Thursday, May 14, 2009

Who's In Charge of Your Credit Cards?

Congress today is going to be considering legislation that would, in essence, tie the hands of credit card companies in many of their dealings with their customers.

The only reason I could fathom for this, aside from the fact that our government seems tenaciously determined to exert more control over our lives, is that people must want it.

So let's ask: Why?

If you have one or more credit cards, let us consider who might possibly have control over them. There are three possible sources of control:

  1. You
  2. The credit card company
  3. The government
Let us also examine what each of these sources might do with the credit card.
  1. You. It's "your" credit card. You use it from time to time and pay the bill in full in a timely fashion. In so doing, you avoid any charges, to the likely chagrin of #2. If you are displeased with the customer service or find a better deal elsewhere, you cancel the card and take charge of a new card. Or you simply pay off the bill and walk away from it altogether, bringing a smile to the face of Dave Ramsey.
  2. The credit card company. They have every intention of making money from the card. You are, at some level, aware of this; therefore, you should be responding accordingly. They will make money by charging interest—which you knowingly agreed to when you signed the cardholder agreement—and any fees which cardholders allow to fall upon themselves. Credit card companies wish to expand the number of cards in circulation to expand the potential for profit. Ideally, they seek people who can pay their bills but will likely carry balances; this maximizes their profit opportunity.
  3. The government. The government, with its recent scorn for signed contracts, wants to tell the credit card companies how much interest to charge, what fees to charge, when and how these can be changed, and how long they must allow for cardholders to pay their bills. The natural response to this (should currently proposed legislation become law) will be the opposite of what some in government desire: Card companies will limit their exposure to loss by denying credit cards to larger numbers of (irresponsible) people. But notice: It is still government exerting control.
So it must be time to make up your mind: Who are you going to allow to be in charge of your credit card? You? This can only happen if you pay off your entire balance on time every month when the bill arrives. The credit card company? Even with governmental interference in the way they deal with customers, they will still be able to charge interest and fees if you allow them to. The government? Do you really want that?

1 comment:

Brenda Brough said...

Why are we relying on credit at all? Why are Americans not just paying cash as they go along? Believe me, I am sympathetic to those who have true emergencies come their way, and understand the burden of large medical bills that are much higher than pocket change can cover! I am aware that there are genuine needs that are much heavier for some people than others. But does anyone remember the days when Americans worked their tails off and did without fast food and multiple vehicles just to stay current with their bills? Does anyone remember the days when families helped families in tough times or when people prayed in their needs? How about when the church cared for the widows and orphans? And all on one income? Certainly they didn't live in 5000 square foot homes with Hummers in the driveway and just two children in the household...i.e. extravagence. But today, our country has gotten so used to credit cards that it's almost unheard of NOT to use them to pay for most things. We are a people who are not willing to live at our true income level, but want to live in this fantasy land where you can everything your parents had with living and working only 1/4 of the time they did. So now, the people of our country are so imprisoned to their own desire to have, that the GOVERNMENT has to step in and take control. that's the answer.