Last week I shared with you information about the new Credit Card Bill of Rights. This is important legislation, as it impacts so many Americans. I just saw a statistic that nearly 144 million Americans have general-purpose credit cards. The average American owns 8 different credit cards!
In thinking about credit card reform, it struck me: If lawmakers respect a consumer’s choice to enter into credit card debt to solve a cash flow problem- why are they trying to limit access to a cash advance?
I would argue that cash advances are more commonly used for necessities, while credit card debt often accounts for luxuries. I have never heard from a Consumer Rights Coalition member who has used a cash advance or pawn loan for a vacation, theater tickets, or a five-star meal. Yet, these are some of the expenses reflected on many credit cards accounts that are in default or part of a bankruptcy case.
The facts are also clear that consumers who use cash advance products know clearly the costs of such loans. There is no fine print, no adjusting rates in the middle of the loan, it is typically $12 – $15 for each hundred borrowed.
Informed consumers choose cash advances, pawn loans, on-line loans, and other options to meet their household financial needs. They have done their homework and chosen short-term credit products because it was the right choice for them, just like millions of Americans have turned to credit cards as a financial option.
It is not my place, nor is it the government’s, to decide which financial option is best. But, that is exactly what lawmakers would be doing by taking one of those options away.
“Every segment of our population and every individual has the right to expect from his government a fair deal.” - Harry S. Truman
