Obama's fight against credit cards

Gassner's picture

Dear Reader,

"President Barack Obama, who met card executives at the White House on April 23, says customers deserve protection from unfair practices. "


He actually is a long standing opponent of credit cards offering repayment in installments. A short search in Google proofs he is looking into the issue far before his election, e.g. in 2007:

"Democrat Barack Obama called for new restrictions on "predatory" credit card companies he says deceive consumers into piling up massive debt they have little hope of repaying."


In spite of cheaper funding, the card companies continue to charge high justifying it with the write offs:

"A Moody’s Investors Service estimate of credit card charge- offs, or debt that issuers deem uncollectible, jumped to an annualized rate of 8.8 percent in February, the highest in 20 years of data. That may rise to 10.5 percent by mid-2010, especially if the U.S. unemployment rate continues its rapid climb, Moody’s analyst Will Black says. “This recession is so big that it’s affecting issuers and cardholders on a scale not seen before,” he says. "

"The average annual percentage rate offered to new card customers in the U.S. was 14.2 percent in April, up from 13.8 percent a year earlier, according to IndexCreditCards.com, which surveys the industry to track rates. "


Credit cards have weakened the strongest economy on earth, but still we see replications of this bad practice even in Islamic banking, but with one difference: usual APRs are not just about 14 % like in the US, no, somewhere between 20 - 30 %.

Hence, I think following the strong Fatwa of the OIC Fiqh Council against Tawarruq, a method on which many of those Islamic credit cards are based, it would be a good start to cut back on this harmful activity, before it ruins the Muslim countries like it did with the US.

Obama shows leadership against credit cards, inshallah Muslim leaders follow him.

Best regards,

Michael Saleh Gassner