Credit Controls Punish Responsible

The following article originally was published on May 24, 2009, by Colorado Daily.

Udall’s credit controls punish the responsible

by Ari Armstrong

Didn’t Sen. Mark Udall’s mama ever teach him to read contracts before signing them?

If he had learned that lesson, he wouldn’t impose new federal controls on credit cards — controls that would punish the responsible and the poor in order to reward irresponsible whiners.

Nobody is forcing you to get a credit card. If you don’t like the terms that a credit card offers, you are perfectly free to reject them.

Michael Riley writes in the Denver Post that Udall “hatched the idea in 2005 after watching a staff member’s experience with a credit-card company that boosted his interest rate to 21 percent even though he had never missed a payment.”

If you sign up for a credit card that tells you it will raise your rate whenever it wants, then why are you complaining when the company does exactly what it said it was going to do to you?

If you don’t like the deal, then pay off the card and cancel it.

What if you’re not able to pay off your card or transfer your balance elsewhere? If you can’t handle your balance, then don’t charge it in the first place.

The new controls will have two main effects. They will ensure that the young and the poor have less access to credit. And they will make it harder for responsible cardholders to negotiate good terms.

An Associated Press article summarizes the key provisions of the Senate bill. It would force credit card companies to lower rates even for people who miss payments, increasing rates for the rest of us.

It would require a “45 days notice before rates are increased,” making it harder for credit cards to lower rates for others. It “requires anyone under 21 to prove that they can repay the money before being given a card,” making it harder for young adults to build their credit.

Additional Federal Reserve controls would limit “excessive fees” charged to “people with bad credit,” limiting their ability to rebuild credit.

For a few years, my wife and I got in over our heads and faced high balances and interest charges. We made a budget, controlled our spending and steadily paid off our debts. The more debt we paid off, the better the credit terms we could negotiate.

Today credit card companies pay us to use their cards. Our American Express card charges an insanely high interest rate on balances — which is why we never carry a balance on that card. The card also pays cash back for purchases and offers free monthly interest when we pay in full.

We carry about $6,000 on a Chase MasterCard at guaranteed 0 percent interest forever (provided we make all our payments). Counting inflation, the credit card company effectively pays us to keep the balance.

Of course, if you bury high-interest charges beneath a no-interest balance, it’s not such a good deal — which is why we don’t do that.

We worked hard to earn good credit terms, and now Udall wants to punish us to buy the votes of the whiner demographic.

Udall’s scheme flows from one fundamental premise: You’re just too stupid to live your own life without the “help” of federal politicians.

Unfortunately, those who push for political control over their lives would drag the rest of us down with them.

Ari Armstrong, a guest writer for the Independence Institute, is the author of “Values of Harry Potter” and the publisher of

2 thoughts on “Credit Controls Punish Responsible

  1. Anthony

    “Did you know the government just made it illegal for credit card companies to give a lower interest rate to people who make their payments on time?”

    Actually, I tried that argument on one of my liberal acquaintances and he settled on the assertion that credit card executives should have their fancy cars taken away and we should give the low interest rates to everyone.

  2. Elisheva Hannah Levin

    Hear, Hear!

    I never had a credit card until I was in the position to pay the balance every month. We pay $25/year for the convenience of using plastic. We never pay interest because we still adhere to a budget and pay our balance in full every month. We get airline miles, so, like you–I think we are coming out ahead on the deal.

    There’s an easy solution to the “credit card” problem. Don’t own one unless you can read and do math and have the discipline to stick to a budget.

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