TEXT OF INTERVIEW
TESS VIGELAND: We’ve all heard about the theft protection features on credit cards. Consumers can expect alerts from issuers if, say, they live in California and a charge comes from a mini-mart in Texas. But soon there will be a new service to guard against another culprit: You. It’s coming to you courtesy of the parental units we call MasterCard.
Ron Lieber wrote about the program recently in The New York Times. Ron, welcome back to the show.
RON LIEBER: Always good to be here.
VIGELAND: Tell us a little bit about how this program works. This is, the credit card is your best friend?
LIEBER: Ha. Well that’s probably what the credit card would have you believe. Look, there’s something in it for them, too. But the basic idea here, it’s called inControl. MasterCard is offering it and banks that issue MasterCard debit cards or credit cards can offer this. And it can do a couple of things. Basically the big idea is that you can set controls on your spending, so that charges that you don’t want to make — whether they’re happening in countries where you don’t approve, where you feel like fraud might be taking place — or if you’ve gone past a certain limit that you’ve set for yourself each month, say no more than $200 in iTunes charges or spending on gasoline or dining. Once you pass those levels, you can actually tell the card to shut you off, to cut down your charge and deny them altogether at the point of sale if you want to.
VIGELAND: So the evil credit card is now the angel on your shoulder?
LIEBER: Well, that’s what they would have you believe. Look, they lose billions of dollars in fraud each year. And so if they can get consumers to help them avoid fraudulent charges, then it helps the banks and it helps MasterCard. You know, the other sort of truly cynical approach to this — and I’m not sure I would go this far, but other people have suggested it to me — is that they’re trying to use this as a sort of a public relations ploy. To say, “Look, we’re helping people control their spending,” when they know good and well when they know good and well that not that many people will ultimately sign up for this. But I’m not so sure about that. I think it’s possible that this could be the holy grail of budgeting for some people who simply can’t control their spending behavior, but really truly actually want to.
VIGELAND: You know, I have to tell you that when I first read your piece in the Times, my first thought was: Why can’t we just control our own spending? Do we really need a credit card to do this for us or at least to program a credit card to do it for us? Doesn’t that just get us off the hook for planning and budgeting and keeping track of our own money?
LIEBER: Well, it’s interesting you use the phrase “off the hook.” I think any tool that can help you achieve a goal is a worthwhile tool, as long as you’re not breaking laws, right? Look, we have the same willpower issue with dieting, with exercising regularly. And, you know, for those of us who don’t get as much exercise as we would like to, if there was some way to force ourselves to do it, that actually worked, we’d probably try it.
VIGELAND: Do you think that it could serve to do the opposite of what I criticized it for, which is to actually help it change behavior. I mean, maybe the MasterCard works as kind of training wheels for you?
LIEBER: I think that’s possible. There may be a whole group of people who simply don’t want to put themselves in a situation where their card stops working — whether it’s for a circumstance where they set the limit or whether the card company cuts them off because they’ve gone too far over whatever their credit limits is on their credit card. Some people just won’t want to deal with that inconvenience, or the potential embarrassment. But I think there are plenty of people who want to go cold turkey who will find novel ways to make use of this.
VIGELAND: This is a fairly novel idea, I think. What else would you like to see the credit card companies doing to, perhaps, help customers manage their money better, if that’s their role?
LIEBER: One of the things that the credit card companies and the banks that issue debit cards could do better is just make their statements more useful. I think it’s telling that a company, a site like Mint.com, has been able to sort of dis-intermediate the banks from their customers. You know, Mint takes all of you charges on whatever debit and credit cards you use, and it puts them all in one place and it categorizes them and it helps you to make a budget. The fact that it took some third-party company to think of that and make it work as well as it has is sort of an embarrassment to the banks and the credit card companies. And it’s sort of high time they do that for customers on their own, without needing some other site to do it for them.
VIGELAND: Ron Lieber writes the “Your Money” column for the New York Times, good friend of the show, thanks so much for your time today.
LIEBER: Always fun to be here.
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