We Need Less Credit

Unfortunately, when you buy a meal or DVD or pants and end up paying and paying and paying no one except the bankers benefit.

I’m in a pissy mood tonight, so let me vent about another thorn in my side. Have you read the threats from the credit card industry? That’s what they are–threats. They don’t like the recently passed credit card legislation and are throwing a financial hissy fit.

From The New York Times: “Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.””

Yeah–take that consumers! They threaten to raise fees and cut accounts. Shhh… they are speaking like a monolith and forgetting there is (supposed to be) competition.

OK, here’s the deal. When folks pay a significant portion of their weekly income in interest and fees as opposed to using it for things they might actually need, we’re all getting screwed.

Some credit for durable goods purchases makes sense. Car loans and mortgages seem like reasonable uses. Unfortunately, when you buy a meal or DVD or pants and end up paying and paying and paying no one except the bankers benefit.

Though it will be a temporary inconvenience, we need less easy access to expensive credit, not more. We need more money spent going toward paying for things, not paying for fees and interest.

Addendum: Ron Lieber writing in Wednesday’s Times agrees with me competition will keep banks from raising fees