The long-term harm to be caused by new credit card reform bill that Congress passed last week and President Obama signed into law far outweighs its short-term benefits.
An adoring press corps has lauded the bill for eliminating over-the-limit charges, requiring advance notice of rate increases and prohibiting double-cycle billing and “universal default.” That’s how the banks make the bulk of their money. Now they’ll make their money by raising interest rates and charging new fees that aren’t prohibited by the act. Instead of charging fees that penalize irresponsible financial behavior, banks will now charge fees that penalize responsible financial behavior (like paying on time).
The real intent of the bill is like everything else from this President and this Congress: to obstruct the free market and redistribute wealth. In this case, they seek to make conscientious folks like me, who pay our bills in full every month and don’t incur any interest or late fees, to start paying whatever fees the banks come up with to replace the fees currently being paid by those who are irresponsible with their credit, most of whom voted for Obama and majority Democrats in this Congress.
Congressional Democrats, including my Congressman Russ Carnahan (D-MO), and the President think they’ve got us responsible folks by the short hairs and that we’ll just bend over and pay up. But we’re smarter than that. I currently use credit cards because the benefit of the card’s rewards and the month-long interest-free loan is greater than the minor cost of keeping track of the bill and paying it on time. That changes when the rewards go away and new fees are imposed.
When the banks initiate new annual fees on our credit cards, responsible customers like me will stop using them. Maybe we’ll keep just the one with the lowest fees and best rewards, or maybe we’ll cancel them all and go back to paying by check, just like we used to. Think of those Visa commercials in which the world comes to a screeching halt when somebody gums up the works by writing a check. All those young Obama-voting punks who are usually too busy enjoying their lifestyle to pay their bill on time will now be stuck behind us in the checkout line when we do. They’ll be in their usual hurry, but they’ll just have to wait for us! Poetic justice!
This reminds me of 1993, when President Clinton and his soon-to-be-ousted Democratic Congress socked it to rich people by passing large luxury taxes on yachts. Then those horrible rich people stopped buying yachts, and lots of union workers who built those yachts lost their jobs! Well, here we go again.
Of course the big bad banks will still make money, because what credit they do extend will be very expensive. A Post Dispatch business column predicted that interest rates will rise sharply in the nine months before the law goes into effect. And after it does become effective, further rate hikes will only require a 45-day delay, because the bill didn’t limit interest rates.
And that all adds up to a longer, more severe recession – or worse. Businesses won’t pull out of the recession, because banks will extend less credit. Also, consumers with fewer credit cards won’t be making the impulse purchases they used to. Those impulse purchases drove our economy, but now Obama and his Democrat cronies have killed them off. People without credit cards also won’t be shopping online any more. And banks won’t pay much interest on savings, because they won’t need to attract as many deposits to extend less credit. People who need and can afford credit in the new environment will get socked, not only with higher rates but also with other higher fees, like balance-transfer charges, that aren’t covered by the legislation.
Obama and Carnahan’s lame attempt to make responsible consumers pay for the irresponsibility of Obama-voting deadbeats will backfire and hurt all of us, especially the very people they meant to help. Ready-Fire-Aim. Way to go, Russ and Barry!