Friday, May 2, 2008

Comeuppance for Credit Card Companies.

The Washington Post leads with an article about new rules governing credit card companies.

This is a long time in coming.

Credit Card companies are notorious for such things as making their agreements subject to the state law of states with few or no limits on usury.

What this means is that if you sign a credit card agreement and you reside in Tennessee, your agreement will be subject to Delaware law. If the agreement was subject to the law of Tennessee, the credit card company could only charge 21% interest as a maximum, but we all know that's not what they charge. Delaware allows higher interest rates, so that's where they go to profit.

I'm a strong advocate of requiring credit card agreements to be subject to the state law of where the debtor resides. It's only fair, since all other debts belonging the the debtor are subject to the state of the debtor's domicile.

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