Posts Tagged ‘tight credit’

The hue and cry from people opposing the credit card reform bill is that banks are going to make it harder for consumers to get credit. Fees such as annual fees might be raised, reward points might be minimized, and approval for credit might be harder to attain.

“We are concerned that the Senate bill will have a dramatic impact on the ability of consumers, students and small businesses to obtain and use credit cards,” said Edward Yingling, president of the American Bankers Association.

Who is tight credit going to hurt? The economy won’t recover as quickly because consumers, upon whose backs the economy rests, will be spending less and carrying less debt. So tighter credit might curb spending–and perhaps raise feelings of deprivation–but it’s not going to hurt consumers.

Yes, they might have to learn to do with less–meaning that which they can afford. In the long run, the economy itself will be healthier because the danger of a credit card collapse will be lessened.

When our economy was deemed healthy, the actual financial position of many consumers was anything but. And the cause was often easy-to-obtain credit.

Tighter credit will mean slower growth for small businesses–and some larger ones too. This means the economy as a whole won’t grow as fast, but I wonder if, in the long run, it is better to have a stable economy than a fast-growing one.

What do you think?