Could Congress Cripple the Credit Card Industry?

[Apoptosis]

Could Congress Cripple the Credit Card Industry?
Proposed Price Controls Could Threaten Consumers and Small Banks

Washington, D.C., May 14, 2008—Thursday morning, the U.S. House Judiciary Antitrust Task Force will consider a bill that could have a major impact on the credit card industry. The task force is scheduled to hold a hearing on the Credit Card Fair Fee Act of 2008 (H.R. 5546), introduced two months ago by House Judiciary Committee Chairman John Conyers (D-MI) and Rep. Chris Cannon (R-UT).

The proposed legislation would effectively cap interchange fees, the prices that banks charge retailers for processing credit card transactions. The Conyers-Cannon bill would empower a three-judge panel to set the price of interchange fees to match the rates that would prevail in a mythical “perfectly competitive” marketplace.

“Supporters of the bill claim that credit card companies have excessive market power and are thus able to exert undue influence over interchange fees,” said Center for Entrepreneurship Director John Berlau. “In reality, the credit card marketplace is highly competitive, with four major players and several smaller entrants, along with emerging online payment services like PayPal.”

Interchange fee price controls will hurt U.S. consumers just as capping fees harmed consumers in Australia. When the Reserve Bank of Australia capped interchange fees in 2006, consumers suffered the most: annual cardholder fees increased and rewards programs shrank, but retail prices did not decrease as promised, according to a recent report by the consulting firm CRA International.

“Accepting plastic is a retailer’s choice; some merchants choose to accept credit cards as payment, while others do not,” said Research Associate Ryan Radia. “Interchange fees, along with the costs of handling cash, are one of many factors that retailers consider in selecting payment options for customers. Unless Congress wants to turn a thriving marketplace into a dysfunctional one, lawmakers would be wise to reject Conyers-Cannon price controls.”

CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government. For more information about CEI, please visit our website at www.cei.org.

[HôS]

Much thanks for posting that , Apoptosis .
I had not heard anything about this .
At the moment , I'm just working to get my credit debt squared away .
As I pay off a card , it goes into a lock box . I lock the little lock box in a custom built safe in my closet (I hold the only key to the safe) ,
and a significant other holds the key to the lock box itself .
This way , if using a card is the only choice , it takes the two of us to get to it , thus avoiding any temptation that may pop up from time to time on either of our parts .
Canceling the cards isn't an option , as that goes as a mark against your credit , so locking them away with this two stage process seemed the best thing to do .
Don't want to cut them up either , in the event they are absolutely needed (emergencies only) .