Everyone remembers before the recession how things were. There were people who would show how much money they could spend running rampant. Most of those people have been silenced by the recession as everyday average Americans have grown tired of extravagance.

So here are a few of the things that have gone almost extinct through the recession:

1. Unaccountability. People feel as though CEOs and high level executives have had a hand in the recession due to their lack of accountability. We never heard from them or made them accountable for actions they may have done. However, now, they end up being the most accountable and when a company does something wrong, the CEO is the first to blame and the first to go.

2. People flaunting their extravagance. The days of people owning things like Hummers, bling, and having their homes featured on shows like Cribs has come to an end (for now anyway). Even the once very public Paris Hilton has been fairly unseen recently. Hummer has been dropped from the GM lineup and people are cutting back wherever they can.

3. Outrageous Gas Prices. I’m sure this one will end up making a comeback eventually, but as of right now the average for a gallon of regular unleaded gasoline is around $2.65. This is far from the record highs of $4.10 a gallon for the same grade of gasoline from last year. Many people welcome the difference due to lower income levels and higher unemployment.

4. Less junk mail. Before there was a credit crisis everyone was getting credit card offers, including children and cats. Now there aren’t as many credit card offers floating around and credit card companies are being a bit more careful about who they are sending pre-approved offers to.

5. Stores that sell stuff we don’t need. Stores like the Sharper Image have just simply disappeared in the last year because they sell stuff that people don’t need and typically can’t even create a need for.

All the credit card companies are reporting a huge rise in delinquencies. The problem I see is that not only are there more and more defaults of credit cards, but these are the same banks that faced huge losses in the subprime mess.

Most the companies like Citigroup and Chase are going to be raising their rates before new credit card rules go into effect. There is only one company that comes to mind that says that it won’t raise its rates before the new rules go into effect and it is Bank of America.

The problem I am seeing is that with more fees and higher interest rate charges, people are not going to be able to afford their bills even more. So, it seems to me that those people who are facing problems now will almost definitely be defaulting on their high interest credit cards.

Of course, some of the credit card companies are currently telling their customers that if they want to avoid the new rate hikes then they can pay off their credit cards in a small time frame. I have read that most people are having to pay off their debt in 45 days if they want to keep their rates the same.

I just don’t see how people who have thousands of dollars of debt are able to pay off their debts in a matter of less than two months.

So, this brings us back to the issue of defaults that credit card companies will likely be facing in the near future.

Without the ability to increase rates (and mess over the customers that pay their bills on time every month) at the drop of a hat, what will the credit card companies do? How will they make up the amount of money that they will be losing on defaults?

Here are some pretty common things that people tell themselves right before they find themselves in credit card debt:

1. It’s an emergency.
2. We deserve it.
3. It’s a bargain.
4. It’s not that much money.
5. The payment is small.
6. The card rewards make it worth it.
7. There’s an offer of zero percent APR on purchases.
8. Balance transfers are zero percent APR also.
9. Its for my business.
10. I’ll pay it off after graduation.

Here’s some truths to these lies that people tell themselves:

1. First of all, many times credit is not used in emergency situations. Sometimes we convince ourselves that credit cards will only be used in emergency situations and some people are able to stick to that rule, but not most.
2. No one deserves anything that they haven’t earned and later in life, they will be happy when they can afford something nice with the money that they’ve made working instead of paying interest on a splurge when they were younger.
3. A credit card is never a bargain. You will always pay interest. If you have an interest free card, it won’t remain that way forever and you HAVE to pay it off in order to keep from having to pay the interest. Did you know that even when you go to the furniture store and they say “no interest for 24 months!” or something like that, if you don’t have the furniture paid off by the end of those 24 months, you will have to pay interest on the entire purchase price,  not just what you owe.
4. It’s not that much money on the purchase maybe, but over time, the interest adds up and it becomes a lot of money.
5. The payment is small because it is meant to ensure that the credit card companies get the most amount of money they can from you. The smaller payment you make, the more interest the company will earn from your money.
6. The rewards are never worth it. Haha.
7. See number 3.
8. See number 3.
9. Businesses sometimes need loans to start up. However, if you’re going to take out money for your business, perhaps you should consider small business loans first. The interest rates are much smaller. However, if you can avoid it, why would you want to start your company in debt.
10. Haha. College procrastination at it’s greatest. I paid my credit cards off before graduation because I knew I had a crazy high student loan bill. Not everyone will have such an outrageous loan payment, but if you do those credit cards will likely be put on the backburner for awhile.

Lies, Lies, Lies….

Credit cards are a great tool to use in tight situations or anytime you could use the extra credit. Not all credit cards are bad, some actually offer some pretty good perks that you may be missing out on. Of course, no credit card company wants to come out and say all the great things that they actually do to help out their customers for some reason.

Here is a list of things that credit card companies actually do for customers who simply ask for them. I didn’t include things like reward points because those are widely known about.

The following perks are from Citi:

1. You have dedicated “concierge” staff to assist you. There is a 24 hour personal concierge service that is around to make dinner reservations for you, get tickets to events, locate hard to find items, and even coordinate business arrangements worldwide. They can also assist you with gift selections and other requests that are said to “simplify your life.”

2. You also have extra car rental insurance. Citi provides up to $50,000 in secondary coverage against collision or theft when you get a rental car and charge it on the card and decline the rental company’s insurance.

3. There is also retail price protection. This protects your stuff if it gets stolen or is accidentally broken up to $500 for the first 90 days of purchase when it’s put on the card.

