Does anybody have any details about this Treasury Department letter that looks like it bans any no-payment deferred financing, like lots of furniture and electronics stores use?
To enter a coupon code in your post please enter the following info:
Coupon Code:
Merchant:
Url (optional):
saving...
Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.
SummerSoFar
Addicted Member
posted: Feb. 8, 2010 @ 10:51p
Yes, no payment offers have gone the way of the dodo.
This, IMO, is a good thing...
tripleB
Banned
posted: Feb. 8, 2010 @ 10:53p
Yes always works out well when government blocks free markets.
brettdoyle
Senior Member
posted: Feb. 8, 2010 @ 10:58p
This will hurt sales cause people to lose their jobs. Sounds like lucky people will be high fiving each other after getting laid off and looking forward to watching The Price is Right and Judge Judy on their 79 weeks of unemployment.
Kalun47
Broke Member
posted: Feb. 8, 2010 @ 11:21p
tripleB said:Yes always works out well when government blocks free markets.
free markets only work well if the people are educated about finance, which the majority of them are not. hence I shudder when I pass a Rent-A-Center or the like..
FrugalFreak
Teh d00d
posted: Feb. 9, 2010 @ 12:00a
Kalun47 said:tripleB said:Yes always works out well when government blocks free markets.
free markets only work well if the people are education about finance, which the majority of them are not. hence I shudder when I pass a Rent-A-Center or the like..
Marketing that preys on gimmicky credit finance sales is not marketing but psychological thievery.
sell an honest item, for honest price with honest terms or get out of the biz. Your kind is not welcomed if you will sell at any ethical cost.
donotdrinkPBR
Happy Member
posted: Feb. 9, 2010 @ 12:11a
Why would anyone on FWF concern themselves with how this might affect a Rent A Center? I'll be pissed that I can't take advantage of free financing for items I would otherwise pay cash for, but instead leave the money in rewards checking and pay in full when the 0% financing ends.
mannyv
Senior Member
posted: Feb. 9, 2010 @ 12:33a
Technically it's not a ban; the letter is very carefully worded. It's a reminder that minimum payments should be imposed by rule. It's unclear what would happen if the savings institution in question didn't do that. Would they force 90% reserve on those debts?
Also, it only covers savings associations. Do store credit cards fall into that?
All my 0% BT offers require a minimum payment...so what 0% promotions by savings institutions is this covering?
ThePessimist
Ancient Member
posted: Feb. 9, 2010 @ 6:13a
This is covering retailer promotions. "Buy a new TV today, and make no interest or payments until 2011!" These deals are very common on retailer-branded credit cards. Well, I mean they were common...
The "catch" was that interest was accruing, but was waived if you PIF by the deadline. Otherwise, the accrued interest posted to the statement in full, which is when you noticed that the card had a >20% rate.
Guess I'm gonna be paying someone's unemployment down the road rather than paying for a new TV. We should exchange our congresspersons living room TV with that unemployed person, see who they like watching best.
taurean
Senior Member
posted: Feb. 9, 2010 @ 8:05a
mannyv said:Technically it's not a ban; the letter is very carefully worded. It's a reminder that minimum payments should be imposed by rule. It's unclear what would happen if the savings institution in question didn't do that. Would they force 90% reserve on those debts?
Also, it only covers savings associations. Do store credit cards fall into that?
All my 0% BT offers require a minimum payment...so what 0% promotions by savings institutions is this covering?
I got a notice that my Home Depot card will require minimum monthly payments on their historically "no payments, no interest" offers due to this. Who knows if it's absolutely required of them, but most card issuers will probably follow it anyway.
ThePessimist
Ancient Member
posted: Feb. 9, 2010 @ 8:22a
mannyv said:Also, it only covers savings associations. Do store credit cards fall into that? The requirements aren't new, this is just a friendly "reminder" about the requirements from 2003. Since those requirements were jointly issued by the Office of Thrift Supervision, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation, they'll apply to most financial institutions.
