Regardless of the reason why rates are going up, the result will ultimately be positive. It will discourage credit card use.

I have no problem with the idea of credit cards. It allows you access to a lot of buying power without having to carry a great deal of cash in your pocket. In the event of an unforseen bargain, or an emergency, you have access to all the funds you need to make almost any purchase. For businesses, it offers a useful means of keeping records and for managing a large cash turnover without having to carry around dangerous amounts of currency. It is a phenomenal convenience for many which they get for free, because most folks always pay their entire bill at the end of the month and avoid the interest. And if you are faced with a very large unforseen expense, it allows you to spread out the payment over time.

The problem arises when you use the credit card as a means of, well, credit. Availability to credit is essential for both private businesses and individuals because income is usually continuous, but expenditures are very often discrete. You get paid every two weeks, but a big expense can come in any time. For a reasonable charge (interest), the two can be brought into synch. The wise use of credit demands it be restricted to those items which are essential for the individual or business. If you need a car, you buy it on credit because that car will start paying for itself as soon as you use it to go to work or shopping. You have to have it, it helps you survive as an economic unit. The same can be said for any purchase that helps you generate personal wealth, say a house, or work clothes, or tools or education for your job. The items you buy on credit will have to be paid for eventually, plus interest, so they should be restricted to those items which help generate revenue while they are being paid for.

Consumer credit, which I will define loosely here as the purchase of non-essentials or luxury items, is the killer. Of course, there is a big shadow zone here, the definition of "essential" is negotiable, and sometimes whether a purchase is considered a luxury or not is debatable. But we are not talking about one-time borderline items and exceptions, I'm talking about overall patterns of consumption.

I don't have any doubt everyone of you reading this, or for that matter, any American consumer, needs me to to tell you this, but we also know consumer credit is abused, and it causes many families great financial hardship. Through extravagant interest rates, it increases the price of everything, and if it is allowed to get out of control, can lead to bankruptcy. People get into financial problems with their credit cards because of their own extravagance and greed (except of course, a small percentage trapped by circumstances, like those who have to pay for medical care on credit). No one puts a gun to these peoples' heads and forces them to go into debt buying expensive luxury items, and the temptation is to dismiss them as getting exactly what they deserve.

Having said that, getting people to act irresponsibly is how credit card companies make money, they certainly don't get rich off people like me. The creditors do every thing they can to encourage this kind of behavior, including spending vast amounts in advertising in order to draw people into the honey-trap, and creating a situation which forces retailers to participate in the scheme. Unless they participate in credit card sales, they can't compete with those who do. Of course, the retailers pay a heavy financial price for this too, and they have little choice but to play. Credit card business is not illegal, nor should it be, but it is unethical because it exploits and encourages immoral behavior for profit. I don't find it that much different from selling drugs.

The whole consumer credit system is strongarm operation, not that much different from a Mafia money lending racket. They don't put a gun to your head either, at least, not until it's time to pay.