Credit Card Fees address- what about insurance?
The Wall Street Journal is reporting that the Federal Reserve is taking public comments until Aug. 4 about sweeping rules changes that have been proposed. Among those changes, credit card companies may be required to put a larger portion of consumer payments to higher debt as opposed to the cheaper debt such as balance transfers.
Among other things, the sweeping set of changes would prohibit credit-card companies, in some instances, from hitting you with a higher interest rate on debt you’ve already incurred.
Another change: Issuers would be required to apply at least a portion of consumer payments to higher-rate debt. Some issuers put payments first to cheaper debt, such as balance transfers that have low rates, rather than to higher-rate purchases.
The proposed rules also would prohibit “two-cycle billing,” in which banks compute interest on debt on days preceding the most recent billing cycle, a practice that can result in borrowers paying interest on debt paid off during the previous month’s grace period.
Of course, the credit card companies are saying this is bad news for consumers, because this could raise rates and create fewer options for people looking for the best rates. Over 9,000 comments have been posted to the Federal Reserve site (federalreserve.gov), most in favor of the rule changes.
Personally, I think this is good for consumers who have a higher debt, because the payments would go toward eliminating a bigger portion of the debt- thereby eliminating some of the higher interest rates. I realize that credit card companies are in the habit of making money (aren’t we all?) but the almost unreadable fine print on their “great” offers leaves a lot to be desired and can almost be blamed for such high rates of bankruptcy filings.
It’s great that Congress is stepping up to address these issues too. However, I think instead of focusing so much attention on getting people the ability to spend more money via credit card (which is a bad idea, in my opinion) they should look at some other, more important and less noticeable goings on. For instance, the fact that insurance companies are getting out of paying benefits thanks to laws disallowing subscribers to sue them.
But Spherion Corp., the temporary staffing company where Amschwand worked, told Amschwand-Bellinger she would not receive any of the $426,000 in benefits she believed she was due. When she went to court, Spherion succeeded in getting her lawsuit thrown out. The Supreme Court on June 27 refused to review the case.
Amschwand-Bellinger received a refund of the few thousand dollars in insurance premiums she and her husband dutifully had paid. The total, she said, would not cover the costs of his funeral.
The story has played out often under the federal Employee Retirement Income Security Act. Designed to protect employee benefits, the law has been used by employers as a shield against suits.
Amschwand-Bellinger’s husband died without knowing that he could go back to work for one day to receive his full benefits. His employer as well as the insurance company assured him that there was nothing else he needed to do to ensure that his wife received his life insurance benefits. What his employer failed to tell him was that they changed plans and this new policy didn’t go into effect until the employee worked one full day. Mr. Amschwand could have managed to go back to work for one day if he would have known. As it happened, his wife received only the premiums he paid for his insurance, which weren’t even enough to pay for his funeral. She goes on to say:
“What if we had had children and I was a stay at home mom?” said Amschwand-Bellinger, who previously worked for a public hospital system. “What if I was 60 years old, with no skill sets, and I had to go back to work?”
It’s unbelievable that today when people pay for their insurance benefits (much more money than a lot of folks can afford easily) they are denied because of small loopholes that benefit only the insurance companies. Of course they didn’t want Mr. Amschwand to know about the policy changes. They knew he was terminally ill. They didn’t want to pay. They didn’t have to. And Mrs. Armschwand-Bellinger can thank the legislature for that.
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