From 1980 to 2005, credit card debt has soared from $69 billion to $1.8 trillion. Such a huge increase calls for a closer look at consumer debt within an entire struggling economic system. Should there be more regulations on credit card company policies to protect consumers?
The competitive credit industry is known for tricking cardholders by targeting vulnerable consumers and changing rates and terms without notice. Various regulations have been put in place over the years, but none take decisive measures and companies always seem to work around them. Economists even say that despite the credit industry's damage to consumers, the damage brings more benefits to the economy than negatives. Only to a certain degree though. This whole issue traces back to greed, as I have mentioned before, a sort of moral failure within the United State's economic structure. Companies and consumers alike are guilty of it. While personal debt is not the cause or major factor of the current crisis, it does play a big role on the state of the economy. People cannot put money back into the economy, invest in the market, and spend freely when debt is skyrocketing. New York has began taking measures to start regulating credit-default swaps between bond-buyers, and likewise, there should be regulation enforced for consumer credit too. Credit card debt, which consumes so many Americans, can drive individuals to bankruptcy and will only further the economic crisis.
Many economists have varying ideas on what could improve this situation, including a Georgetown analysts' thoughts of "standardizing annual fees, interest rates, and per-purchase transaction fees." The Credit Cardholders' Bill of Rights Act of 2008 was passed by the House of Representatives on September 23, and will be put into place to protect consumers. The bill largely focuses on consumer awareness and a universal default policy. Not much action will be taken until January of 2009, but it is encouraging to see the government enforce much-needed regulation on an abused free market.
_KIJU%20copy.jpg)
3 comments:
Britney,
I most certainly agree that more regulation should be put in place, and I am shocked by the fact that economists assert that the damage the credit industry inflicts will have more benefits than drawbacks. Anything that is referred to as "damaging" is named so because it inflicts overall harm, not help, as these economists claim. New York and the House of Representatives may contribute slightly to the repair of the credit industry, but given the greed and moral failure that you reference, along with partisan bickering, how can the government continue to promote regulation of the credit industry without collapsing into a gridlock?
Tommy
Britney,
How would the government decide on one set standardized interest rate? Would it be the same for everyone? If not, what factors would change the rate between different consumers?
Britney,
Of course I agree that more regulation of the credit industry in needed but like everyone else I am at a loss of how the government plans to do so. The greed that you have mentioned is mostly in the large rich companies that lobby congress. How do you think congress and individual parties will deal with the lobbyist?
KG
Post a Comment