There is no easy way to say this, credit card company greed makes me want to vomit.
Today, credit card companies and the American Bankers Association have their britches all in a bunch because new credit card limits and protections for consumers will be voted into law within the week.
The banks response, more fear mongering and scare tactics to make people believe that consumer protection regulations will lead to higher costs and less credit available.
I’ve got to say, if that’s the case, good! So be it.
Banks don’t operate in a sound fiduciary capacity when they spray credit out to millions of people that obviously could not afford to handle it. It should not be the role of the average American consumer to foot the bill for corporate greed.
The banks are going to argue that credit will get more expensive for good customers now since new regulations limit some charges, fees, and practices. So if that is the case, than what has really been going on, could it be a poor tax and unfair fees and traps that trip up the customers that could least afford to have a credit card to begin with? Who is now subsiding the best customers then, it could only be the least qualified customers.
If credit card companies now want to threaten us with the elimination of grace periods, ditching reward programs, and charging big annual fees, then let consumers vote with their wallet and take their transactions to debit cards, write a check or pay cash.
The scare tactics are meant to make us tremble and not ask for greater protections and controls. But you know what, this is America, the land of the free, and the home of consumer consumption, anything that limits consumption and growth will never be tolerated, by any political party.
Banks used to give credit cards only to the best consumers and charge them a flat interest rate of about 20 percent and an annual fee. But with the relaxing of usury laws in some states, and the ready availability of credit scores in the late 1980s, banks began offering cards with a variety of different interest rates and fees, tying the pricing to the credit risk of the cardholder.
That helped push interest rates down for many consumers, but they soared for riskier cardholders, who became a significant source of revenue for the industry. The recent economic downturn challenged that formula, and banks started dumping the riskiest customers and lowering their credit limits in earnest as the recession accelerated. Now, consumers who pay their bills off every month are issuing a rising chorus of complaints about shortened grace periods, new hidden fees and higher interest rates.
The industry says that the proposals will force banks to issue fewer credit cards at greater cost to the current cardholders. Read rest of New York Times article…