Everybody loves to hate credit card companies. But, the truth is that most Americans abuse credit cards. We over rely on plastic and spend more than we have. That’s a problem. But, a worse problem is when we then complain to the government and want them to solve the pickle we got ourselves into (subscription):
The Federal Reserve and other regulators are planning tighter rules to stop credit card companies from unfairly raising interest rates and to make sure they give people enough time to pay their bills.
-Placing unfair time constraints on payments. A payment could not be deemed late unless the borrower is given a reasonable period of time, such as 21 days, to pay;
-Unfairly allocating payments among balances with different interest rates;
– Unfairly raising annual percentage rates on outstanding balances;
-Placing too-high fees for exceeding the credit limit solely because of a hold placed on the account;
-Unfairly computing balances;
-Unfairly adding security deposits and fees for issuing credit or making credit available;
-Making deceptive offers of credit.
This is more unnecessary regulation. Credit cards are unsecured debt. If you don’t like the terms being offered, don’t get a credit card. If you’re not happy with the fees and penalties of one credit card company, then switch to the another. As to “deceptive offers of credit,” I’m sure we already have laws that deal with fraud. If it’s fraudulent, then the government should prosecute those committing fraud as opposed to creating new regulations for an entire industry.
The answer to the credit card problem is education, not regulation. Teach financial literacy to children in math classes, and then let personal responsibility trump govern behavior.