Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Credit Card Industry Aims to Profit From Sterling Payers (annual fees, no grace period)
New York Times ^ | May 18, 2009 | Andrew Martin

Posted on 05/19/2009 5:06:46 AM PDT by reaganaut1

Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”

As they thin their ranks of risky cardholders to deal with an economic downturn, major banks including American Express, Citigroup, Bank of America and a long list of others have already begun to raise interest rates, and some have set their sights on consumers who pay their bills on time. The legislation scheduled for a Senate vote on Tuesday does not cap interest rates, so banks can continue to lift them, albeit at a slower pace and with greater disclosure.

“There will be one-size-fits-all pricing, and as a result, you’ll see the industry will be more egalitarian in terms of its revenue base,” said David Robertson, publisher of the Nilson Report, which tracks the credit card business.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Front Page News
KEYWORDS: bankcards; banks; creditcards
Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-80 ... 101-109 next last
To: mtrott

Exactly the same thing in healthcare.

Zero wants all the sick to ride the backs of the healthy.


41 posted on 05/19/2009 7:10:25 AM PDT by bestintxas (It's great in Texas)
[ Post Reply | Private Reply | To 24 | View Replies]

To: reaganaut1

It looks like the Community-Organizer-In-Chief is going to prevent credit card companies from a covering the costs generated by people who refuse to pay their bills. So they are going to go after people who do pay their bills to make up the shortfall.

If retailers start chrging back customers for the transaction fees or credit card companies start addign annual fees to my card, I will simply drop the cards and pay cash. Screw them. I am willing to pay a little bit for convenience, but no more.

Before too long, the credit card companies are going to find that deadbeats are the only customers they have left.


42 posted on 05/19/2009 7:31:03 AM PDT by gridlock (L'Etat, c'est Barack...)
[ Post Reply | Private Reply | To 1 | View Replies]

To: reaganaut1
I don't think this will actually happen, because a credit card company that tried this would lose its credit-worthy customers to a company that was more selective.

So our Community-Organizer-In-Chief will just get Congress to pass a law that says that credit cards cannot be selective, and must issue to anybody.

Or maybe we can just have a complete government take-over, and have a nationalized credit card!

43 posted on 05/19/2009 7:33:34 AM PDT by gridlock (L'Etat, c'est Barack...)
[ Post Reply | Private Reply | To 6 | View Replies]

To: Beagle8U
Ever try to rent a car or reserve a hotel room without one? They wont take a debit card!

This will change. If the most credit-worthy customers are dropping their cards, businesses will find some other way to accomodate their best customers.

44 posted on 05/19/2009 7:35:44 AM PDT by gridlock (L'Etat, c'est Barack...)
[ Post Reply | Private Reply | To 14 | View Replies]

To: reaganaut1
“Those that manage their credit well will in some degree subsidize those that have credit problems.”

Just what Obama wants..

45 posted on 05/19/2009 8:05:33 AM PDT by b4its2late (There is always one more imbecile than you counted on.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: sickoflibs

ping


46 posted on 05/19/2009 8:06:51 AM PDT by GOPJ (If printing money was an answer, why don't Haitians "print" their way out of poverty?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: reaganaut1

Ya know....another thing that bank credit cards do is act as a back up for OVERDRAFTS to your checking account, SINCE it’s AGAINST the law for a bank to pull from your SAVINGS into your Checking as overdraft protection.....NOT that we do overdrafts, but it DOES happen occasionally that there’s more money in the savings than the checking....


47 posted on 05/19/2009 8:09:22 AM PDT by goodnesswins (WE have a REPUBLIC.....IF we can KEEP IT!!!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Orange1998

That’s the drawback with debit cards- the vendor will put a big hold on your account for more than the bill, and for up to several weeks

I’ve heard many stories of bounced checks from folks who used debit cards for car rentals and didnt realizee the hold period was so long


48 posted on 05/19/2009 8:10:54 AM PDT by silverleaf ("Never forget that everything Hitler did in Germany was legal ( Martin Luther King))
[ Post Reply | Private Reply | To 38 | View Replies]

To: Beagle8U

Actually, Enterprise (at least here) will rent with a debit card—but it’s a hassle. They tack an extra $100 refundable deposit into the rental rate, and require two proofs of residency, basically two utility bills, to be presented when picking up the car.

}:-)4


49 posted on 05/19/2009 8:11:04 AM PDT by Moose4 (Hey RNC. Don't move toward the middle. MOVE THE MIDDLE TOWARD YOU.)
[ Post Reply | Private Reply | To 23 | View Replies]

To: reaganaut1

““Those that manage their credit well will in some degree subsidize those that have credit problems.””

I think this is becoming the theme of the Obama admin. Those that work hard, play by the rules and are smart get punished and those that don’t get rewarded.


50 posted on 05/19/2009 8:11:15 AM PDT by Birch Barlow (We have gone from a Bush Country to an Obama Nation)
[ Post Reply | Private Reply | To 1 | View Replies]

To: reaganaut1

Looks like I need to go through every credit card I own and cancel them, except the one with my credit union. I’ll cancel it too if they try to charge an annual fee.


51 posted on 05/19/2009 8:12:02 AM PDT by Brett66 (Where government advances, and it advances relentlessly , freedom is imperiled -Janice Rogers Brown)
[ Post Reply | Private Reply | To 1 | View Replies]

To: GOPJ
People who routinely pay off their credit card balances have been enjoying the equivalent of a free ride, he said,
I remember when CCs first came out. They were using that as a selling point. Now you're a "deadbeat". Orwell is alive and well.

