Should the Government Regulate the Credit Card Industry – No

Sure as a single rain drop can put out a forest fire, Congress can protect us from predatory credit card companies and the banks who control them.

Too many legislators in Washington, D.C. need or just plain want the money banks and credit card companies are ready, willing and able to pay out to protect profit. Band-aid legislation that looks good to consumers might pass out of Congress and be signed into law. Major surgery is need though and I doubt there are enough representatives and senators willing to support its performance.

Even if there was will in Washington, any significant government regulation would have to wait until George Bush is gone from the White House. We already know how lowly he regards children in need of health care. Do you really think he would sign any bill that would hurt his banking buddies’ bottom lines?

Here in California, I can, by law, be charged no more than 10% interest a year to borrow money from a friend money, $10 for every $100 borrowed.

Read the fine print on your credit card statements. You can be made to pay 30% or more in interest every year until you pay back the money a credit card bank loans you when you buy anything using their credit card. This can mean paying over $2000 for something that cost $1000, the $1000 borrowed plus over $1000 in interest.

There once was government protection against usury, “an unconscionable or exorbitant rate or amount of interest,” according to the Merriam-Webster Dictionary. No more. Banks can charge as much as they believe they can get away with charging.

The federal government and state governments are the reason people who have come to depend on credit cards to pay their bills are abused, why middle-class people are becoming poor and poor people are becoming poorer. They have allowed interest rates to become onerous and usurious. They’ve allowed the predatory practices of banks and credit card companies that have resulted in many Americans being all but enslaved.

You, me and everyone else regularly ripped off by banks through credit cards are the only ones who can protect us.

Pay for what you buy with cash and stop using any credit card. If you know in advance you’ll have to make a purchase you’d usually make with a credit card, put enough money in a savings account every month so you can pay cash when you make the purchase. Yes, this may be a pain in the posterior. Better, however, to save before you buy and, maybe, get paid a bit of interest than to pay principal and a lot of interest after you buy. Difficult at first, this will pay off in the end.

If you must use credit cards, stop using any card from a bank that charges an interest rate higher than the lowest rate your local bank would charge to borrow money, for sure a rate a lot less than the credit card rate.

Bankruptcy might be an option. Talk to a certified public accountant. If it’s going to take a decade to pay off a credit card loan, and you’ll wind up paying two or three times the loan amount in interest, like $30,000 interest on a $10,000 loan, maybe bankruptcy is the most responsible alternative. Banks count on people being afraid of bankruptcy. Don’t be afraid to find out if this is an alternative for you and do what is best for you. Don’t worry what any bank thinks about you. You’re already regarded as a chump anyway.

Whatever you do, tell everyone you know what you are doing and why. Write the news media and blog. Write your state legislators and demand that your state legislature limit the interest rate anyone in the state can be charged for use of a credit card. Let them know that your vote will go to the candidate who will best protect you.

Bankers and credit card company CEOs don’t fear or respect us because we have simply paid more whenever we’ve got a letter saying, essentially, “Pay More Or Else.” They believe we are too stupid or too weak to stop them from robbing us. They are confident that we have neither the courage nor the conviction to stand up to them.

I say, “Let’s prove them wrong!”