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 ...
People who pay their bills subsidizing those who don’t. Where have I heard that before?
Yep, it’s the “Obama way”.
From those according to their means....
My credit card company doesn’t really like me. I haven’t used it in over two years. I’m beginning to wonder why I even have it.
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.
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.
The reason they have good credit is because they’re smart with their money.
This is another disaster waiting to be fueled by the feds.
Congress passes yet another law by which the prudent and hard-working will subsidize the foolish and irresponsible?
There is an iron law of economics that says what one subsidizes, one gets more of.
No problem for the Rats - the more foolish and irresponsible people there are, the more Rat voters there are!
The debit card is not free, my issuer charges 12.00 a year.
Cash is king - I’ll gladly drop the cards if they cost me money.
If my credit card company tries to charge an annual fee, I will also ditch it. I will not pay for the irresponsibility of others. Period!
True story. last month I received a letter from BofA announcing that they were going to raise the interest rate on my CC to about double what I was currently paying.
I told them to go pound sand!
I believe I'd be changing banks. There's no fifference between a debit card and a check - except that the debit card hits your account faster.
Ever try to rent a car or reserve a hotel room without one?
They wont take a debit card!
When Citibank had to beg for tax dollars to stay afloat, I no longer considered THEM credit worthy, so I canceled my accounts.
I'm sure if I were in financial straits, they would have done the same for me.
Me too. I’m already resigned to stopping my cc use. My wife and I charge perhaps 90% of our purchases ranging from a cup of coffee to a car down payment and college tuition. We’ve accumulated many airline tickets as a result and never pay finance charges.
If these changes occur, we’ll switch to debit cards or back to cash.
I’m sure the cc companies know this type of user has many other options and they won’t generate the revenue they are anticipating. This is identical to using static analysis for estimating new tax revenue where the govt refuses to believe that people will change their behavior when you raise tax rates. Of course, it’s being driven by the same administration, so no surprise there.
News flash for NY Times: Credit card companies already started to do that, before the Dems called for a credit card bill.
I rent hotel rooms on a debit card all the time. I’ve never had a problem.
This is yet another consequence of Obama nanny state "egalitarianism" which values and encourages infantile and dependent behavior over adult and independent behavior.
That's the first I've heard of an issuer charging a fee for a debit card.
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.