{"id":15048,"date":"2010-06-07T20:00:45","date_gmt":"2010-06-08T00:00:45","guid":{"rendered":"\/\/www.askmrcreditcard.com\/news\/?p=15048"},"modified":"2010-06-07T20:00:45","modified_gmt":"2010-06-08T00:00:45","slug":"ethics-and-credit-cards","status":"publish","type":"post","link":"https:\/\/www.askmrcreditcard.com\/news\/ethics-and-credit-cards\/","title":{"rendered":"Ethics And Credit Cards"},"content":{"rendered":"

Last year, I took some time to think about the ethics of reward card deals.\u00a0\u00a0 I encapsulated my thoughts in somewhat of a manifesto on the subject, The Ethics Of Reward Card Deals<\/a>.\u00a0\u00a0 Since then, I have referred back to this piece on numerous occasions in order to decide where a particular deal falls on the ethical spectrum.<\/p>\n

Ethics And Individuals
\n<\/strong><\/p>\n

I take ethics and morality seriously as I strive to be a good person and do the right thing in my daily life and\u00a0 I would like to believe that all people have an obligation to do so. \u00a0\u00a0 Unfortunately, the world can be a very tough place, and such moral beliefs are a luxury that some can not afford. \u00a0 When given the choice between survival and morality, many choose survival, such as in the classic case of a thief who steals food to feed one’s family.<\/p>\n

Currently, many people are deciding to walk away from their mortgages in a practice called strategic default.\u00a0\u00a0\u00a0 I do not see any moral problem with strategic default, as default it is essentially a right you are exercising, and the bank accepted that risk when it offered you the loan.\u00a0 You placed your home as collateral to secure the bank against default.<\/p>\n

When it comes to credit card debt, banks grant individuals unsecured <\/strong><\/em>loans.\u00a0\u00a0\u00a0 If the borrower defaults, the bank cannot reposes\u00a0 your purchases, they have to go to court to secure a judgment.\u00a0\u00a0\u00a0\u00a0 Nevertheless, there have been reports<\/a> of banks trying to make moral arguments for survivors paying the debts of the deceased.\u00a0\u00a0 I can’t fault a bank for using guilt trips for collections, but I certainly would never pay a debt that I did not incur.<\/p>\n

Ethics And Business<\/strong><\/p>\n

On the other hand, what about a corporation?\u00a0\u00a0 Public corporations, by definition, have an obligation to their shareholders to make a profit.\u00a0\u00a0\u00a0 They are not in business for the good of society.\u00a0 Over at the University of Redlands<\/a> School Of Business<\/a> Banta Center For for Business, Ethics and Society, they seem to be devoting a lot of thought to these issues.\u00a0\u00a0 I recently came across this paper When Businesses Do Bad Things<\/a>.\u00a0\u00a0\u00a0 It was originally written about the Enron bankruptcy, but it seems to apply equally to the bank collapses of 2008 and the current Gulf Oil Spill.\u00a0\u00a0 This quote from Professor Jeffrey Smith of the California business school stands out:<\/p>\n

“So what is our assessment of recent events? Don\u2019t they show that such ethical norms are not only absent from business life but intentionally neglected by managers? From time to time it certainly appears so. This is surely the motive behind the development of securities laws, accounting regulations and other attempts to reign in the incentives toward irresponsibility.”<\/em><\/p><\/blockquote>\n

The fact is that a business is not a person, and they will not do the right thing if it is not in their interest.\u00a0 We saw this during the debate over the CARD Act.\u00a0\u00a0\u00a0 There is no doubt that credit cards were, and to some extent, still are employing tricks and traps that are clearly unethical.\u00a0\u00a0 These practices damaged individuals and society as a whole, yet they were going to continue as long as the law permitted them.<\/p>\n

There was no ethical consideration by the banks as to whether or not it made sense to have a payment due on a weekend or a holiday when it could not be processed.\u00a0\u00a0 Someone figured out that profits increased due to late payments and interest, and the corporation had an obligation to maximize profit.\u00a0\u00a0 The same is true when a bank reorders checks to maximize insufficient funds fees.<\/p>\n

Setting The Proper Expectations<\/strong><\/p>\n

Once you realize that banks only have an obligation to their shareholders, you should no longer expect your credit card company to act in any way ethical or moral as you would define those terms for an individual.\u00a0\u00a0\u00a0 In the same way, you should be honest and ethical, but otherwise play by the same rules when you deal with your bank.\u00a0 Treat individuals bank representatives with courtesy and respect, but otherwise feel free to aggressively pursue the best terms and best rewards out of each of your credit cards.\u00a0\u00a0 When you do not get the service you require, do not hesitate for a moment to switch banks for a more competitive credit card.<\/p>\n

A bank’s obligation is to maximize profit for it’s shareholders, while your obligation is to safeguard the wealth of yourself and your family.\u00a0\u00a0 They will never loose sight of their responsibilities, and it is up to you not to loose sight of yours.<\/p>\n","protected":false},"excerpt":{"rendered":"

Last year, I took some time to think about the ethics of reward card deals.\u00a0\u00a0 I encapsulated my thoughts in somewhat of a manifesto on the subject, The Ethics Of Reward Card Deals.\u00a0\u00a0 Since then, I have referred back to this piece on numerous occasions in order to decide where a particular deal falls on […]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[8],"tags":[],"yoast_head":"\nEthics And Credit Cards<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.askmrcreditcard.com\/news\/ethics-and-credit-cards\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ethics And Credit Cards\" \/>\n<meta property=\"og:description\" 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