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 ...
Exactly the same thing in healthcare.
Zero wants all the sick to ride the backs of the healthy.
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.
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!
This will change. If the most credit-worthy customers are dropping their cards, businesses will find some other way to accomodate their best customers.
Just what Obama wants..
ping
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....
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
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
““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.
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.
. . . 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.
"..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.”.."
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.
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.
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.
Then they will start an annual fee for debit cards.
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