Increasing Interest Is Risky Business
I am an unashamed free market capitalist, which is why I’m in such a quandary over the credit card issue.
I believe capitalism is the most powerful and perfect system on planet earth. Politicians may want your vote to attain a position of authority in a democracy, but voting with your wallet in a capitalist society means the very life and death of a company and its product. In democratic terms it would mean that if you lose an election you die instead of making millions as a paid lobbyist or speech giver.
Companies are governed to prevent monopolistic market dominance but in some cases, like Microsoft, even a monopoly works just fine and to the benefit of both the company and the consumer. Perhaps some of the more Apple inclined users will disagree. But for those of us that want to actually use our computers for business purposes other than web design a Microsoft based PC is the only answer. Just consider for a minute the advances made in only a few short years thanks to the accomplishments of a company like Microsoft and you will see the power of capitalism.
Advancements in almost every area of human endeavor were in large part made possible by a capitalistic mentality. In most of those cases government interference would only serve to hinder the breakthroughs rather than protect consumers and delay or completely eradicate the remarkable advancements that we enjoy on a daily basis.
The recent government intervention in the form of bailouts being passed out by Congress like free heroin will only serve to make companies more dependent rather than more efficient. Bailing out a bad business model does nothing to improve the business. It only allows it to continue to make bad decisions. Capitalism is as perfect as the laws of nature. Only the strong survive.
That’s why I have such a hard time denying the necessity for government intervention into the credit card market.
Credit card companies have for far too long made risky business decisions in order to entice un-creditworthy consumers to use their cards. I get 5 or 6 new offers every week, but I pay my bills. Folks I know that have no means of support get an equal number of preapproved card applications every week. Young people, college students, even illegal aliens are prime target markets for these credit pushers.
If the card companies had to absorb the default costs of their folly I would see no reason for government intervention. But that is proving not to be the case. These card companies are now changing the rules of the game for many of their creditworthy consumers by summarily increasing interest rates, in some cases 200 or 300%. I have not had any of the cards I use increase, but I have family members that have suddenly found their interest rates double or even more. No late payments, no excessive spending, no change in income, just a notice in the mail that effective immediately the interest rate on the balance being carried is double.
Even loan sharks play fairer than that, although the late payment penalty is significantly more uncomfortable.
Credit card companies have become so outrageous in their business practices that even a diehard capitalist like me has to say “STOP”.
You have to work pretty hard at being insufferable to make government intervention look positive. But the credit card companies have done just that.
