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Beyond Usury: A Study of Credit-Card Use |
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Written by Prof. Angela Littwin
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Wednesday, 12 March 2008 |
Over the past two decades, credit cards have become increasingly available to low-income families as credit-card issuers have extended credit to riskier customers. Families that would not have been able to obtain credit cards as recently as a decade ago now receive a deluge of preapproved offers in the mail. The question of whether to reimpose usury restrictions lies at the heart of the debates over consumer credit regulation. This debate has continued for more than two decades, but until now no one has asked the affected families for their views about access to credit or what safety features they would welcome. In order to obtain a new perspective, Angela Littwin conducted in-depth interviews, supplemented by documental materials, with fifty low-income women. This Article presents original data from her study suggesting that usury regulation is an unnecessarily blunt instrument to provide protection for low-income families because low-income families themselves can identify credit-protection devices that would be more nuanced and more useful. This study suggests that there is indeed a problem of overconsumption, one of borrowers whose short-term spending exceeds that which they themselves would prefer in the long run. However, careful consideration of the perspectives of low-income consumers can better inform credit policies that are neither punitive nor paternalistic, but that instead enable borrowers to better resist the “temptation” many associate with credit cards and thereby better effectuate the low-income consumers’ long-term borrowing preferences.
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Last Updated ( Tuesday, 18 March 2008 )
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