The government – and this goes for all governments – should certainly regulate the credit card industry. One good excuse for doing so would be the chronic personal and business debt that people find themselves in. Chronic debt accounts for chronic health conditions, including, deep depression, lack of sleep, acute stress, heart attacks and even suicides.
Obviously, as one can instantly see, this is a time bomb of monumental proportions. With the economy at its lowest ebb ever and austerity measures being applied by western governments to try and gain back control of their faltering economies, no country can ill-afford the payments they would have to make toward the unemployed caused by ill health due to chronic debt.
The health of the nation is literally in the hands of the credit card industries who issue out cards like confetti to those who apply for them. Of course, it is all very well applying and receiving a card, but when the credit card bills begin to come in can you really afford to pay?
There are many people who see credit cards as ‘free money’. This is especially the case with young adults who like to spend, but forget that the credit card bill must be paid on, or before the due date. Very rarely do they read the small print upon the contract – mainly to see if there are any other hidden charges that are applied.
And so the debt from credit cards continues to go up, while people worry in trying to meet their credit card bill. This is were the government should be stronger in acting. Legislation should be written – in which governments can take control of credit cards and force them to abide by the rules that they set out.
The standard rate of pay would remain fixed – and affordable to those who happen to be out of work. Credit cards issued by the government would depend on how much a person had paid into the system whilst he or she was employed. So, the money that one could theoretically ask for would be the money that one has paid into the system through taxes and national insurance.
The credit card industry has been in need of regulating for years. It has become not unlike a huge spider’s web, in which we – the flies- are constantly caught and snatched by the industry. Huge personal debts have built up, caused by the way we use credit cards for our own ends.
The banks and credit card industries knew this, but continued to lend money to those who were already deep in trouble – as far as credit card debt is concerned. This resulted in the loss of homes, [as some debt was secured on properties such as the home] the loss of health, through worry and stress over none payment of credit card bills. And last but certainly not least, suicide.
Government has given the credit card industries ‘free reign’ in how they acted toward customers and potential customers. Of course, it can be said that any industry has a right and a duty to claim back money from credit card holders that is not being paid back to them. And that customers knew full well, what they were letting themselves in for when applying for a credit card.
The responsibility lies with the applicant. But the responsibility also lies with the credit card companies in the way that they issue out cards – especially to people who are already in serious debt. This is something that the government should have taken control off a long time ago. And this is why legislation should be brought about. Legislation that enables the government to control credit card companies in the way that they behave toward their customers and small businesses.
It is only through legislation, and a change in the law by government, forcing credit card companies to comply with the law, that debt can be brought down and controlled. Credit card companies should be punished heavily if they act in a way that undermines the industry as a whole. As well as any one person is responsible for their own debt that they have accrued, it is also the responsibility of financial industries, such as the credit card industry, to behave in a professional manner.
However, the government has to be very careful that it is not seen as simply stifling financial growth and business by regulating the way the industry acts. So, it becomes a fine balancing act between, encouraging lending, and, at the same time, regulating the industry to make sure they stay within the rules of the game.
It is said that regulation of the industry by the government would hurt small businesses. What this means is that the industry would find it harder to remain competitive and flexible. That they would not be able to offer rates and terms that would best suit their customers.
And this is the balancing act that governments are faced with. We all know that the credit card industry needs regulating, as much as small businesses may complain about government stifling financial growth. Chronic debt has to be brought under control once and for all, and the only way this can be achieved, is through government legislation and regulation of the financial sector.
The behaviour of the industry needs regulating, simply because too many small businesses, and personal customers, have seen their [APR] Annual Percentage Rates rise without warning. They have seen the limits imposed on their credit cut without warning, and they have seen their credit cards closed by the company that issued them – again, without warning.
Small businesses and customers would be very happy indeed to see some kind of government regulation on the credit card industry, to stop such practices from happening again. And many small businesses, and personal customers believe that the credit card industry should be held accountable for the way they treat their trade – which is small business and personal customers.
There are merchants who support regulating the interchange fee, because, simply, they are the ones that pay them. They do not understand, and have not been able to understand, why such fees are collected by Mastercard, Visa, American Express, and why merchants do not have the means to be able to fight such fees.
Credit card companies have to make a living, but they constantly agree to raise interchange fees – seemingly – at a moments notice. This is wrong, and this is one of the reasons as to why regulation should be brought about by the government.
Regulating the credit card industry