Wednesday, May 20, 2009



That's the disappointment you utter upon opening your credit card bill and realizing that you lost the how-late-can-I-mail-this-in-and-still-be-in-time? game you played. (C'mon. You've said it before.)


That's the less than silent groan you make when you immediately write out the next check for your purchases bought on credit plus the late fee and the interest charged by the company in accordance with your agreement. You don't want to pay more than you have to or risk ruining your credit.


That's the deafening sound of coercive government squashing those who have good credit in order to help those who have poor credit, which is shortly followed by the same sickening sound a company makes when the government rides in and stomps on its legal ability to make money. And it's the onomatopoeic sound in the cartoon bubble over your flattened body when the Blue Hippo of general welfare sits on you.

As reported by The New York Times in a topsy-turvy manner yesterday, "credit cards have long been a very good deal for people who pay their bills on time and in full." Well, fellow Good Risks, those salad days are over!

As congress moves "to limit the penalties on riskier borrowers" it is expected that the credit card companies will try to recoup some of that loss of projected revenue by lessening perks, charging annual fees, or increasing interest rates on those holders who have managed their credit well. But the Times article blames the credit card companies for expecting to be able to enforce their agreement with card holders rather than the government intervention for attempting to remove responsibility from those individual card holders.

But a key point is sorely missing from the Times article: credit cards are not a right. They help us to pay for things with one easy transaction without carrying lots of cash around. They allow us to get a mini-loan in an instant based on the company's assessment of our ability to repay that loan. They are an agreement we have made with the company who issued the card on the premise that we will repay our temporary debt. In short, they are a value that we work to attain. Anyone who thinks that he can borrow indefinitely without having to actually pay the price must be confusing personal finances with government finances.

And another thing that's missing from the article is the ability of card holders to cancel their accounts. I will cancel my credit cards if I suspect that they have been violating our agreement. I have the power. I have noticed a shortening of the payment period on one, but I didn't cancel that card because I value its convenience.

An economic advisor to President Obama, Austan Goolsbee, likened credit card company practices to carjackings:

“The card industry is giving the argument that if you didn’t want to be carjacked, why weren’t you locking your doors or taking a different road?”

I think the government attempt at egalitarianism in the credit card industry is like saying if you didn't want to be carjacked, why did you lock your doors (i.e. pay on time) and take a different route (i.e. pay in full)? Why didn't you just go along for the joy ride?

And now for something completely different
(Well, it is somewhat related, but much, much more enjoyable.)

The "WOW!" girl was always my favorite.


Christina said...

We just watched this particular snippet of School House Rock last week--it served as Lanuguage Arts that day!

Lynne said...


Jenn Casey said...

Awesome post.

My favorite was the kid who says, "Darn. That's the end." :o)