Give Me Some Credit (Or Maybe Don’t Give Me Some Credit)!

With the Credit Card Reform rules in place since 2010, it is clear over a decade later that it is still time to reform the way we view and use Credit Cards.

The much anticipated Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 went into effect on February 22, 2010. This long overdue reform was met with exuberant cheers, dancing in the streets and ticker tape parades. Okay, perhaps that was only in my house. Credit Card ownership has become a necessity in our culture. But how did the creation of something so good, turn into something so bad? Was it those naughty bankers who I suspect all strangely resemble the banker on the Monopoly board, or was it us? As much as I hate to admit it, it was us! For that reason I am proposing a Credit Card User Reform Bill.

To be fair, it is not entirely the consumer’s fault, The Credit Card companies certainly own their fair share of blame. Like the finest predators in the wild, they stalked our habits, smelled our weakness and pounced! The passing of the CARD has essentially fenced them off from us by creating provisions to protect us. The question now is whether we gratefully accept these protections, or continue to be our own worst enemy. CARD protects us from Universal Default while giving us sufficient time to pay the bill with no more double-cycle billing or fear of due date gimmicks. It also protects us from arbitrary rate increases, as well as gives timely notification when they do increase, and provides fair allocation of payments on accounts with different interest rates. Though possibly the best feature is found on the Credit Card statement itself. Each statement now clearly shows the consequences of only making the minimum payment with an eye opening estimate of the length of time needed to pay off your balance along with how much you would end up paying in interest!

With the Credit Card companies’ predatory practices restrained by CARD, it is now time to take responsibility for our own actions. We would not have been taken advantage of, if we had not been such easy victims. In order not to be a victim in the future, or rely on the Federal Government to step in to save ours hides, Credit Card holders must commit to the Credit Card User Reform Bill (CURB). CURB pledges to curb our impulses, curb our spending, and curb our mindset by agreeing to the following concessions:

I will not use my Credit Card like an ATM

Many consumers viewed their Credit Card like a giant piggy bank, filled by one of the Genie’s three wishes. A $10,000 credit limit somehow morphed into $10,000 of money just waiting to fulfill your every need, want and desire. This meant many consumers didn’t hold back their immediate gratification urges, whether it be a gym membership when they couldn’t zip their pants, morning cappuccinos that cost more than a 64-serving can of coffee, or a round of drinks for a full bar on Super bowl Sunday. Why not? It was our money right? Wrong. Exceedingly high credit limits give us a false sense of wealth which turns out to be one of the biggest factors in the demise of real wealth. This leads to debt you will be shackled to long after the T.V. is landfill and you can no longer tolerate coffee too late at night.

I will not use my Credit Card as a magic wand when I’m short on cash

As much as there is nothing better than watching Animal Planet on a big screen television, if you can’t pay for it, it can’t have it. I know this sounds cruel but this is the beginning of an indentured cycle that could last a life time. You see something you want, you buy it immediately, the bill comes in, you make the minimum payment….painless, right? Now, start at the beginning and repeat again, and again, and again. Soon, you will have absolutely no cash flow because what you used to have as cash now goes to the ever growing minimum payment. And do you know what you do when you don’t have cash? Precisely! And the cycle starts again.

I will not beat myself up for past behavior and use the Credit Card Reform as a way to educate myself and change my behaviors

What’s done is done. Credit Card Reform has helped us to regain a little bit of control over the once mysterious and ever changing world of Credit. It is now up to you to mindfully read their statements and increase your minimum payments in order to pay off the balance faster. You may want to set up small weekly drafts from a checking account to the Credit Card Company to achieve this in an even quicker and less painful way. It is also a good idea to contact your card carrier and decrease your account credit limit to an amount that wouldn’t drown you if maximized.

Are there good reasons to own and use a credit card? Absolutely! There are times that both owning and utilizing a credit card has greater benefits than using cash. Some of the ways that credit cards are indispensable are for making online purchases, booking travel reservations, building reward points, and having one on hand for true emergencies. But we cannot ignore our own natures or weaknesses. It takes consistency to turn a new behavior into a habit. If you cannot control your impulse to reach for your credit card at the mall, maybe you should try leaving it at home.

The Credit Card Accountability Responsibility and Disclosure Act of 2009 has given credit card owners a chance to feel more enabled in controlling their own credit card futures. The question now is whether we can exercise temperance and control over our urges. It is only a matter of time before the predators find their way out of their cages. And when they do, will we have adapted our behaviors in order to survive the next attack? If not, we only have ourselves to blame.

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