Could Credit Card Squeeze Help Consumers?

Wilkenson.jpg News reports of tough times in the financial industry tell of credit card customers getting the squeeze in advance of the start next February of the new credit card protection act,  Whether through higher interest rates, lowered credit limits or increased fees, credit card companies seem determined to do their damnedest to bleed consumers dry before some restrictions are placed on them.

I wonder, though, if this might be a good thing?  Several people I’ve spoken to muse that they hope the recession that we’re now mucking through will be enough to change people’s high-spending ways and consumerist habits.  I’ve been skeptical that the lessons will be learned or, at the very least, will last very long once the economy begins to rebound.

However, if credit cards companies keep tightening the screws, it might become so unpleasant and so painful to pay by credit card that many consumers may once again learn the habit of paying cash and only buying what they have the money to pay for.  It seems to me that that, more than anything, would help us turn the corner on our instant gratification, buy-cheap-crap-now-so-we-can-throw-it-away-later, IKEA/Wal-Mart mentality towards life.



0 thoughts on “Could Credit Card Squeeze Help Consumers?

  1. Hmmm… I think the best way to go is start using debit cards and avoid credit unless there is an emergency or you need to get something real quick but don’t have the money needed.

  2. I’m with you- I don’t really see any lasting changes in the use of credit cards. It’s hard as hell to say no to the plastic devil sometimes, and I’m at the point now to where I don’t even carry my card around- I keep it locked in a box in my bedroom. Locked away from myself. I’m almost done paying it off, and I don’t want to ever see it near maximum again.

  3. I’ve stopped using credit cards altogether; and only use a debit card or cash now. In fact, I rarely even use the debit card now; most transactions I use cash. I think this is a good thing to do in general, because it allows you to “see” the money being spent. It’s easier to swipe a card and pay $1000 for something than to actually have to take 10 $100 bills out of your wallet and watch it go.

  4. Sadly, I’m not sure that screws being tightened are going to help anyone. There are still going to be people that spend beyond their means no matter the consequences. I think that credit cards can be a good thing. For instance, since I work in a big city, I don’t want to carry a lot of cash on me because I’m afraid of losing it and I suppose there’s always the chance that I could be robbed (although I don’t fear it that much).  I use my credit card in this case because it is much easier to replace a lost/stolen credit card rather than lost/stolen cash. I have never, ever carried a balance on my credit card. I live within my means. I wish others would learn to do the same…

  5. I doubt this recession will suddenly reverse a trend that’s been building up since the 1980s. I mean, the gentile poverty mindset gave way to the let’s flash some cash (borrowed) / bling bling lifestyle. The level of competition / catching up with the “Joneses” is too strong a pull to all of a sudden expect society to become frugal and live within (below would be a stretch).I’m just happy I was raised to save money vs. spending it like crazy but it’s not easy given all the pressure to be like everyone else out there.

  6. @chow@ireallylikefood – Very true.  A few months ago after we had a game night at our house, I wrote that the new Monopoly version that is being sold has debit cards instead of cash and a little “ATM” type machine that you use to debit or transfer value between players’ cards.  I mused that this was going to be one less opportunity for children to learn the value of cash and managing their money well.@TheLatinObserver – It is all about the Joneses, isn’t it?@TheCheshireGrins – @secade – Good points.  While I now live debt-free, in the years just out of college I managed to build up quite a lot of credit card debt.  Memories of the way that felt are enough to keep me very fearful of any type of debt.@Dezinerdreams – And that is exactly the type of situations that start digging the whole from which it is difficult to extract yourself.@yang1815 – You a rapper now?

  7. I just heard that on the ABC news tonight. I had never used a credit card in India, and many people still do not use it there. I agree with you , that perhaps paying cash or writing checks for the amount that you have spent is probably the better option. I know carrying too much cash is a pain, but if one is shopping locally, you can always write a check. I have written checke even out of state; all I have to do is show my license and give my phone number.

  8. I really doubt that anything will change. Some people really have a crazy mental illness where they just can’t help but to shop. Do you get the show “Till Debt Do Us Part”? It’s this crazy show where a woman helps these people get a hold of their finances. It’s really scary to see how much these people spend per month!!!

  9. Chris, it is a very worrisome dilemma. Without consumer spending and the credit that drives it there will be an even worse jobless rate here which will make this recession last even longer. This trend actually started after WWII when the GI’s returned to a booming post war economy. Consumer spending supported factories which were retooled after the war to make the goods the new families needed which supported manufacturing jobs which fueled spending and housing, which stimulated manufacturing and added jobs… etc. See the trouble here? No easy remedy here.

  10. I’ve seen so many friends abuse their credit cards during college, thinking that it would be so easy to pay it off once they graduate and get a high paying job. And now a lot of them are in debt and are struggling because of how hard it is to actually find a job at all. So I do think this recession will scare people away from excessive credit card spending.

  11. I’ve never, ever  carried a balance on my credit card. I also won’t use one that charges a service or monthly fee just to have it. I do like my check book. But the family wants me to use the debit card – but it is so hard to keep track of the balance spent… Since I’m frugal (yes I do sometimes pinch the pennies until they scream) I’ve never had any issues about buying more than I can pay for! I’m happy to say we paid off our mortgage in about 9 years (I just HATE being in debt) and only buy cars when we can pay the total in cash. So the resession is business as usual for us.

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