Washington Week: Student Voices (O)

Column: Credit card reform bill can launch new view on money
By Kris Noneman
OSU Daily Barometer, Oregon State U.
May 15, 2009

It has finally happened - Americans have gotten so fed up with credit card companies that the government has decided to overstep its bounds and do something about it.

The United States Senate is currently debating a measure that would greatly restrict credit card companies' ability to conduct business in the way the companies have become accustomed to: stripping away what little money the poverty-stricken consumers have as minimum interest payments.

Despite my undying support for a capitalist economy without governmental interference, I have to agree with the senators on this one - if not for my own selfish irresponsibility, then for every debt-ridden citizen who might be aided by this bill.

The majority of my life, or at least since I learned what credit cards are, I have believed that people are responsible for their own debts. My father always said it was stupid to buy anything if you cannot pay for it; he also told me that silence was golden and if I ever shut up I would get rich.

Still, the industry serves a purpose.

Credit was established in this country so that consumers could afford to purchase things that they desperately needed but could not pay for in one installment - things like houses, automobiles, home appliances and the Disney World vacations. All these have become the backbone of this consumer-driven economy.

But apparently Americans cannot handle the responsibility of paying off the debts they have incurred anymore, not that many of them could have before this great recession.

The Senate measure being discussed at the moment would prohibit credit card companies from raising interest rates on existing balances unless the card holder is 60 days behind in payment. It would also restore said interest rates back to normal once payments have been on time for six months. It would also require notification of rate increases at least 45 days in advance, and companies would not be allowed to charge late fees if payments were late in processing.

According to The New York Times, the bill would also require statements to be mailed 21 days prior to due dates, would restrict credit card issues to persons under 21 years of age, would prohibit rate increases on credit cards within the first year of their being issued, would extend all promotional rates to a minimum of six months and would allow gift cards to last for at least five years.

Overwhelming support has been shown for this new measure within the Senate - not a single member has stepped up to speak against it - though debate was delayed for a short period on Tuesday so that one Republican Senator could talk about another important issue: carrying firearms in national parks. Go figure.

President Obama and the Democrat-dominated legislature have called for a reformation of the credit industry, and the Republican minority has had little to say to defend their capitalist motives, according to the Times article.

Even Republican Senator Richard Shelby of Alabama, the senior Republican on the Senate Banking Committee, has stated his full support for this bill, which would clearly allow increased government involvement in the once "laissez faire" credit industry.

"Credit card contracts are unclear, at best, and thoroughly confusing at worst," Senator Shelby said on Tuesday. "Card issuers raise rates for unclear reasons, use billing methods that consumers do not understand, and assign fees and charges without warning. This bill seeks to remedy this."

It appears as though this measure will be passed as soon as possible, much to the chagrin of all major credit card companies, and much to the pleasure of all major credit card debtors.

This bill is very helpful for the economy. By taking the money from the investors for interest payments to keep them in debt for as long as possible, it makes it incredibly difficult to invest in the economy by spending money on all the unimportant things Americans love to buy, like the latest fashion trends, electronics that will be obsolete in two weeks, ringtones, alcohol and that all-important Disney World vacation.

This columnist understands what it means to live well below the poverty level. Living paycheck-to-paycheck makes it incredibly difficult to keep up with credit card payments.

And once a payment is made, it seems like fees and rising interest rates put the balance right back to where it was before the initial payment.

It's like many of us have fallen into a trap set up by people who have great amounts of money, are willing to lend it out and even more willing to reel those debts back in.

Yet I cannot help but feel like we put ourselves into this position because Americans, in general, seem to be incredibly irresponsible. I would be a hypocrite if I did not count myself among these people; luckily for me, I have learned my lesson before it was too late.

Of course, the "irresponsible" label does not fall on those who have experienced the misfortunes of losing their incomes due to lay-offs and company bankruptcies.

But, despite our financially neglectful ways, the U.S. Senate is trying to help us get out of our situation so we might once again be able to afford investing in our waning economy, although "investing" might put some people right back where they started.

I believe it is time for a change, not just with these companies, but also with the consumers' spending habits.

I say it is time for us to stop living like MC Hammer and start spending with a little more responsibility, keeping in mind what my father used to tell me: "If you can't afford it, don't buy it - and stop talking back to me, smartass."

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