An item in today’s Marketplace Morning Report started out with this condemnation: Credit cards. Aren’t they evil? A convenient, maybe even necessary evil, perhaps, but such a temptation.
They reported that the Senate’s Banking, Housing, and Urban Affairs Committee heard testimonies from consumer advocates today who want to see more regulation of the credit card industry. According to the AP Report, the committee chair plans to crack down on the fees charged by the credit card companies and scrutinize the way they take advantage of members of the military.
The Senate committee heard representatives from credit card issues such as Capital One and J.P. Morgan Chase. If you are so inclined, you can watch the full hearing.
Eilzabeth Warren, a professor at Harvard Law School, testified this morning. She wrote about the hearing briefly on her blog, and I’m looking forward to the follow-up.
Also, check out The Secret History of the Credit Card, posted at Millionster.
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5:42 pm (reply)
You know, my father always told me never use a credit card unless you have the cash to pay for it. And I’ve only gotten my first credit cards recently. I think it’s pretty scary how a credit card can totally ruins someone life. Thanks for sharing about the Senate Hearing. It’ll be interesting to see how it plays out.
Your friend in credit card insanity, 1mil from millionster.com
12:18 pm (reply)
I’m against any further action by Congress against credit card companies. It’s the responsibility of companies to regulate themselves. Just like most other regulation, it will only be a temporary band-aid as the companies find other ways to charge customers, and those ways may be even more subtle and confusing.
To me it seems like Congress is grasping at issues that should not be regulated in order to win support for reelection next year. They talk it up with limited information and hype it in interviews without giving all the facts.
Fact is, credit companies clearly state on applications what their fees are. It’s the people who use them that are to blame. And trust me, I was one of them! I can only blame myself for purchases I make and can’t pay for. In my case, though, it was in the process of starting a business. Credit card companies are actually very lenient in the ways they help you out when you face hardship.
4:14 pm (reply)
Cracking down on the credit card industry is precisely the wrong thing to do. For some people, use of credit card is an important part of their personal finance. For example, my wife uses hers when she travels for business.
What is needed, is actually a free compediting enviorment in which credit card companies are forced to compete, therefore lowering their prices and fees thus benefiting consumers. More regulation is only going to gum things up.
best,
James
11:44 am (reply)
it doesn’t look like credit card debt is an issue to the panel of 4 people. they all stated that they have money in the bank to pay off the balance. they don’t pay it off because of the low minimum payment and worry about the unexpected. so the credit card balance situation is more psychological (and perhaps lack of emergency fund).
of course, credit card is risky business. there is no collateral for the issuer, except for a fico number. they’re entitled to charge high interest rate.