Let The People Lead

Posted by Larry Miller on January 4, 2010 under How | Be the First to Comment

creditcardRonald Reagan once said, “All great change in America begins at the dinner table.” Now is a time when we may be needing to take the lead, not just for the good of the country, but for our own survival. With our federal government borrowing like money is going out of style, we, the citizens who will be given the bill, have to not only fuss, fume and protest (which is generally ignored), but we must lead the way by example.

Credit card companies have been called by some “the grinch that stole Christmas”, and with pretty good cause at times, as too often bills from one Christmas overlap the next yule season. There have been some minor signs of restraint on the part of the consuming public, but this is just a beginning. I won’t bore you with statistics as everyone knows consumer credit has been excessive for many years, but has really gotten out of hand in recent years. The only statistics that really matter to most people are the ones on their own credit card bills. Seeing this trend, the lenders have been bumping up interest rates and fees while decreasing credit limits and rewards programs.

One TV financial consultant recommended making nice and kissing up to their representatives when you call them. This may work for a while, like a woman being nice to a rapist hoping he won’t hurt her too badly. It does not solve the problem!

But, some will say, didn’t the congress look after us by passing credit card “reform”? Well, they wouldn’t tell us that if they didn’t want us to believe it. One has to wonder if there can be any meaningful reform of such a profitable industry so well represented by skillful, high priced lobbyists and lawyers. The answer is, wondering is an exercise in futility.

Sure the bill limits fees that can be charged in relation to a credit card account, but does nothing to prevent these fees from being added to or increased on other accounts, so the lenders can still get their pounds of flesh… just from different people… even those with spotless records.

The new legislation also forbids the companies from bumping up interest rates on accounts unless they are at least 60 days in arrears OR the possibility of unannounced increases is disclosed when consumers sign up for a new account. Again, this presents no problem for the card companies as they have already begun the process of phasing out old plans and replacing the customer’s accounts with new ones containing the disclosure.

These over lawyered companies have been living high on the backs of the American consumer for so long that they are not inclined to roll over and give the customer a fair shake without a fight. This is not going to change anytime in the near future any more than our Chinese note holders would be inclined to give us a break simply because most of us are nice people.

What is the answer? Any reasonably successful gambler will tell you that you need to cut your losses when you have a loosing hand. You may think you can out bluff them, but the lawyers these guys have are the ones that give the legal profession a bad name… you will not win! So the answer is to recognize a loosing proposition and get out! Dave Ramsey has been saying this for years.

Start the new year by cutting up most of your cards. If you can, get their fangs out of your neck by paying them off as soon as possible. They cannot charge you interest on money you don’t owe – but they will try if they can! Uncle Sam won’t protect you, but many will think you are in good hands. It is up to you to take care of yourself and your family since there is really no where else to turn.

If you have already found yourself owing more than you can handle, especially with increased interest rates, there are all sorts of companies advertising on radio and television that they can help you get out of debt. Save your money. Call the credit card companies, or if has gone to collection, call the agency yourself. They will usually write off 25 to 30% right from the start with no questions asked if you behind on your payments. If you feel the need to pay the whole thing, do it, but at least make the deal to make them go away. In any case, with the inflation and higher taxes on the way, eliminating as many other drains on your budget only makes sense.

These credit card companies say they are doing us a service, and obviously there is a market for what they do. It is just that they have created a dependence much like a drug dealer does with his product. In both cases, it is a good idea to stay away, but this is just one of many instances corporate involvement in their own regulatory processes through political contributions, lobbyists and who knows what else, where we are told regulations protect the consumer. In reality the regulations often protect the insiders from competition or the need to deal with the public in an honest manner. Regulations of the credit industry, like many regulations from all levels of government give various industries a veneer of respectability… and the American public pays.

Bookmark and Share

Add A Comment