Additionally unlike loans for autos or even houses, credit card issuers have little to no way to secure their risks, they can’t simply come and repossess the items that are purchased on the cards. As a result they use a variety of techniques – not simply relying on credit scoring organizations like Experian – but also employment trends, geography, consumer purchasing habits etc. as a basis for determining the levels of risk and thus the related interest and fee charges associated with that risk.

Notably, credit card issuers don’t simply offer cards to the rich and elites. Today they have programs for almost every risk group high and low. While a small percentage of Americans are familiar with the so-called American Express Black Card (with its nearly unlimited credit line which opens a door to private jets and a lifestyle of unparalleled luxury) far more are familiar with a basic Visa or Master Card with the one or two thousand dollar credit line and the derided 18% interest rate.

But if the so called credit card reform proposals are enacted into law, the impact on credit card users will be felt across the board. Recently laid off and other recession impacted people (and even those who live next to them) will be adversely impacted as credit card companies will be rightly concerned that there is too much risk and no return for doing business with this group. These marginally risky customers might have to choose between the secured credit route and simply being shut out of the credit card market altogether. And even relatively good credit risks will see changes. For them it will be harder to get a credit line increase. They’ll likely see the end of short term teaser rates below 5% because of the need for cross-subsidization (which means keeping rates across all risk lines higher to offset the mounting losses from credit card abusers who default).

And all credit card holders will see other changes. Because credit card holders can’t balance risks with income from fees and rate hikes, it will be more important than ever on the front end to determine risk more precisely. This harder and more intensive evaluation process (creating the digital equivalent of the bank manager) will also be more costly for issuers and users and result in fewer new accounts being issued and requiring more mandatory and higher annual fees. Even new accounts that pass the first threshold will see lower credit lines and will likely be issued for shorter lengths – instead of 2 or 4 year long authorized activity periods for a given credit card, cards might be issued for as few as 6 weeks at a time.

What about the abusers? For them this policy is a windfall. That abuser purchasing that must have Battlestar Galactica action figure will see several positives: they’ll likely find their credit lines lowered every couple of months and as a result they’ll soon climb out of debt as they can’t keep piling up more charges – something they’d never do voluntarily, and more significantly no matter how many times they are late with their payments neither their interest rate nor their credit card fees can ever increase. Finally they will no longer have to worry about getting additional cards to run up debt with because their applications will be declined as a result of the more stringent application process. But even these “benefits” come at a high cost for everyone else.

Hate them or love them, credit cards are a valuable commodity in the American economy and over-regulation of this industry will hurt far more Americans than they will help. As light follows day, these restrictions will lead to reductions overall to credit access. Many marginally creditworthy users will find their credit access denied and even responsible credit users who diligently pay their bills and fulfill all of their obligations will see higher costs for credit card use. And doing so during the downturn will prove even more painful for all credit card holders as they find a valuable financial tool increasingly unavailable.