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Wednesday, May 20, 2009

Happy to be a 'deadbeat'. . .

According to this article that discusses Obama's new regulations to limit credit card penalties, I'm a 'credit card deadbeat'! The article talks about how people who pay off their credit cards in full (or at least make their payments on time) will essentially be subsidizing the people who are late or in arrears.

Obama's plan limits the penalties that credit card companies can put on people who pay late, meaning that the credit card companies will need to find other ways to make their money. Which all translates into higher interest rates, annual fees and other ways of taking dollars out of our responsible pockets! Although this may have financial ramifications for me down the line, I was tickled that the article referred to people who pay off their balances as 'deadbeats'---only because they don't make any money from us!

I'm not sure about these new regulations, to be honest. In general, I'm in favor of more regulation versus less, but in this case I think we would be reinforcing the behavior of people who over-use their cards and then don't pay on time. Meanwhile, we'd be punishing the people who use their cards responsibly. Will this result in fewer people keeping credit cards handy? If it ends up costing me $60 a year to be able to use a credit card, I might just resort to using savings to pay for items with my debit card all the time, rather than using my credit card and turning around and paying the bill electronically through my online bank. . . .

2 comments:

Anonymous said...

Don't the credit card companies charge retailers for each use of the card? And I agree with you -- if the card company is going to charge me for the privilege, I'll use cash, debit or line-slowing-cheque.

Gary Anderson said...

Unfortunately, as my website points out, the banking scam started at Basel 2 with off balance sheet banking, and ends with profiteering off credit cards. Bottom line? Walk away from usurious, loan sharking credit card debt and show the banks that you mean business. We can kill the snake while he is writhing on the ground if we walk away from big bank loans and big bank deposits.

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