The Protectionist Plastic Police

Well, Obama’s gone and screwed the pooch again—this time, he signed into law several new rules for credit card companies to do business if they want to do business with credit cards.

Obama’s become Champion of the Financially-Impaired. Now he’s Money Man without the flowing cape and spandex tights—under his button-down shirts is a huge tattoo of a green dollar sign.

Because a relative handful of people (when compared to the rest of the population) can’t stop spending, and can’t seem to pay for what they bought, the rules of the game have changed to protect the imbecilic, such as:

• A set grace period time of 21 days

• An interest rate hike cannot occur unless the payment is at least 60 days late

• Credit card agreement changes must have a 45-day notice before they take effect

• No more over-the-limit fees, late payment charges, etc.

• No more charges for human tellers, phone payments, etc.

• No more double-cycle billing or retroactive interest (this one I agree with)

These new rules will apply to EVERYONE, whether paying on time and in full, or not. The effect this will have on everyone, for the sake of salvaging some sort of credit card profits, will include:

• No more free cards—an annual fee may come back into play for all card levels

• Teaser rates will become extinct, as will balance transfer offers

• Cash advances will either hike to double what they are now, or go extinct altogether

• Reward programs and cash-back cards will probably also become extinct, or at least come with more stringent qualifying terms

• More cards will come with variable rates rather than fixed ones

He’s effectively put time, spending, and payback limits on these people, and I guess I’m the only one who sees it.

For those of us who can still balance a checkbook on the ends of our noses, and are responsible with plastic, there are ways around these protectionist crackdowns:

• The rules don’t go into effect until something like October, so get free cards, make balance transfers, and take advantage of teaser rates while you still can.

• Use any rewards or cash-back programs while they’re still in effect, but be prepared to cash out if the programs are set to go under.

• Seek out new cards to replace old cards (while they’re still free) that have already opted for more stringent terms on their own, or have a soon-to-be expiring rewards or cash-back program.

• Keep your monthly charges to no more than 20% of your income—this will keep the red flags off your record, and keep the credit card companies from slating you for higher interest, agreement changes, lowered limits, or lower FICO scores.

• Pay the charges off in full every month. If you cannot, then only charge what you CAN afford to pay off each month.

• With the advent of electronic banking, credit card companies have shortened their grace period from 28 days to (soon to be) 21 days—with a floundering postal system that can’t support itself no matter how much money is thrown at it, I suggest you go to electronic banking, and if at all possible, get a credit card at the same bank. Why? Because the bank just has to transfer money from you to it, and doesn’t need 21 days to do it—this saves you time, allows your money to earn interest for 19 days, and avoids all those nickel-and-dime fees.

Better yet, set up a recurring payment plan so the bank will automatically get money every month, reliably. You get an electronic statement before the bill is due, so all you’d have to do is change the amount owed, not the payment date. Another thought: set a specific amount, and use that as your credit card budget each month. If the payment amount is more than the amount actually owed, you have “credit” on your card.

Let the Money Man protectionist police set limits for out-of-control spenders—you now have loopholes to avoid the credit crackdown that you were never responsible for, and shouldn’t apply to you. Some of us CAN be more equal than others, despite the “fairness and equality” doctrine of the current administration.

Because of this new set of regulations, Obama has created the unintended consequence of making credit less available to those he’s trying to protect and serve. Less credit available means less shopping and spending, and less economic activity…which will lead to no economic recovery on the part of irresponsible shopping-and-spending masses. They’ll be forced to spend less, which is fine by me—the only real ways we’re going to get out of this mess is through production and savings.

Unfortunately, by cutting off credit to poor people, it only servers to broaden the gap between rich and poor, which Obama was trying to bridge by knocking us ALL down a few pegs with outrageous tax-and-spend bailout programs, coupled with various vote-buying projects. However, since the government now owns most of the banks…well, you know how this is going to end!

Fortunately for some of us, being knocked down a few pegs doesn’t exactly make us poor—probably because we already save and are responsible with money and credit.