Wednesday, November 04, 2009

Credit Card Regulation

The House is currently debating legislation that would accelerate further regulation of the credit card industry. Essentially Congress is telling the industry when it can and cannot charge you for using their services.

Let's be crystal clear about what exactly a credit card is: You spending someone else's money. Whether it is because you don't have the money on you at that very moment, or won't have the money until later in the month, or won't have the money for several years, a credit card allows you to borrow someone else's money to buy the things you want today.

Now Congress wants to regulate how and when credit card companies can impose fees. This is viewed as 'consumer protection' but I fail to see how it qualifies. How does assisting already overspent Americans in running up their personal debt, by making it less costly to use their credit cards qualify as 'consumer protection?'

Aside from the invasion upon a corporation's ability to interact with its customers on its own terms, so long as those terms are lawful and forthright, why can't credit card companies charge whatever they want for the use of their services? Why does the government feel the need to get involved at all?

In an arrangement between a lender and a borrower, the lender sets the terms, and the borrower agrees to those terms in exchange for the money. But protection for the borrower comes in the ability to not accept the lender's money, in which case the terms, however onerous, get thrown out the window. This holds true for credit card companies and their customers just the same. If you don't like the fee structure, don't use the credit card.

1 comment:

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