Thursday, December 30, 2010

John Stossel on consumer protection

John Stossel explains once again why we need to let the market function. The unintended consequences of "helping" the consumer.

Please Stop "Helping" Us
by John Stossel

Last year, Congress passed the Credit Card Accountability, Responsibility and Disclosure (CARD) Act. It was supposed to really end the alleged abuses perpetrated by the credit card companies. The law forbids some penalties and interest-rate increases on existing balances.

It is one of President Obama's proudest achievements.

"Enough's enough," he said. "It's time for strong, reliable protection for our consumers."

Reform, he said, would not come at the expense of honest businesses. "Unless your business model depends on cutting corners or bilking your customers, you've got nothing to fear."

Finally! Protection! A new bureaucracy will stop greedy credit card companies from unfairly penalizing you. And it won't threaten the credit business. Yippie!

How has it worked out?

Not so well. George Mason University Law Professor Todd Zywicki points out that the new restrictions hurt more consumers than they help.

1 comment:

Powell lucas said...

I have four credit cards. I use two. One has 19.9% interest rate but I get loyalty points. I use it for everything and pay it off at the end of each month. I keep the points. If I have a large expenditure like a vacation and don't want to tap my GICs to pay for it I still put it on this card. However, this is where my second card comes in. It charges me a 1% fee on balance transfers and usually 2.99% on outstanding balances. When they get competitive, they drop the APR to 1.99% or, in many cases they offer me 0% for 6 months. I still get the points from the first card, transfer at 1% to the second card for anything I don't pay off, and pay from 0% to a max of 2.99% APR on outstanding balances. It usually takes only a couple of months to pay off the outstanding balance and I don't have to touch my other savings. Minimum pain. If the government gets involved, I will lose this advantage which competition provides.

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