Rogue Sun Meida

The Credit Cardholder Bill of Rights is a great idea & necessary but the meaning of it could be misunderstood and that could cost you big bucks.  Everyone wants credit card relief…but is it worth the cost?

You might think that I’m a credit card company apologist.  I’m not.

First, some background.

Last week, President Obama had a powwow with top credit card executives in an effort to make them change their evil ways.

Specifically, the president wants credit agreements to be written in clear language.  He wants to get rid of hidden traps that allow the companies to jack up their interest rates suddenly. He also wants to let cardholders set their own credit limits and force card companies to allocate payments fairly.

Great ideas. I really hope this becomes law soon.  But I have concerns.

1. It puts the spotlight on the wrong issue.

The credit card companies have indeed operated in an unfair, greedy manner.  There are few providers & little competition. Pure capitalism won’t cure this problem.  In this case, we need laws to protect consumers.  So this law is important but let’s not kid ourselves.  It won’t cure our credit debt woes.  No law will.

The average American owes $1900 in credit card debt.  And the unfair practices of these companies didn’t create that debt – we did. We went to the mall when we should have stayed home.  We vacationed in Barcelona when we should have gone to Bakersfield. You get the picture.

The credit card companies have been jerks – but they aren’t the only ones.   We have to seriously address our spending addiction.

The credit card agreements should be written in plain English.  Yes, that has to change.  But how many people who are complaining about those agreements now even tried to read them? My guess…..not many.

By moving the spotlight to the insurance companies, people may think it’s OK to sign contracts without understanding them.  That has been the underlying message in the mortgage bailout and now we see it in the credit card issue.  Don’t fall for it.  Never ever sign an agreement that you do not fully understand.

2. Will this law set up an expectation by consumers for another debt bailout?

I don’t know if that will happen but if it does I won’t be surprised.  And if it does, guess who’s going to end up paying for it?

Are the credit card companies angels?  No way.  I’ve gone a round or two with them myself on occasion. Do they take advantage of people?  Yes.  Should these rules be put in place? Absolutely.  But are these abuses the reason we have so much credit card debt?  I’ve got my answer.  What’s yours? What is your best credit debt advice?

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