A government-backed card?
Monday, April 27
Posted 11 a.m.
After Obama's much talked-about meeting with the top credit card executives last week, Slate's Christopher Beam made an interesting proposal on Friday: The government should issue a government-backed credit card that wouldn't have any of the "gotcha" fees and would keep the interest rate at 8 percent. In order to qualify for this card, you'd have to have great credit. He also suggests that cardholders who are carrying large balances at 18 percent interest could refinance their credit card debt to the lower ARP government card -- which he dubs "the O card" -- in order to keep monthly payments manageable.
He also proposes the card be an affinity card that would aid the government. "Every time you buy something, a small percentage would go to wind-farm construction, say, or clean-coal research, or school computers," he writes.
Beam's idea is certainly worth debating, but I'm not in favor of the government issuing credit cards. I'd just like to see the credit card issuers lower the interest rates so cardholders could pay off their debts. Since the government is giving TARP money to Bank of America, Chase, American Express, etc. -- the largest credit card issuers -- maybe the money should be contingent on lowering interest rates. As I've often said here, 8 percent when the banks are borrowing money at nearly zero percent is not a bad return. Would you take an 8 percent return on your 401(k) right now? I sure would.