On Thursday Senator Sheldon Whitehouse’s proposed measure that would have forced credit card companies to abide by the state of issuance’s credit card interest rate rules (for a detailed explanation of how the law is currently set up then read our in depth guide to credit cards and usury) was shot down in the senate by a 35-60 vote with 21 Democratic Senators joining Republican Senators across the aisle to shoot down the measure.
As we mentioned in an earlier post about some of the negatives of the CARD Act and how the CARD Act will likely leave many people in even worse position than they were prior to the CARD Act it’s very rare to see any type of arbitrary outside regulations help consumers without hurting them in some way, shape, or form at the same time.
One example would be that if there were more intensive caps placed on credit card interest rates then of course we all know what would happen:
A) Credit cards would be harder to get approved for
B) Credit card limits would be decreased for many
C) Credit card rewards would be reduced
And on it goes – thanks to many well meaning (sometimes) politicians that want to exert more control over every situation they come across rather than simply getting out of the way to allow people to make their own choices and live with the consequences of their actions (oh, the horror!) – both good and bad.
I am 100% for getting rid of abusive and deceptive marketing practices but as mentioned in negatives of the CARD Act article:
CARD Act Regulations for Transparency in Credit Cards = Clear Understanding of Credit Card Features and Options = GOOD!
CARD Regulations for Forcing Companies to Cap Fees/Interest Rates and Underwrite Credit in a Certain Way = Less Options for Consumers = BAD!
What do YOU think?
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i think rates should be capped. or at least follow some sort of pattern. here is the thing not everyone should be able to have a credit card. if you can’t make a payment you should be able to have a card.
as for rewards, you can keep them.
i don’t want my limit to go down but at the same time i have had a card for 15 years and always make my payments on time so i might have a slightly skewed view.
Why is it that you think that credit card interest rates should be capped or “follow a pattern”? As far as not caring for credit card rewards you are certainly allowed to choose a credit card that doesn’t pay you rewards but as you can see from our cash back credit card calculator even cash back rewards of just 1% to 5% can add up to some substantial money in your pocket after 20+ years (in many cases enough to pay for a year or two of college for your kids!): http://www.creditcardchaser.com/cash-back-credit-card-calculator/
Seems like educating young people about credit cards would have helped us avoid this problem in the first place. Having safe lending practices would limit the amount and accrued debt. The thing that sticks is the limit on rewards now. Wish companies would step up and honor those.
I am not sure what you mean by “Wish companies would step up and honor those (credit card rewards).” because as mentioned above the CARD Act and other government intrusion is what is causing credit card companies to be forced to either offer less credit card rewards and other perks or go out of business. You do understand this, correct?
That being said – I am fully with you when you mention the need to educate young people about proper credit card use. However, many people with all of the education in the world still behave irresponsibly and should face the consequences. Spend more than you have = you deserve to get hit with interest charges.
Teaching young adults how credit cards work is important but let’s not kid ourselves too much – 99.99% of teenagers already know that if they charge something on credit then they will have to pay it back – it’s not just free money, wouldn’t you agree?
Sorry for the confusion above. I just re-read what I wrote and totally agree with what you have to say. I still think its a bummer that credit cards aren’t able to honor previous commitments. Anyways…
I think there is a disconnect in this culture when it comes to money. Lots of middle school and high school students don’t get how money works or how credit and debt works. They know they have to pay it back, however interest rates can cause some confusion and that is where is problem lies.