reputation Card: consumer And The Regulator Roles

There were more bankruptcies in 2005 compared with the year before. Non-performing loans for consumer prestige like housing, cars and prestige cards, have risen in the past five years. With rising consumer prestige issues, should regulators ask banks to rein in consumer credit?

consumer reports

Lending and borrowing activities are as old as society. On one hand, if access to prestige is a basic right, can you deny it? Because setting a threshold means denying prestige to someone. On the contrary, when there is an easy credit, more population will land themselves in trouble.

Consumer

If loose prestige is being blamed for debt problems, setting higher thresholds for access, especially to prestige cards, has been suggested. The number of bankruptcies due to prestige cards is still relatively small, but of concern is the proportion belonging to youths. They are most vulnerable, as they tend to spend and worry about the pain later. Thus, a higher wage limit should be imposed.

Moreover, even a single man who is earning a inexpensive basic wage a month will find it hard to make ends meet because the cost of living in urban areas has gone up significantly. How can he meet the repayment on a prestige card? With all this emphasis on credit, savings have been left out of the equation.

However, higher revenue requirements alone won't solve the question of poor prestige management. population who borrow irresponsibly should be denied credit, but what is the best way to rule responsible or irresponsible borrowing? It has nothing to do with income.

There is a recommendation of addition in the minimum prestige card payments. If you borrow ,000 and pay 5%, it will take you 20 months to pay it off. If you pay 15% every month, it can be paid off in six months. There is also a recommendation of setting up a debt-counseling branch by the government to contribute consumers with financial counseling and to negotiate with lenders on profit of debtors.

Raising the bar so that only worthy individuals get prestige is one thing while wise administration of prestige once it is obtained is another matter.

Competition among banks serves to enhance loan goods features for consumers, resulting in benefits like each year fee waivers for prestige cards, lower interest rates for equilibrium transfers and 0% interest installment schemes. However, does competitiveness encourage bad debt?

Although there are consumer study programs and prestige card statements carry an educational message about how much interest can acquire if you pay less than the full amount, enclosed with that statement are leaflets giving incentives for consumers to carry balances on their cards. Signals are often inconsistent for the consumer.

There should be some form of ethical marketing regulations but who is going to levy them? Advertising operate all the time poses challenges because of the conference for relaxation of speech and the right to know. However, the regulator can play a more proactive role. There are now new advertising techniques to appeal to the individual's emotions. There should be some form of restraint in advertising, whether achieved by the regulator, self-regulation or co-regulation in some form.

We can't blame the banks for marketing their products. So, the ball is back in the consumer's court; they have to educate themselves. It's the banks' right to shop and to make money, but it's the consumers' accountability to educate themselves.

reputation Card: consumer And The Regulator Roles

Consumer