Credit cardholders are seeing extraordinary behavior out of the banks that issue the cards. Higher fees, higher interest rates, higher minimum payments, restriction of credit lines — they’re all coming now before card issuers are prevented from making arbitrary and instantaneous changes once the CARD law goes into effect.

So, as usually happens when government gets involved, the consumer gets screwed.

Some day I hope that politicians and consumer activists realize that increasing regulation almost never benefits the consumer in the way the law intends. Before CARD, consumers faced arbitrary increases in their interest rates and fees. The point, said the banks, was to insulate themselves from credit risk.

Now that CARD has been passed, consumers are seeing….arbitrary increases in their interest rates and fees. The point, said the banks…was to insulate themselves from credit risk. And since CARD restricts them from changing their credit terms without warning, they fear that poor consumer behavior — especially now in a tough economy — could severely impact their bottom line. Their solution? Rush the changes through now.

Even worse, at a time when people desperately need credit, CARD further restricts it.

Nice going.

So once again, consumers have the government to thank for meddling in overzealous regulation. Mind you, I’m no fan of credit card companies. However, when you corner a wild animal, expect it to fight for its life.

Those politicians eager to attack and restrict payday loans should consider this, as well. I’ve harped on what happens when you needlessly restrict credit — it always makes things worse for consumers. This has happened in North Carolina and Georgia, where payday loans were banned. Ask the people there how much money they’ve paid in overdraft protection since PDLs were outlawed.

They’ll have a thing or two to say about that, I’m sure.

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