Interesting Idea, Idiotic Example

Ron Lieber in the NY Times writes: 

"Coming soon: credit and debit cards that cut you off when you disregard your own monthly budget. 

In the next couple of days, MasterCard is expected to announce that Citigroup will be the first company in the United States to issue MasterCards with special features intended to protect consumers not only from thieves but also from themselves. 

The service, called inControl and already in use by some Barclaycard holders in Britain, is a sort of financial chastity belt that offers the potential to prevent a variety of budget sins and other money traps. 

Worried about your restaurant habit? If your bank adopts MasterCard’s service, you could tell it to have your debit or credit card reject any restaurant purchase above whatever monthly cap you set."

Ummm. Yeah - cause that would help (SARCASM ALERT!) - having your credit card declined when the bill is presented to you after you've already eaten the meal.  Obviously, restaurants are probably the worst possible example of potentially good uses for auto-budget-enforcing credit cards, since you pay for the product after you consume it.  So, while it might help if your card automatically rejected your purchase of a new pair of  $700 Jimmy Choo shoes and they take them and put them back on the shelf, it won't help you so much if it rejects your $700 dinner at Per Se that is already residing comfortably in your tummy.

However, the service has some interesting customizable features:

"The inControl system, at its most basic level, is intended to let people do two things: be warned about charges on their cards and block the wrong kinds of transactions. 

Alerts can be sent when a purchase is made with a credit or debit card in particular geographical areas or at certain dollar levels. Also, if you use your card only for in-person purchases and never use it online or for recurring charges, you could arrange for an alert every time your card is used when you’re not present at the merchant ringing up your purchase. That way, if fraud is afoot you can call the company right away to cancel the charge. 

If the alerts start to get annoying, you can alter them or turn them off at any time through your bank’s Web site or over the phone."

Interesting - no reason we shouldn't be able to do this with current payment processing technologies.  There are myriad potential applications; like cards for your children that you program to be used only at gas stations and grocery stores, or only at drug stores, etc...  Employers can give their employees cards that can only be used at certain types of stores, programmed by the user.

"The real leap with inControl, however, is being able to turn off certain forms of spending altogether. Dining out is the one I sometimes have trouble keeping in check, but for you it might be your iTunes habit or something else. While inControl now sorts companies into merchant groups that you can set budgets for or ban altogether, MasterCard said that if it had enough demand for company-specific caps it would add those, too."

Well, ignore the asinine dining example again, but otherwise the whole selected budget control by category idea couldn't really hurt.  After all, we've already established that we need all the help we can get.

-KD