Friday, October 30, 2009

Credit Card Fees

One of the silliest arguments against credit card reform(or for that matter reform in many related areas) is that if we ban practices such as charging huge fees for over-withdrawing a bank account or late fees for credit card payments these companies will have to charge everyone a yearly fee for the card or bank account. This is said as if it is some horrible thing that must be avoided.

This is exactly what we want though! Companies should be forced to charge customers based on the cost of doing business, not their ability to jump through silly hoops. If a company is making half its income off of silly fees, it is impossible for a potential customer to evaluate whether or not a product is worth buying. They only find the true cost after getting slapped by unexpected fees. This makes comparison shopping impossible, and interactions with the companies maddening. Far better are transparent interactions where a company says "I will sell you this, and it will cost you this"

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