. . . because many have not had to pay an annual fee
Good ole Gerry Ford initiated that little gimmick to "control inflation" (think "WIN" buttons - Whip Inflation Now!) Of course the banks were eager to "fight inflation" by charging $30 a year. Boy, that really worked. Now they whine because people took them up on the "No Annual Fee!" promotion.

. . . even as they collect points for air travel and other perks.
More whining over people taking advantage of a gimmick the banks used to lure them in.

Pathetic, and blind, losers.

52 posted on 05/19/2009 8:12:21 AM PDT by Oatka ("A society of sheep must in time beget a government of wolves." –Bertrand de Jouvenel)
[ Post Reply | Private Reply | To 32 | View Replies]

To: reaganaut1
I really don't appreciate the attitude, especially from bankers who abeted these problems:

"..People who routinely pay off their credit card balances have been enjoying the equivalent of a free ride, he said, because many have not had to pay an annual fee even as they collect points for air travel and other perks.

“Despite all the terrible things that have been said, you’re making out like a bandit,” he said. “That’s a third of credit card customers, 50 million people who have gotten a great deal.”.."


53 posted on 05/19/2009 8:15:15 AM PDT by Anti-Bubba182
[ Post Reply | Private Reply | To 1 | View Replies]

To: reaganaut1
I have a stack of credit cards, most of which I use for only special purchases (My BP Visa gives 5% at BP, so I only use it there. Similarly with my Shell MC). If they start charging $20 per year on each card I can cut down to a couple cards. If they eliminate grace periods and rebates, I can switch to cash or checks for local purchases and debit cards for internet/phone purchases.

One thing about credit cards, debit cards and checks is it allows people to keep most of their money in the bank until they actually use it. If the banks push too hard, consumers may start living like my parents did while I was a child. When the paycheck came (actual check, no direct deposit), my father would cash it and take about a third to a half as actual cash, leaving the rest in checking to pay bills. He almost never used a credit card. The fractional reserve banking system functions much more smoothly if people aren't holding onto large blocks of cash for weeks or a month at a time. The banks start being able to lend money only based on the lowest monthly balances rather than counting on people drawing down their accounts a little at a time. Consider that there is only about $800 billion of US currency in circulation (http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html), with the majority of that held outside the US. If every worker in the country started sitting on $1000 cash outside the banks, that would consume a large amount of the currency in circulation. It might even wipe out currency available in the US.

54 posted on 05/19/2009 8:19:29 AM PDT by KarlInOhio (No free man bows to a foreign king.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: GOPJ; reaganaut1

Thanks, I get the rewards and never paid interest and knew this would happen. The problem is that we are a very low credit risk and much less costly asa group, so the market may still force them to reward us for good credit.

In Maryland the dems passed a law that made it illegal for home insurance companies to give us a discount for GOOD credit and our premiums went way up. A number of Freepers here agreed with democrats on this, but now with the housing bubble crash the bad credit risks left their forclosed houses a disaster and the banks expect the insurance companies to fix up the houses.


55 posted on 05/19/2009 8:22:32 AM PDT by sickoflibs (Obama /Pelosi/Bush Theme : "A dollar borrowed or printed is a dollar earned!")
[ Post Reply | Private Reply | To 46 | View Replies]

To: reaganaut1
It will be important to read the fine print on those terms statements.

Many will drop credit cards and go to debit cards, if card fees/immediate interest are imposed.

It depends on exactly how much the credit card companies expect those who manage their credit well to subsidize those who don't.

==

Since my first VISA in 1967, I have never paid a fee for a credit card, and I don't intend to start paying a card fee now.


56 posted on 05/19/2009 8:30:17 AM PDT by TomGuy
[ Post Reply | Private Reply | To 1 | View Replies]

To: Prodigal Son
I haven’t used it in over two years. I’m beginning to wonder why I even have it.

One day you will get a letter saying your account has been closed. No warning. Or, you may get a letter saying your account will be closed if you don't use the card in the next few weeks. I've had both.

The first lowers ones credit rating. So does canceling it yourself.

57 posted on 05/19/2009 8:31:00 AM PDT by Right Wing Assault ( Obama, you're off the island!)
[ Post Reply | Private Reply | To 5 | View Replies]

To: nh1
It’ll be debit or cash.

Then they will start an annual fee for debit cards.

58 posted on 05/19/2009 8:32:24 AM PDT by Right Wing Assault ( Obama, you're off the island!)
[ Post Reply | Private Reply | To 7 | View Replies]

To: reaganaut1
perks such as cash back

That is the only reason I use a credit card any more. If they take that away, I'll start using a debit card or ye ole checks (if I can remember how to fill one out).
59 posted on 05/19/2009 8:32:36 AM PDT by TomGuy
[ Post Reply | Private Reply | To 1 | View Replies]

To: Orange1998
The debit card is not free, my issuer charges 12.00 a year.

Consider changing banks.

I have 2 banks and debit cards with each. Neither charges a fee for the card. If they did, I'd give it back to them.
60 posted on 05/19/2009 8:35:24 AM PDT by TomGuy
[ Post Reply | Private Reply | To 9 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-4041-6061-80 ... 101-109 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson