By Ross Kentner
At a time when the federal government is spending hundreds of millions to shore up the domestic auto industry and printing money to create jobs, it is also looking for ways to prevent people from falling through the cracks. As always, an ounce of prevention is worth a pound of cure.
Let me remind you that one of our economic problems is the average family+?G??G??s credit card debt. And while it is people who chalk up this debt it is the credit card companies that issue far more cards and far more credit than makes sense even in the best of times. One of the best ways to protect consumers then, would be an alternative which fortunately we have. It+?G??G??s called the "debit card." While it is also plastic, there the similarity ends. When your credit card is swiped, you+?G??G??ve borrowed and start paying interest on our purchase. When your debit card is swiped, you+?G??G??ve paid for your purchase with money in your bank account or from a pre-approved line of credit with the bank. Unfortunately, VISA and MasterCard are planning to enter the debit card business. At the moment Interac provides this service on a non-profit basis. Retailers, who pay credit card companies a fat cut for each transaction, pay only a nominal fee to Interac to cover the cost of the terminal.
I see two dangers. Count on VISA and MasterCard to clip retailers for higher fees likely translating into higher in-store prices. As well, count on them to entice consumers into fresh new ways to be parted from our hard earned money. You can just bet the farm on it!
You would think we would have learned something profound in this global economic meltdown. It would be that we really need to get back to old fashioned values such as saving a little instead of going head over heels in debt. We wouldn+?G??G??t be flooding the marketplace with a jungle of financial products and services of dubious value. And we could count on the government to draw a line in the sand here and say, "Interac works for consumers; let+?G??G??s encourage them to get their house in order by leaving it that way."