The Byzantine complexity of credit card pricing structures makes it impossible for people to possibly use credit cards intelligently and responsibly. No amount of increased Truth-in-Lending disclosure or consumer financial literacy education will change this.
That's a quote from Adam Levitin's op-ed article on December 27:
Chicago Tribune: "Complex pricing of credit cards should be simplified."
I don't know about you guys, but I love being told that I'm not smart enough to use credit cards "intelligently and responsibly." Those of you who, like me, have used credit-card arbitrage to make yourself a few bucks on the side ... well, you should feel damn lucky.
...frequently I cannot calculate with certainty the costs of carrying a credit card balance, and my calls to card issuers' 800-number servicing lines have done nothing to clarify matters.
Here — let me calculate the costs of carrying a card balance for you: You take the Daily Periodic Rate, multiply it by your Average Daily Balance, and divide it all by the total of IT'S JUST FREAKIN' EXPENSIVE!
Which is Exhibit A in my case of REASONS TO NOT CARRY A BALANCE.
The lack of straightforward, easily comparable and understandable pricing is a major factor in the growth of credit card debt.
Oh, I dunno. I would prefer to point to the fact that people seem fairly incapable of not spending money they don't have.
So am I a mean-spirited hardliner, ranting against any sort of credit-card pricing reform? Nope. If reform happens, that's fine. But I constantly hear Elizabeth Warren of Two-Income Trap fame pointing out that card companies are the only ones that can change the terms of their customers' contracts whenever they feel the need. Rather than deride such "evil" and "greedy" and "malicious" practices, I'd rather focus on how it's another glowing reason to NOT CARRY CREDIT-CARD DEBT. Who cares what they do with their endless contracts if you don't owe them money?
At some point, consumers have to be responsible for their own shaky decisions.
Now, if you're one of those souls who can't be bothered to reconcile your checking account before spending money from it, then yeah, I imagine the credit-card small print pretty much abuses you. And if you can find yourself a free five minutes or so, you might just want to write Mr. Levitin a letter. Let him know you read his article.
And that you sure do appreciate being coddled.
Labels: Credit Cards, Debt
