Should Credit Card Debt be Illegal?
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With all of the government intervention taking place in this financial meltdown, perhaps it’s time to start looking at making credit card debt illegal. It’s true that credit has played a huge role in the growth of our economy and economies around the world and it helps finance the gaps in everyday life for both families and business, but has the debt load gotten out of hand? It might not be a bad idea to put a government limit on the amount of debt, specifically credit card debt, that any one individual can access.
On any given day you can walk down to your mailbox and find a small rainforest of solicitation mail for credit card offers; they range from 0% to pre-approved high dollar amount limits. This seemingly unlimited access to credit has found many American’s finding themselves behind a growing mountain of debt. Once that debt has accumulated it can become very difficult and overwhelming to pay down the balance, if not impossible. If someone is carrying $30,000 in credit card debt you have to ask yourself how will they ever get it paid off and also how did they get to that point in the first place? We all know many people live well beyond their means and buy, buy, buy but then there are people who are simply trying to keep up with the rising cost of gas and groceries. With consumer prices going up dramatically over the past few years and wages lacking to keep up, it’s no wonder that many times these expenses are resorted to a high interest credit card. Before you know it you find yourself in a large financial hole. I’ve recently heard multiple stories of friends and family having their credit limits reduced and in some cases having credit cards closed due to inactivity. Clearly there is a concern that we’ve become too dependent on credit, but is it enough to simply leave responsible lending up to large financial companies?
Are credit card companies setting the table for a recipe of disaster? It might be time that we put a government limit to the amount of credit card debt anyone person is allowed to carry. Maybe that number is a flat limit of say $20k or perhaps we limit it to a percentage of documented annual income. There’s no doubt that the conveniences of swiping a card are numerous such as booking hotel rooms, rental cars and eliminating the need for carrying a large wad of cash, so an outright ban probably isn’t a viable option. Maybe it’s time that we make it illegal for consumers and credit card companies alike to over extend credit leaving consumers with no choice but to pass on that next impulse purchase?
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10 Comments on this post
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AverageGal said:
It’s probably not a bad idea to put a limit on the amount of credit card debt people are allowed to rack up. It might help keep people from getting in over their head!
October 10th, 2008 at 8:18 pm -
Tim Ramsey said:
I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.
Tim Ramsey
October 10th, 2008 at 9:01 pm -
Alberto said:
I have actually been thinking about this exact same thing myself.
However, it’s hard to actually put a cap on debt, because even though some people may rack up huge debts, their bank accounts may have even more money to pay off those debts instantly. And if not, they may have assets tied up elsewhere that they can liquify and use to pay off their debts.
The only thing I can think of is to put greater regulations on credit lenders. This means freezing purchases more frequently as credit card debt accumulates. It would be highly inconvenient for most of course, but I just don’t see any other way at this time.
October 10th, 2008 at 9:02 pm -
Justin said:
I agree it would be difficult to cap debt on credit cards without knowing what kind of assets are behind the actual PG that is using the card. However I would state that credit cards have been a relatively new phenomenon, with respect to the dependency the average consumer has on them.
I think that we need to get back into a more cash base mentality.October 10th, 2008 at 10:09 pm -
Todd said:
Hey, nicely designed site. I’ll be back.
October 10th, 2008 at 10:25 pm -
VeRonda said:
OMG! You’re so on point here. Credit debt is the worse and some just don’t seem to learn from previous mistakes… I tell you, we try not to charge anything AND if we do, it is paid off by the end of the month. I had to learn that the hard way, though. Which is probably the case for most, unless of course, you’re taught differently as a child. It’s a crazy cycle and if you don’t get out of it early, you definitely pay for it later, big time. Thanks for sharing this!
October 10th, 2008 at 10:34 pm -
Carolyn said:
I think there should actually be a cap on the percentage rate that these companies charge, more than on the actual cap on some credit that people receive. If maybe they could work with a percentage rate of only around 5% to 9% percentage rate, that would help out I think so much. They could actually get their debt cleared away sooner and the money wouldn’t just be going for profit for the banks.
December 2nd, 2008 at 11:20 pm -
George said:
Now, it is the time to make the use of credit cards illegal. Credit cards destroy lives and they can put people like me in a trap for the rest of your life. Credits are nothing, but legal frauds. Please make credit cards illegal, now.
September 14th, 2009 at 9:55 am
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