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 ...
Whoa, that stinks.
Clark Howard advises against using debit cards, in part for the reason you've cited.
Clark calls debit cards "fake credit cards".
I'll see how this plays out. I order stuff online, and the credit card is mighty useful in this context.
But I don't plan to pay a bunch of interest. I'll go back to writing checks or paying cash, if it comes to that.
Sounds like collusion to me, as if they’re admitting there’s no such thing as competition in the credit card industry. If there is, some cc companies will go this route and some won’t.
Have the credit limit for your favorite card reduced to no more than $1000, $500 is even better. Then cut up all the other cards and send them with a letter requesting the company cancel the count. You will have to personally sign to get your account officially closed though.
Oh, yeah. It always has been, of course, but these days you get quite a few in the mail that are updates and I tend not to read them closely because they're written in legalese and microscopically small. Big mistake.
About once a quarter I call the little number on the backs of my active cards and find out what my actual APR is at the moment. What triggered that was a little surprise I got once - a card that I originally got at 5.99% (a loooong time ago) was charging 15.99%. That was bad enough but then the bomb dropped. One late payment and it was 24.99%. And guess what? I was late on a card I'd never even used due to a credit "protection" plan that I hadn't denied and so was activated by default. Bill was sent to my old address. Too bad, so sad. Quite a nice little scam, actually.
I would drop my Chase 2% cash back on gasoline (1% back on other purchases) MasterCard in a minute if they put a annual fee on it or dropped the cash back rebates.
Also, there is a lot of confusion on this thread about the difference between straight ATM/Debit cards and VISA/MC Check cards that are also ATM/Debt cards. My credit union offers both regular ATM/debt cards and ATM cards with the VISA logo...the ATM card with the VISA logo can be used as a “credit card” but the charge comes out of your checking account in a few days. If I was forced to drop my regular Chase Mastercard by annual fees or lack of rebates, I would just use my credit union no-fee VISA ATM card.
W-H-Y was this approved by the Senate 95-0?? What the h*ll happened to the 40 Republicans that are supposed to be there?
It all falls into place.
“When will they learn. Those with good credit will not subsidize those with bad credit. They’ll just stop using the credit cards. It’ll be debit or cash.”
And they won’t miss those good credit users for even a nano second, as they can’t make any money off of them. They make their money off the high rollers, with all sorts of fees they can tack on for late payments, over limit fees, higher interest rates, etc. They are in business to make money, and they can’t make any money from someone who barely uses their cards,collects cash back, frequent flier miles, and other rewards. They can’t even make much money off of merchant transaction fees as the good credit customers often don’t use their cards much. This is probably one of the few cases where the “bad” customers are the good ones, and the good customers are the “bad ones. Funny that.
That's how they get you. In chess what is called? The zug-zwang or something like that. Got you by the gonads coming and going.
From their perspective- A man that doesn't need credit isn't too much good to our system.
Haven't rented a car in a long time.
Haven't had any trouble with the room thing so far- but that's probably because I've gone through a travel agent for the last few holidays I've booked.
I shall probably get back with the program and go out and buy some silly things in order to have a transaction to pay off so they think I'm a good person. Then they won't cancel my credit card due to lack of use and I can keep functioning as a citizen in this glorious new age.
If you have a car full of kids and break down far from home it would be quite a shock to some when they can't rent a car. It happened to me once and I was very upset with the dealer that couldn't rent me a car, even though mine was in their shop.
I checked around and found that nobody would rent cars without a CC anymore. That was when I got one.
I know. Once you are checking out they don’t care how you pay.
That doesn’t seem to be correct. I have used a debit card to rent a car recently. I had to accept a $500 hold on my account that I wouldn’t have needed with a crdit card.
I was told that it is directly linked to drug dealers renting cars to transport drugs. With Detoilet only 100 miles away, I-94 ( Detoilet - Chitago ) is full of drug dealers.
I’m not sure. The vehicle I rented was from Budget at BWI to go home though.
I won’t use Enterprise anymore. They charge $100 return fees that make them completely uncompetitive unless you are returning to the same store.
We won't. If the credit card companies take the route of penalizing responsible customers, many of us will be former customers. A credit card is a convenience, not a necessity.
Always good to have one at least - might need a hotel or car rental, and using debit cards for those purposes can create some unexpected issues.
The problem arises if/when they place a hold on the debit card for a greater amount than you spend...and it can trigger overdrafts depending on what you keep in your checking account.
When a credit card (or debit w/a Visa or MC logo on it) is swiped, first it’s authorized for an amount then 1 - 5 days later the money is actually collected. Ever notice that if you get gas on your debit card, taht it shows online as a pending transaction for one dollar, then hits the account at the correct amount a few days later?
Hotels and car rental companies (and a few others) do the opposite - they preauthorize for often MORE than they expect your bill to be (then it clears the acct at the correct amount.)
Basically, if you book a $105 room for two nights, or rent a car for $70/a day, they might authorize the card for $500 or so (not CHARGE it, but authorize it) to make sure you can cover it if you decide to stay put longer than expected...and if your account has under $500 in it, you can have an overdraft fee because of it.
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