Stores can't and don't issue credit cards. Store-branded cards are issued by banks. In rare cases, the bank may be a subsidiary of the store itself (in which case it's usually a Utah-chartered industrial bank), but more commonly the store has a relationship with a major bank.
Their entire business model seemed to depend on selling young, foolish people cheap furniture with no payments for 2 years. Then, they would immediately sell that debt to Citi, who would later get a default judgment and/or trash the fool's credit.
Seems to me that no one will be lining up to buy RTG furniture if they actually have to PAY for it.
nycll
Geeky member
posted: Feb. 9, 2010 @ 8:40a
tripleB said:Yes always works out well when government blocks free markets.I can tell that $100K tuition didn't raise the economics understanding above HS level. When the question about government action is asked, the only correct answer is "it depends".
In this case, the action is clearly positive.
DamnoIT
Senior Member - 4K
posted: Feb. 9, 2010 @ 9:19a
Rather then fixing it so they cannot back assess fees they just decided to Fup the whole party. Thanks again FedGov for making all my CCrates higher and limits lower. Worthless.
tazzy531
Senior Member - 3K
posted: Feb. 9, 2010 @ 9:46a
One key tenet of safe and sound retail lending is the monthly minimum payment requirement. Regular monthly payments add structure and discipline to the lending arrangement, provide regular and ongoing contact with the borrower, and allow the borrower to demonstrate and the bank to assess continued willingness and ability to repay the obligation over time. Conversely, the absence of a regular payment stream may result in protracted repayment and mask true portfolio performance and quality.
I am going to write a letter to Treasury to encourage that all banks and lenders verify that the customers are brushing their teeth each night. Daily dental hygiene is a key tenet for long term oral health.
In addition, I would be a big supporter for the lenders read a bedtime story to the borrower's kids. Bedtime reading is a key tenet for the future education of the children.
tazzy531
Senior Member - 3K
posted: Feb. 9, 2010 @ 9:52a
nycll said:tripleB said:Yes always works out well when government blocks free markets.I can tell that $100K tuition didn't raise the economics understanding above HS level. When the question about government action is asked, the only correct answer is "it depends".
In this case, the action is clearly positive.
Yes, I understand the benefit of this regulation to some (ie.. people that are being taken advantage of). But regulations like this also restrict the freedom and flexibility of those that are educated, understand the risk, and can manage their own affairs. Else, you're just lowering the entire society to the lowest common denominator.
For example, in this situation, the solution isn't to restrict lenders/retailers for allowing these no interest plans. The solution should be to provide financial education to the general public.
What's the difference between a regulation like this and one that requires everyone entering a pool to wear swimmies (whether you can swim or not)?
Addendum: And speaking of tuition... Why not implement this on the largest 0% interest deferred payment plan out there... student loans? A number of points in the memo were: Regular monthly payments add structure and discipline to the lending arrangement -- Students would benefit from the lesson in financial discipline provide regular and ongoing contact with the borrower, -- Another thing that would apply to student loans and allow the borrower to demonstrate and the bank to assess continued willingness and ability to repay the obligation over time. -- Same here... Conversely, the absence of a regular payment stream may result in protracted repayment and mask true portfolio performance and quality. -- Also a problem of student loans.
michal1980
Whistle Blower
posted: Feb. 9, 2010 @ 10:11a
Kalun47 said:tripleB said:Yes always works out well when government blocks free markets.
free markets only work well if the people are educated about finance, which the majority of them are not. hence I shudder when I pass a Rent-A-Center or the like..
The lack of education is the fault of the whom now? Did the store somehow prohibt the person buying the goods from learning about finance?
If I go in and sign up for one of these 'bad' deals. the only person I would blame is the one I see in the mirror.
scrouds
(_o_)
posted: Feb. 9, 2010 @ 10:19a
michal1980 said:
The lack of education is the fault of the whom now? ...
Low taxes that pay for substandard public school education.
Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.
When the question about government action is asked, the only correct answer is "it depends".
