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 The CaliforniaAlliance For Consumer Protection
37 Derow Court, Sacramento, Ca. 95833
(916) 923-2215 fax (916) 923-2216
www.consumeradvocacy.com * ssorleahcim@comcast.net
“Competition Is The Highest Form Of Consumer Protection”
- Early Credit Payments -
Problem:
Under current law, there are several credit oriented marks that can be used if you are late or miss a payment on a revolving or regular credit account. Currently there are no credit related marks if you pay in advance and are technically ahead of the agreed upon payment plan.
That means that if your account requires a $50 a month minimum payment, and actually pay $100 a month (and thus paying off your balance in advance), there is no mark that recognizes this. To add insult to injury, what makes this terrible is this: even if you pay more and are ahead on your payments, yet make a payment that arrives a day late, you receive a bad credit mark. In many instances, that "mark" will cost you a minimum of $39. And this begs the question: If you can get bad marks, how about getting good ones?
Example:
During a recent trip to Asia, I made sure that my credit card accounts had positive balances on them before I left – two were left with as much as $2,500. Even though I was ahead in my payments, I did not receive any “credit” from the bureaus for this surplus, but two companies did charged me “late fees” because I spent all of the balance while, yet was late a few days on payment.
Solution(s):
a) Create a new credit category that requires credit reporting agencies and lending institutions to report if you are either ahead of the agreed payment schedule or have been paying more on your monthly payments.
b) Create language that states that if you pay off your revolving credit early, and have a "recognized positive credit" in your account, that the company must pay you interest on that money until the day they return it to you. That fee should be equal to what they charge you now for a late fee.
Possible Support: Support can come from a variety of people, including consumer organizations, individual consumers, credit agencies and major companies like Sears, Good Guys, MasterCard and Visa.
Possible Opposition:
1) Credit Agencies
2) Those who issue credit
Arguments In Support:
1) Consumers will be able to establish more accurate and secure credit.
2)) Establishing marks like this will spur consumer spending.
3) Companies that provide credit will get a truer sense of people’s credit and payment history thanks to increased disclosure that this measure will bring.
Arguments In Opposition:
1) Agencies that supply credit to people are only interested in knowing when people do not pay their bills.
2) A new credit mark will create a whole new credit system and upset the applecart, costing consumers more to obtain credit.
Section Affected: As per Legislative Council
Language Attached: The concepts are.
1) Insert the following into the Code of Civil Procedure:
"A consumer credit reporting agency shall include in any consumer credit report information, if any, indicating that the consumer made payments above the minimum amount required on the account or in advance of the agreed upon payment plan.
2) When an over payment occurs:
a) The company has 60 days to return the overpayment, by check
b) The company must provide the consumer with interest, equal to the amount they currently charge on their card to the individual user.
3) All of this information must be included with their monthly bill,
4) All companies will be charged a late fee, equal to what they currently charge consumers. Should they fail to comply with these provisions.
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