by C Tanner

Created on: October 11, 2009   Last Updated: October 12, 2009

With recent bank failures in the absence of appropriate government regulations and monitoring should be proof enough that the government should step in, to some degree, and regulate the credit card industry. Although it is the individuals responsibility to maintain their credit worthiness by using their credit cards responsibly and managing their own debt, for years banks have been issuing credit cards without limit and with little regard for the individual's true ability to pay.

No, we do not have apply for credit cards, but banks have made it too easy to rack up the debt by offering deals that most consumers just can't afford to pass up. 0% financing for purchases and balance transfers open the door for the consumer to transfer one balance to another card and free up the credit use of the card they just paid off and/or giving them the green-light to go out and purchase a high ticket item taking advantage of the low interest rate offered for new purchases. The temptation to use credit when your cash flow is limited is almost impossible for average consumer to avoid.

Banks have proved in recent history that they are willing to loan money to consumers who truly did not exhibit the ability to pay their debt in the long term. The sole purpose of the banks offerings are to acquire more accounts with the intent of making their profit from high interest rates that magically appear on your statement after a few short months and the ability to charge enormous late fees when your payment is merely ONE DAY late, not mention the unfortunate event that your account exceeds its limit...and get this...you went over your limit because you paid your bill ONE DAY late, were charged a $39.00 late fee, the interest was added for that month AND you were charged another $39.00 fee for exceeding your limit. Can credit cards legally do this? Yes they can and it is stipulated in the fine print of the terms and conditions that very few consumers actually read.

But just because they've satisfied their responsibility to disclose it does not mean that they should actually continue this practice. Consumer debt to credit card companies would actually be dramatically reduced if the government regulated the credit card company's practices of apply higher interest rates, late fees and over limit fees. It's a fact that the banks are now in a position where they need to charge these fees, not to recover bad debts, but to recover their losses generated from other poor decisions they've made.

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