No Runny Eggs

The repository of one hard-boiled egg from the south suburbs of Milwaukee, Wisconsin (and the occassional guest-blogger). The ramblings within may or may not offend, shock and awe you, but they are what I (or my guest-bloggers) think.

I’m From the Government, I’m Here to Help!

by @ 5:26 on August 21, 2009. Filed under Economy, Miscellaneous.

So you think greater government regulation will help bring down pricing in health care?  If what we are about to experience with the repercussions of their decision to force “change” in the credit card industry is any indication, you may want to think again.

Newsmax has this articledocumenting the changes that credit card companies are now putting into place in anticipation of new government regulation which began yesterday.  While reading through these changes, remember that the new regulations on credit cards were ostensibly implemented to make the various credit card agreements more transparent and easier to understand and to impose restrictions so that credit card companies are less able to uniquely address high risk accounts. 

Amongst the changes being implemented:

Citi, for example, is in the process of informing some cardholders that it will institute an annual fee, about $30, on certain accounts.

That will help those who can’t pay….fewer of them will be able to get/afford a card at all!

And American Express Co. recently sent out notice it will eliminate over-the-limit fees on its consumer credit cards in October. They were dropped in response to a provision in that law that, starting in February, requires card companies to offer a way for customers to agree to pay each time a transaction triggers such a fee.

That’s good news for the over charger, until you see this:

the interest rate on her card will jump to 10.24 percent from 6.99 percent. If she makes any late payments, the rate will shoot up to 27.24 percent.

Citi and American Express aren’t alone:

American Express and Citi are not unique. A survey by the Pew Charitable Trusts of nearly 400 credit cards offered by the 12 largest issuers in the country found that rates have gone up on average 2 percent since December.

Yeah, consumers may find it easier to read their contracts but credit card companies aren’t going to give up the margins they’ve enjoyed.  By removing the ability for credit card companies to selectively deal with higher risk accounts the new government regulations have created market conditions that have the credit card companies increasing costs to all consumers.

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