Feds Want Tougher Rules For Retailers Who Want To Sell Us Credit – About Time!

‘Would you like to save $20 on today’s purchase? Just sign up for one of our easy to get credit cards.’ I don’t know about you but this gets old when you just want to buy something and get hit with this from a clerk. I just came in to buy the item and not fill out a credit application. This may change soon if the feds have their way.

According to one article it states that:

Some big retailers are balking at federal proposals that would make it a lot tougher for them to dole out instant credit at the cash register.

The restrictions, if enacted by the Federal Reserve, would force retailers to gather more financial information from customers— including how much they earn— before giving them credit.

That would endanger at least some popular cash-register pitches, which often echo one from apparel retailer Talbots Inc. to “get 15% off today’s purchase” by opening a charge-card account on the spot.

This is the line I enjoyed reading the most:

“Instant credit is important because it is another service that we can offer the customer that the customer considers to be valuable,” said Jim Sluzewski, a spokesman for Macy’s, which like the other retailers has lodged gripes with the Fed. In the third quarter, more than half of Macy’s sales were rung up on store-brand credit cards. Macy’s operates more than 850 department stores in 45 U.S. states.

A service for who? What a crock. These are legal scams that bilk the consumer and put more dough into the pockets of those that deserve it the least. The article goes on to state that these retailers bundle up these credit cards and sell them to banks.

Isn’t this the same thing that happened to our housing industry? Bundle up bad credit loans and sell them to investors? Wasn’t this the same bunch of banking crooks that we had to bail out?

I sincerely hope that the Federal Reserve implicates these changes. We can no longer afford to bail these jerks out with our hard earned tax money.

Comments welcome.


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I have been writing for Lockergnome for eight years.

  • Kitty

    No, it’s not the same thing. The fiscal vehicle is entirely different.

    The concept here is that you issue credit and make money off the finance charges. You still get your money in the end, and in many cases make more. What makes this profitable is that people are lazy and will forget to pay bills, incurring penalties.

    One of the most popular versions of this is 0% for x months “when you use your y card.” This works by issuing the card with a true 0% interest rate, unless you pay late. Really, you shouldn’t pay late, if you do, you’re a deadbeat, and deserve to get screwed because you’re too lazy to bother paying your bills on time. However, this one in particular makes loads of money because when you do pay late, they collect all the interest they were otherwise forgiving.

    Generally speaking, the credit is issued by banks who guarantee the financing. It’s just like getting a capital one credit card. They’ll give a card to anyone, and specialize in low limit cards. You should also note that recently capital one opened a number of brick and mortar locations because changes in regulation made it profitable for them to do so.

    I think you’re on target with how you feel, but I also think your understanding of the concepts at play here is incomplete.