In the article on the Smartmoney.com website called: What Your Credit Card Won’t Let You Buy, the article makes the following statement:
To the surprise of consumers, major credit card companies are making decisions about what they can and can’t buy with their credit cards. What’s off-limits? Legal purchases like gambling chips and donations to at least one controversial non-profit organization; in some cases, buying p.0.rn.0.s is also restricted, and so, increasingly, is medical p.0.t.
I’ll be honest, I’m not 1005 sure how I feel about credit card companies arbitrarily deciding that they will let the consumer purchase or not. After all, it’s has a bit of the big brother flavor that we all hate but seem to experience more and more in our lives. That said, credit offered by credit card companies is not money or earnings gained by the credit card user, so why not? We live in a capitalistic country so if one company doesn’t do something, usually another companies tries to compete in that niche if it is profitable.
So now that we’ve established that we really don’t have the rights to the money offered by the credit card companies, let’s use an example to make better sense of borrowing money on credit. Let’s say you have a friend that asks you for money to help buy a car, then later you learn that he didn’t buy the car but instead went out and bought p.0.rn online. Now a month later he comes back to you and asks for more money for a car because he needs it for work. This time you tell him that you’ll loan him the money, but that the money must be used to buy the car. Now what if he again goes out and buys more p0rn online? Wouldn’t you want the money that he used to be used for the reason that you lent him the money? Wouldn’t you want him to use the money you lent him for a beneficial use versus repeatedly being use for something addictive or that would make the chances unlikely that you would be able to collect the money that you lent?
IMHO, the bottom line is that credit card company is offering you a service. They are not giving you money away for free and they want to make a profit on their service. If they couldn’t be profitable, they would soon go out of business. So since it is their business, I think they should be able to determine how the money is spent.
I guess in a world where the law says that you must wear a seat belt, I don’t really see the credit card company’s restrictions as being much of a rights violation.
The credit card argue that they are protecting themselves from the federal government coming back and punishing the credit card companies for the purchases that their clients make. Based on the attitude of the government towards this industry, they actually may have a valid point here.
Hidden Benefits
What if the restrictions in place from certain credit card (mainly American Express), help us to curve our additions? Perhaps such restrictions would even enabling us to preserve our financial state of well-being, in addition to making it harder to purchase our addictions? Perhaps this is really a win-win in disguise? However I have to wonder what is next? Cigarettes, alcohol, firearms, certain foods?
Ways Around the Credit Card Company’s Policy.
The simplest way around this problems is to use your credit card company’s card to purchase cash. After it is cash, they can no longer track what the money is being used for.
With so many people in the financial community complaining about credit card companies, what do you think about this relatively unknown restriction on the use of credit cards?
I’m looking forward to your comments,
MR.
Card companies have a higher rate of interest on cash and cash equivalents and you are charged even if you pay it in full!
In some cases like gambling, CC companies are trying to be socially responsible. In other, they are trying to avoid headaches! Amex doesn’t honor porn businesses simply because too many customers were doing a chargeback (surprising?!) and shady businesses were charging more hoping customers won’t fight it!
CC companies not honoring Wikileaks is of course due to government pressure…
Ahh, I read about the Wikileaks, but thought the credit card companies were just being patriotic. Good to read the real deal 😉
Shades of 1984…..
That was an interesting book! And I can see who you reflect that it’s “Shades of 1984”. I think the big “G” company might fit better in the shade though 😉
To reference your example, if I had a “friend” that I was charging interest rate I wouldn’t really care how they used the money as long as they made their payments on time. However, much like credit card companies, if my “friend” was using that money to gamble I would cut them off. Not because I’m morally against gambling or because I was concerned about their growing addiction but because the risk of not being paid back is too high.
CC companies don’t care about our morals or ethics or addiction; they’re concerned about how likely we are to pay them back.
In my example above, a car would mean that my friend would have a car and could travel to work. So if he needed money to get a job and survive, I would let him borrow the money. But if he just spent it to have fun and not get an income, I would be pissed.
This is a great issue for debate. I don’t think it’s really the credit card company’s business what a client uses their card to purchase as long as they’re paying off their balance. There lies the problem, though. Because a few can spoil the pot, people who work themselves into debt due to irresponsible spending can lead to a more “big brother” esque credit card spending control. You bring up a great point at the end of this blog – if you don’t like it, just use your credit card for a cash advance! Or, just don’t use your credit card for above named purchases. There is always a way around.
The thing is that money lent to people isn’t a right, it’s a business transaction. And in a business transaction, there are sometime contracts and if in the contract it states such a restriction can be invoked, then that’s the way it is, simple as that…
Of course, there are always loopholes 🙂
NOT a good idea, things have a history of escalating when it comes to personal life and controls. If I have a credit limit, a valid card, and a good credit repay history then I should be able to buy whatever I want. This is a free country and each little nibble on freedoms takes it toll. Credit card companies already make a fortune with excessive APR, penalties, etc. So do banks, they pay little or nothing for deposit account interest and one might get 1% on a one year CD, 1.5% on a five year CD. The bank may be making up to 26%APR on those deposits. It could be called loan sharking.
People need to be educated early on in life about finances. Most of today’s youth are simply doing what Mommy and Daddy did which is max out all the cards and try to get more cards. Airheads all!!!
I don’t think borrowing money is really a freedom, it’s more of a business transaction. You are not being prevented from making the purchase with cash.
I think without banks and the credit they provide, we would all live a much more spartan lifestyle.
I think today’s youth (other than the cool technology) are headed more toward a minimalist lifestyle than over-consumption way.
Interesting thoughts, thanks for stopping by and commenting! 🙂