Thursday, March 20, 2008
Marketing of Credit Has to ChangeWhen it comes to alcohol and credit financing, overindulgence can be sickening.
While the current recession and mortgage crisis are reported in depth, what is not getting enough attention is the role of credit cards and how easy it is for Americans to obtain credit and spiral into debt that is now undermining our economy.
New rules regarding the marketing of credit cards and regulations in credit policies could be reality in the near future.
Everyone is blaming the mortgage lenders, but the credit card industry is equally to blame. People need look no further than their mailboxes for a bevy of credit cards with predatory interest rates. As people get in over their heads with debt from their homes and personal spending, credit continues to be available, but at higher rates of interest.
And if people miss a payment, the interest rates can double to more than 30 percent, which makes it nearly impossible for many people to make a dent in the principal due on their balances. This results in foreclosures.
In the U.S., adults are owned by and average of five credit cards each while in most of the world, less than half of the population and in many cases less than 1 in 10 have a single credit card.
If we want to avoid future credit crunches, credit card addicts should be cut off from their "dealers" more quickly. A maximum interest rate -- say 20 percent -- would go further in avoiding bankruptcies and foreclosure than the rules that are being changed regarding sub prime mortgages.
By John Gartner at 09:02 AM | Comments (0)