction.) This is why so many merchants only take Visa and MasterCard (and why almost no one takes Diner's Club).

 

Just out of curiosity, how does Diner's Club stay afloat if they are so uncompetitive?

 

Blackthorne TA is right on the, er, money. Credit card transactions cost the merchant, but the cost is worth it in terms of savings on cash handling, bad debts etc. American Express and Diners Club do charge more than Visa and Mastercard.

Also, Drew, I thought Visa hadn't been owned by Bank of America since the mid 1970s? There was definitely an IPO in 2007 because banks all over the world ended up with a windfall of free Visa shares.

 

Their cardholders are very, very rich and essentially have no credit limit at all. For the businesses these cardholders patronize, it's worth it.

Sort of. They still had control of all of the international licenses and after all the various licenses consolidated under one name, they still owned the lion's share. Visa finally became a publicly traded company in 2006, so yes, it now appears safe to say that Bank of America no longer gets a cut of every transaction. I can't believe I didn't notice that IPO...

 

Sorry to derail the thread with persistent questions, but what advantage does Diners Club offer their patrons (both cardholders and the businesses that accept the card) that other credit cards do not? I mean, from what was stated here, all other things being equal, a credit card user would be better off with a cheaper card. Or is it a prestige thing?

 

I believe they provide a "rewards" program tht accumalates points with every usage.

 

Diners and American Express offer better rewards for their customers (paid for out of the higher interchange charges to merchants).

Some banks will offer you an Amex card as a companion to your Visa or Mastercard so you can use your Amex in all the places that accept it (and earn more rewards) and then use your Visa / Mastercard in all the other places.

 

Blades and Harbourboy have covered the cardholder angle quite well. On the merchant end, Diner's Club argues that their cardholders spend a lot more than your typical customer. Diner's Club is also held by an inordinate number of travelers, so it is considered well worth it for companies who cater to travelers to accept Diner's Club.

 

Well, I guess Chase isn't hurting for the cash....

http://www.msnbc.msn.com/id/31939251/ns/business-earnings/