I have been fascinated to read the lengthy discussion which has taken place elsewhere on this forum regarding the NHS and the introduction of a similar system in the USA. My thanks to Messrs Square, Sid and others for their thoughtful and provocative contributions. Serious discussion makes a pleasant change on these screens, so I would like to introduce another topic – a bee which has been buzzing around in my bonnet for some while.
Back in the early seventies, when I got my first Access card, credit cards charged a whopping great interest rate but no fees for each transaction. Bank accounts, on the other hand, charged a reasonable rate of interest and a fee for every withdrawal.
Since those days, interest rates have fallen to the floor – but this is not so for credit card balances – and electronic funds transfers have taken much of the “manual” labour out of processing the transactions. Isn’t it time that the credit card banks lowered their interest rates and instead started to charge a reasonable fee for each transaction?
I used to use my credit cards to supplement my income in the days when my four sons were growing up and expenses were high. As a result, I now have debts which I am slowly – oh so slowly - reducing from my disposable income. I no longer need to use the cards for anything, so I am costing them nothing in terms of transaction costs, but my monthly charges for interest are still as high as ever.
I know that there are opportunities to transfer balances to other cards at lower rates for short periods of time, but this doesn’t encourage consumers to lower their debt level. Why can’t we have a credit card system, enforceable by law, that charges interest rates which do not approach usury, coupled with a fee of, say, a fiver for every transaction? For someone like myself this would allow me the breathing space to get the debts under control with more of what I can afford each month going towards reducing the debt rather than paying the interest.
In addition, customers who use their credit cards much more than I do would pay more of their fair share of the costs involved. And they would have a telling disincentive (the transaction fees on their monthly statements) to encourage to make less use of the card, leaving them better able to reduce the level of debt. If you must have a DVD recorder, much better to save a tenner a month for a year, then buy it with the cash, than to have it now and find it costs you another £18 every year you don’t pay for it! Anyway, the TV channels will still be showing the same crap in a year’s time, so you won’t have missed much.
Discuss. Do not type on more than one side of the screen at the same time.