Regulating credit cards issuance

A friend wrote in his newsaper column advocating that the Philippines should also have its own "credit card law" similar to what the US government recently did. The main arguments are that the banks that issue credit cards charge usurious rate to ordinary card holders when payment is late, and the banks create various "promos" to encourage more indebtedness from card holders.

We should go slow, if not stop, asking for another set of government intervention through another law regulating credit cards.

Nobody is coerced to have a credit card, it's a voluntary act on the individual to get one or not. Unlike taxes or SSS or PhilHealth or Pag-IBIG contributions, whether you like to join them or not, whether you will use those services later or not, whether you will migrate later or retire here, and even if the administrators of those government enterprises are among the most corrupt bureaucrats in this country, you, we, are coerced to contribute to those government programs.

The last time I held a credit card was about 12 or 15 years ago. It was convenient to have a credit card, but I felt it is more convenient to have no debt, to pay in cash. When you have no money, you don't buy, unless it's very important. In which case, you should have some savings for those emergencies, or you have a well-off sibling or friend who can lend you money in cases of emergencies.

When the "five-six" lenders charge usurious rates (usually 20 percent per month), other guys would call this as exploitation. But the five-six do what the traditional banks and financial institutions would never ever do. The latter for instance don't go to the debtors, the 5-6 lenders do. The bankers are not exposed to heat, pollution, foul smell in many public markets, hold-up, etc. in giving out the loans and in collecting the debt + interest, daily.

When the credit card issuers charge usurious rates (between 1.5 to 3.75 percent per month) for late payment, they are making big money from honest card holders, but they are also pushing the less-honest card holders to dishonor the debt and just "disappear" somewhere with piles of unpaid debt.

An irresponsible person who made lots of debts by say, buying expensive appliances via credit card even if his income is small, deserves the mental torture of being hounded by the banks and their lawyers. Why is this a problem or an issue? It's a non-issue for me. So why call in the State to come in and regulate the card issuers?

Besides, with only 6 million card holders out of 35 million Pinoys in the labor force, that's still a small percentage. Besides, I think actual card holders are only about 4 million as some people have 2 or more credit cards and hence, are counted twice or thrice or more as "separate" card holders. There is not enough competition among the banks that issue credit cards.

And should government come in to have another set of credit cards regulation, the legislation that will create such move will most likely create another new bureaucracy, maybe a "Credit Card Regulatory Authority (or Commission)". New bureaucracy, new bureaucrats with new offices and/or own building will mean new or higher taxes to finance the newly created bureaucracy, etc.