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Guns, Booze, Kids, and Credit Cards

Imagine for a moment that you’re an 18-year-old US citizen.  By law, you can:

  • buy a gun
  • get married
  • have kids
  • join the military
  • go to war

You cannot:

  • buy a beer
  • get a credit card

That latest entry is a new one.  It’s one of the not-very-publicized sections of the credit card reform act that sailed through the house today, 361-64.  When the law goes into effect, the average young adult, having reached the age of majority, will not be legally permitted to get a credit card.  But it will be perfectly OK for him/her to have a few children while they wait for their application to clear!

There’s a lot to hate about the credit card reform bill, but this particular section has a special place in my heart.  It’s an unambiguous example of the dumbing of America.  Can’t pay your bills on time?  Don’t worry, the government will help you.  You’re entering into agreements that you can’t fulfill? Uncle Sam will make the bad men go away.  You want to be treated like a child? OK, your nanny-state will protect you from your own free will.

I’m not the only one who thinks that a credit card engenders less responsibility than a gun or a child.  Maybe we should start our own political party.   I can’t think of a name, but I have a slogan: “The Party for Adults.”


Comment from Jason Butler
Time: May 21, 2009, 7:41 am

I agree with you that the age thing is pretty dumb.

I do see the benefits of most of the rest of the law, though. As a company or an industry, you need to screw up pretty bad to draw the wrath of the people through their representatives.

Here’s a fun paragraph from a somewhat-over-the-top screed.

“What I’d like to see — by which I mean what it seems to me ought to happen, the thing that would seem just — would be for [Credit Card lobbyist] Yingling to experience a bit of instant karma. I want him to get a bill in the mail that, unexpectedly, requires a payment 50 percent higher than it reasonably should be, and 30 percent higher than he can manage to pay without defaulting on something else. Then I want to see him hit with penalties for missing this payment, and penalty rates on top of that and fees and charges on those in turn. And as he protests that this isn’t fair, that they’re changing the rules, I want his protests to be met with disdainful disapproval of his reckless irresponsibility and with the bland, bureaucratic reassurance that everything that is happening to him — as he loses his home, his car, his job, his ability to sleep — is perfectly legal and appropriate. I want him to experience and to absorb the powerlessness of that situation, his utter impotence to escape the vortex of rapidly and massively compounding interest and ever shifting rules and penalties. And then, at his lowest point in all of this, I want him to experience the full weight of society’s condemnation — the full force of the idea that his sudden, relentless and inescapable poverty can only mean he deserves it.”

Sometimes over-the-top can contain some truth, though. (Note, pointing, not necessarily endorsing)

Comment from Annie LaCourt
Time: May 21, 2009, 8:37 am

Yes. I agree especially about the beer part. But when I was 18 I couldn’t get a credit card NOT because it was against the law but because no bank would give a college student without a job a card. And guess what? I learned to live on a budget because I had to pay for everything I did with the money I had. So what changed? Regulations that used to limit the amount of interest a bank could charge on a credit card were lifted and banks started handing out cards like candy to people who were clearly a greater credit risk. This is bad for business, bad for the folks who clearly getting credit they can’t pay back and bad for our savings rate and contributes to the Chinese holding more of our debt. We don’t need to make it illegal for a credit card company to give a card to an 18 year old. We just need to make illegal for them to charge more than 10% interest. Then they won’t give cards out to folks who are a risk knowing that they will get and can handle a certain number of bankruptcies based on the interest rate charged. I know that may still seem like the nanny state BUT at some point the community had an interest in protecting its communal financial health just as it has an interest in keeping us from shooting each other randomly. Not to seem like too much of a religious nut but there is a relevant biblical passage here: Leviticus 19. One should never put a stumbling block before the blind and businessmen should always have HONEST weights and measures.

Comment from Josh
Time: May 21, 2009, 10:06 am

If you haven’t, check out the quick Dan Ariely TED talk on decisionmaking:

We like to think we’re rational adults, full of free will and gumption, but in the real world people are wired to choose irrationally.

Knowing the research on this, businesses have become scary good at framing our decisions for us. Credit card and telecoms are the worst offenders, and among the most profitable industries as a result.

Comment from dunster
Time: May 21, 2009, 11:29 pm

Jason: I hear you. You’re successfully making the argument that the bill isn’t 100% crap. Still, it smells like crap, and I can find crap when I look into it.

Annie: You were doing well until you whipped out Leviticus. Leviticus also has some opinions on gays and shellfish – sort of destroys the credibility. Also, see my note to Jason above.

Josh: I’d read the guy’s work before (particularly as it related to tolls and cash and Fastlane transponders), but I hadn’t seen the TED talk. Done. I note that his examples also included a way to reason your way out of it. When you use your head, when someone explains the trick, you can make the rational decision anyway. Even if I concede your point, that we need the government to protect us from mind-altering marketing promotions, I want to know which is worse: the disease or the cure? If we let the government choose which products go to market, where will it stop? Only when the lobbyists run out of money.

Comment from Michael Ruderman
Time: May 22, 2009, 10:08 am

There’s no logic to the age of majority/age of empowerment decisions in our polity, except to recognize that most threshholds were rolled back to 18 years of age in the 1970s, and certain perceived outrages have been addressed politically by returning to age 21 for specified privileges.

I grew up in Massachusetts. I was “legal” to purchase and consume alcohol (outside the home) at 18, illegal at 19, legal again at 20. It made no difference to my age cohort. Our upbringing-_id_est_, parents and family life-were between one and two orders of magnitude more significant in shaping our behavior regarding alcohol.

The credit industry says all the scummiest terms are right there in the contract, but they’ve done an effective job of hiding them in plain sight. Their standard of informed consent runs counter to the common understanding. Since we employ law to protect those who cannot understand the consequences of their actions (children, the mentally infirm, drunks, bankrupts), the credit industry will be punished.

It’s facile to revise the age of (presumed informed) consent, but I’d prefer to see better regs for how credit cards are marketed. Make the disclosures stand out as plainly as they must in home financing: “Miss one payment due date and your interest rate increases from X% to anything up to and including Z%. Miss two payments and we put your debt in collection, and if we hold a mortgage on your house we’ll start to foreclose that as well” (cf. presumed default on cross-collateralization in your fine print).

Comment from Annie LaCourt
Time: May 22, 2009, 11:08 am

mmm. That is the parsha BEFORE the holiness code I think. I see the bible as the first work of moral philosophy written by men NOT the received word of G-d. That aside, the leap I was making is that we have known for a long time that it’s wrong to put temptation in people’s way. Most people assume that a credit card company is giving them credit because they believe that they will be able to handle it when in fact the banks have built the idea that they will assist in driving a certain number of people into bankruptcy into their business model. This is what should not be allowed. I haven’t read the bill but I assume that, as usual, it gets part of this right and part of it wrong.