Word out is Obama is going to do something about the “credit card abuses” as part of looking out for the little guy while rebuilding the nation’s financial system.”
It’s about time and is something I wished Bush and Clinton had done during their Presidencies. The pushing of credit cards to people who can’t afford them has not only created large risks for financial institutes, created a sub group of our population carrying a large debt but also decieved consumers that they can buy much more than their budgets can afford. If you don’t have the money than you shouldn’t be buying something. Food, LCD TVs, vacations, liquer, prostitutes, clothing, boob jobs… and the list goes on of products which people would never pay cash for vs. charging.
Obama should insist that anyone applying for a credit card must meet stringent credit/income requirements and those who qualify will only get “limited” credit lines. This should be done right alongside revising of extremely strict mortgage requirements going back to the standards used 10-20 years ago with employment records, debt/mortgage ratios, good credit scores requirements… There should also be a requirement of being a US citizen.
Student credit cards should be eliminated since DEBT cards can easily fill the void for parents wanting to give their kids this spending ability. Consumption will go down and home ownership might drop but too bad. We will have to learn to live in a slightly smaller economy but a sounder and more predictable financial system is worth it.
There are aspects to this reform, such as preventing credit card companies from raising existing rates which will have to be worked out. If a customer is late on payments they should get a late fee and then another late fee and then if they stay late then close their account vs. raising rates. I think CC issuers should have the right to raise interest rates on their users but users can close their accounts. The downside is your credit score goes down by switching from one credit card to another. Something needs to be done to adress this “switching” activity from being consumers simpl getting the best deal vs. the current “negative” hit you take from closing your 6 year old Bank “A” CC and switching to Bank “B”. Thoughts????