There’s no denying that credit card companies have employed shady tactics in pursuit of maximizing profits. And, much like their brethren at the big banks and on Wall Street, their failure to behave ethically has given the government an excuse to interfere in yet another corner of the free market. It didn’t take long, however, for consumer advocacy groups and others to point out that, in addition to making it more difficult for card companies to gouge their customers, the Credit CARD Act will make it a lot more difficult and a lot more expensive for everyday Americans to get, and keep, a credit card.
In short, since credit card companies are no longer able to pad their profits by exploiting those least capable of managing their credit responsibly, the companies are going to have to adjust their business and marketing model to reflect this new reality. This includes restricting the amount of business they are willing to do with “risky” customers. For the first time in years, sub-prime borrowers, college students, and other “vulnerable” segments of society will find their access to easy credit significantly curtailed.
While some may view this as an unjust response on the part of the credit card companies, responsible measures that push Americans to break their addiction to credit cards are a good thing. As a nation and as individuals, we’ve gotten to the point where we can hardly conceive of living life without access to an endless line of credit. Convinced that we can “have it all and have it now,” we’ve leveraged ourselves to the hilt, financing our food, clothing, shelter, transportation, entertainment – heck, even our government – with credit!
Not surprisingly, our lenders recognize the power they have over us and have used that power to keep us in bondage. This is not something new. The Old Testament Book of Proverbs cautions against the kind of recklessness and greed that leads to financial indebtedness, reminding us that “the rich rules over the poor, and the borrower is the slave of the lender.”
The average American – identified by the multiple credit cards in his wallet, the home mortgaged thrice-over, and the two cars in the driveway being paid for “on time” – has ignored the wisdom of these words for far too long, and the credit card companies have profited hand over fist.
For the time being, it appears that the playing field has been leveled. Because credit card companies are no longer permitted to load up the fine print with predatory and exploitative terms, irresponsible and ignorant consumers will be forced to reduce their dependency on credit as a means of living beyond their means.
It will be a painful lesson for consumers, but one we’re desperately in need of learning.
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