4. You have a price protection. If you purchase something with your card, except for online purchases and some excluded items, you have 60 days to find the same item for a lesser price you will get refunded up to $250 of the difference.

5.  You are not liable for unauthorized purchases online or offline.

6.  If an airline looses your luggage, you are eligible for up to $3,000 in lost luggage coverage for not only you, but also your dependents, when you charge your fare.

7. You also have roadside assistance.

Your credit card company may be keeping some of these (or even more) a little secret from you. All you have to do is pick up the phone and call the number on the back of your card to see what kind of perks you may or may not be missing out on.

In June, PayPal started assessing a 2.9% fee on purchases that are marked goods or services to personal accounts. While their business is their own and they can basically do whatever they want, it would have been nice to know about the change prior to them just going for it.

There was an email saying that the Terms of Service had changed, but the email didn’t give any specifics. In order to find out exactly what happened, you would have had to go read the entire Terms of Service and familiarize yourself with the changes. I don’t know many people who read an entire terms of service document.

When you do most of your business through PayPal, then these fees really start adding up. In the past, with a personal account (versus a premium account), you wouldn’t have to pay fees to transfer funds from one PayPal account to another. however, now even if you do have the personal account, you will be charged the extra fee.

The issue doesn’t stem from the fact that PayPal decided to start charging for something that was previously free. The problem comes from the fact that PayPal was being deceptive about the entire process. It is rediculous to think that a company can just start adding fees for no reason and give no warning. Even when my credit card company decides to change something in their privacy notice, I get a letter along with an email. I mean, credit card companies typically REALLY want you to know what’s going on.

So, what was PayPal’s excuse? This is what they told Jared Newman, the guy who blogged about the changes:

“We didn’t want to make a huge formal communication out of this pricing change, because we weren’t really adding any fees, and we were hoping it would be a more useful experience for people.”

Wow.

The Senate passed a bill today to overhaul the way credit card companies work and how they interact with their customers. The measure passed the Senate yesterday at a 90-5 vote. It is expected to quickly pass through the House of Representatives and be on the President’s desk by the end of the week.

If enacted into law, credit card companies will have to change the way it does business, and many of the “shady” practices will have to end.

If the bill is enacted, some of the biggest issues that the credit card companies will have to begin allowing customers to pay their bills online, and even on the phone, for no extra fees. This has always been a big turn off for me. In my earlier years at college, I was the bad kind of customer that would pay the minimum balance when I couldn’t afford to pay more. My minimum balance was $15 all those years ago. I clearly remember this one time when I had to pay my bill over the phone because I had switched bank accounts and it was no longer linked to the account and I had simply forgotten about it. I called to pay the bill and the fee was $15. So, it cost the same amount to pay the bill over the phone as it did to pay the minimum balance. I have since, not used the pay by phone “feature.”

There is a bill set to take effect July 2010, but the new bill would cause changes much sooner.
Seeing as how July 2010 is so far away, that would give the credit card companies a lot of time to do some damage to customers’ accounts and balances. Until that point, the companies can change APR’s and other fees to even good customers.

When and if this bill goes into effect, the credit card companies will have to give 45 days’ notice to customers for raising interest rates; they will also have to give an explanation as to why the rates were raised.

I have yet to have any experience in that field simply because I am still building my credit history. I only have two “real” credit cards, one from Bank of America and one from Citi (I know, lucky me). Luckily for me, I have been able to fix any issues I’ve had with either card and the cards have been raising my limits and lowering my APR for the last few years.

However, it is quite shady when the companies raise APR’s and/or lower limits just to charge extra fees because they don’t know how to run their business and keep it in the black.

I hope that the government can work together to get this into effect as soon as possible to make sure that the credit card companies stay in check.

The hike is said to affect those who carry a balance and have an interest rate below 10 percent. They can expect their interest rate to climb into the double digits starting with June account statements.

Recently the federal government limited how the credit card companies could raise rates. The problems is that the rule doesn’t take effect until July 2010. Congress is trying to make these rules go into effect sooner, but not in time for the Bank of America increase.

So if you don’t carry a balance or you have an interest rate higher than 10% you should be ok.

The new rules will prohibit payments not be late until the borrower is given a reasonable period of time to pay, playing “too-high” fees for exceeding the credit limit because of a hold on the account, double cycle billing, and making deceptive offers.

The new rules will require lenders to give consumers 45 days notice before changes are made to the terms of a credit account. That includes increasing the interest rate or giving higher rates for penalties.

The companies can also apply to receive aid from the $700 billion bailout rescue package Troubled Assets Relief Program.

American Express dug itself into the hole it is currently in. After all, last year when the housing market started to go belly-up, AmEx was still giving out credit like candy on Halloween. Trick or treat?

I can’t believe some credit card companies. I am STILL getting pre-approved offers in the mail. Some of the companies are ones that I’ve read about having trouble…should they really be wasting assets to pre-approve me for a credit card, especially if I haven’t responded to the last 200 mailings?

It isn’t only the pretty card that draws in the freshies, it’s also the free pizza or t-shirt they give away when you apply. When I was a freshman they were basically giving these cards to anyone who would take one. I will say freshmen, because AFTER you’ve been in college for a while you realize what’s going on. They write about it in the university newspaper.

So as we embark on a new school year, I’d like to give a piece of advice to the income freshmen and anyone else who wants to listen:
Go to the Union, buy your posters. Go to half.com (or amazon or wherever online), buy your books, and don’t give these credit card pushers the time of day.