Credit Card Interest Rates Going Up as They Charge Us More For Using Our Own Money

Throughout history, moneylenders have been seen in a negative light, as bloodsuckers and parasites living off of those that do productive work.  Yet we are ruled by them. But what scum they are.  Why have they achieved such fame and fortune?  I guess we could put the question another way: why does debt play such an important role in our lives?

Marx explained that debt plays an important function in the capitalist economy, it allows capitalism to go beyond its limits.   The source of the capitalist's profits is the use, under their direction, of human Labor power through the Labor process; they pay workers less in wages than the value the use of that Labor power produces. So for capitalists, there is always what they refer to as a "demand" problem. As workers we should not be confused here because "demand" in this sense has nothing to do with what workers need or want, it has to do only with what capitalists can sell at a profit. It becomes pretty obvious then, that capitalism produces more than workers can buy; credit fills the gap between what workers earn in wages and what we can spend. Finance capitalists lend us back the money that has its source in our daily life activity in the workplace----at a price of course.

Debt can only play this role temporarily, like an elastic band, it allows capitalism to stretch or expand beyond its limits, but the more they reduce wages the more this problem arises,  at some point the elastic band comes snapping back.  The average debt of a US household was $40,000 in 1980. In 2010, California's per capita debt  (debt per person) is $77,500, and this is after consumers have been paying down debt for a few years.

With the housing crisis the way it is, the moneylenders are ramping up interest rates on credit cards, the instrument they use to funnel much consumer debt to us and charge us for it.  As a response to the Credit Card Accountability Responsibility and Disclosure Act of 2009, a law that went in to effect Sunday and that restricted the moneylenders from raising interest rates and charging penalty fees as they wish, the moneylenders, they are called "issuers" as they "issue" the plastic thing that keeps track of all this, are lifting credit card rates to a nine year high. 

The average rate on existing cards was 14.7 % in the last quarter compared to 13.1% a year earlier.  An interesting statistic is to look at is the spread between the prime rate on which card rates are based and the average credit card rates. The current spread of 11.45 percentage points, the Wall Street Journal reports, is the largest in 22 years.  The prime rate itself is based on the federal funds rate which is set by the US Federal Reserve, a private club that manages monetary policy in the interest of other moneylenders and the capitalist class as a whole.

Enacting a law like the CCARD Act doesn't restrict anything which shouldn't surprise us as why would they make laws that restrict their own activity. Even the sponsor of the Act, Rep. Carolyn Maloney a New York Democrat admits as much.  "Better that consumers should know up front what the interest rate is even if its higher, than to be soaked in the back-end by tricks and hidden fees."  There is no way we can survive without credit the way they have it set up; you can't even get a roof over your head if they give you a bad credit rating, so people will be forced to get in to debt peonage regardless; they'll just be told their getting "soaked" in writing. One banker makes it clear they have to be "smarter" and charge a higher rate from the off.  This is much more profitable than "penalty charging" which is now restricted as these are charges that occur when the the consumer has already been bled dry.  By this point, "it's too late to do much good", says  Stephanie Keire, head of consumer credit card risk management at Wells Fargo.

During the height of the economic crisis even capitalist economists and other distinguished members of the bourgeois were calling for the nationalization of the banks. The capitalist class will do these things when the system appears close to collapse as it it did back then. Even when the capitalist class takes such measure it should be critically supported because it helps to undermine the ideology that is so strong in the US, that only private ownership can work which is why they resist it ferociously.

But what we have to raise is that the banks, financial houses, the finance industry in total should be taken in to public ownership under workers control and management.  This does not mean taking in to public ownership the deposits in these institutions, the savings of workers, but the institutions and mechanisms for using this capital and allocating it for the benefit of society.  Through such a process the structures for how capital is allocated and used in society will change as they will no longer be the organizations of the capitalist class but organizations filled and governed by consumers organizations, workers' organizations, economists, academics and small business etc. but with the working class as the dominant factor and whose sole purpose would be not to accumulate and allocate capital on the basis of profit for a small section of society, but for the benefit of society as a whole in harmony with our natural environment.

This is impossible under capitalism.