Hmm, am I allowed to say: “I told you so” yet? One of my chief concerns with the CARD Act was that rather than focusing on financial transparency so that consumers can be educated and have many different choices in credit cards the bill devoted much of its legislative girth to loading on more regulations for credit card companies.
Unfortunately for consumers, many of the new credit card regulations do nothing to protect consumers but have the opposite effect of decreasing the options available to consumers when looking for credit.
There are certainly some great things in the CARD Act and it’s ridiculous to say that no oversight or regulation at all is needed but since when is it the government’s job to coddle all of it’s citizens and deprive them of the right to pick and choose the products and services that they want to use or not use?
The most recent example of some of the adverse consequences of government intervention into the credit card and banking business is cited in the Wall Street Journal and it’s twofold:
- It’s Harder to Get a Credit Card – The new burdensome regulations in the CARD Act make it harder for credit card companies and banks to accurately price risk when issuing credit cards (i.e. the regulations prohibit certain types of fees like universal default, double cycle billing, etc.) so many banks are just saying, “OK, if we can’t make any money off of those consumers then we will just say thanks but no thanks and tell them to get lost.” This then leaves many consumers in the position of having less options for credit – do some of them then turn to even worse options than high fee credit cards like payday loans?
- Consumers are Getting Soaked with New Fees – Even consumers with great credit who have managed their finances impeccably for many years are still getting hit with new bank fees. From monthly maintenance fees on a checking account to inactivity fees on a credit card the new fees are just piling up. Why all the new fees? Simple. If banks are not allowed to single out those who are high credit risks and charge them higher fees than the average consumer (i.e. universal default, etc.) then guess what? We all get charged the higher equilibrium fees.
In the great attempted equalization of American consumers where those who make poor financial decisions are bailed out by those who make responsible financial decisions then guess what – we all lose.*
*But hey, why don’t we just keep giving more power to Uncle Sam without addressing the root cause of any of the problems…
- Will the CARD Act Turn Credit Card Users into Payday Loan Users?
- What is the highest credit card interest rate allowed by law?
- Universal Default
- Will regulators ever cap credit card rates?
- Senator Sheldon Whitehouse’s Credit Card Interest Rate Capping Bill is a No Go
- Are today’s rates the highest credit card rates ever?
- Universal American Express Card