The kicker here is the research indicates a strong relationship between self control problems and credit card use in present-biased individuals. We all have the tendency to fall prey to present-bias; i.e. I want it now not later, but low-income people tend to face much more often. Further, not everyone is aware of their self control problem according to Lorenz Goette, University of Geneva/Federal Reserve Bank of Boston. This according to Goette is “by far the biggest policy challenge.”

So does H.R. 627 address this “biggest” challenge? The bill ends unfair and arbitrary rate increases.  Retroactive increases are only permitted if the cardholder is more than 30 days late.  The bill allows consumers to set their own fixed credit limit, and would require consumer permission before charging over-limit fees.  The bill establishes a fair allocation of consumer payments, requiring consumer payments to be applied to the high-rate balances first.  Also, the bill would require teaser promotional rates to be offered for at least the first six months, and protects students by liming student accounts to $500 or 20 percent of the students’ income, whichever is higher. This might do something to mitigate the results of present-bias and lack of control but little to stem the problem which, in agreement of Mr. Goette, is a big policy challenge that I’m not sure politics is up to.