Is USA the Credit Card Consumer’s Saviour?
Could the passing of the new law controlling US Credit Card charges be good for consumers worldwide?
For the good, the bad or the ugly, financial trends tend to follow the USA for the past, oh, perhaps half a century; maybe less. The world is still stinging from all that sub-prime fiscal impropriety; then the mother of all financial crashes worldwide (thus far) and is there more to come?
There is a possible crisis coming at banks again. The spectre of rising unemployment will create the expected rise in credit card defaults has the world worried. But the sqeezing of consumers by banks who are now being gouged by rising costs and sudden increases in credit card fees and APRs have consumers worldwide up in arms. There has been enough pain that politicians are actively clamping down on banks’ credit card practices.
Bank executives and some analysts have been warning the restriction on banks trying to raise more cash will likely cause the another cash crunch. Then I doubt these guys have ever been on the sending end of the credit card bill that keeps rising in costs. Consumer budgets often fly out the window when that happens.
What happens when that same consumer is already walking the tightrope between making the payments and outright default? This is another huge fear – people being pushed into default. The resulting Domino effect can easily be far worse than the banks’ ability to scale down.
Put to a vote, with the sentiments against the banks these days, the people will win – at least win a compromise. There will be no rock bottom credit card rates planned. A proposed cap of 15% APR is apparently not in the cards after all. Instead, 22 or 23% seems to be the acceptable limit.
Whatever the result, this is expected to have strong repercussions around the world especially in countries where the banking crisis has the banks trying to squeeze single penny they can from any source. It will give strength to the argument that the banks will need to bite the bullet some more and the consumers should at least have a fairer shake.
I do not expect either party to like the final result, but this is better than having a crushed banking system or thousands of crushed consumers. This is a calculated middle line that we hope is the right one.
Read about the US Senate restricting credit card practices…
Tags: Credit Card
Posted in Banking Services, Credit Cards | 1 Comment »
Just a quickie. I don’t have too much time here for even a picture or you tube video…Quick, before you miss the movie – there’s no time to get to the ATM – just whip out the credit card; 1,2 …7 people. “And that will be…$X”.
After all that China had to endure on the run up to this stage, I thought a smile will be good. Remember to get your visas at the Chinese consulate or embassy bring your credit cards and some cash. While you’re there take in the sights of the natural wonders and the nightlife of Shanghai. Click “Olympic” title above to watch.
