Washington – 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.
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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.”
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.
“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.
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.”
If they start charging, I’ll go with debit cards.
No. The only people “making out like a bandit” are the credit card companies.
Yes, people who pay their bills in full don’t pay interest, and often don’t pay annual fees.
However, the merchants pay the credit card companies for every purchase those people make. The real secret of the credit card companies is that they get money coming and going.
They get money from the merchants for every purchase. A swipe fee, plus a percentage of the actual total.
They get interest payments, annual payments, late fees, from the customers who don’t pay in full or on time.
They even make money off of fraud. Someone fraudulently uses a fraudulent card to purchase something, and the real owner challenges the charge? The credit card company takes the money back from the merchant, and adds a fee that they charge the merchant for the charge back. The only one out cash in that case is the merchant.
I guess people will stop paying on time
In other words, this is another “redistribution of wealth”.
Welcome to communism.
Oh vey the rewards points was a great thing BTW the best card is now chase freedom up to 3% cash back with no annual fee
Credit cards are as necessary as a telephone, electricity or running water and thus should be regulated like a utility.
I am not worried because one company will have the brains to stick to the old game and everyone will switch to the one company that does not stick it to good customers.
Millions of normal people will switch to my company that won’t punish people who pay on time and I will finally become a billionaire!
Chase Freedom Changed it’s reward program no more 3%.
BTW, US Bank (HAS Advantage) credit card gives you a round trip ticket to Israel on El Al after 56,000 points. 1 point equals 1 dollar. I think most other cc’s it’s about 80,000 points.
I have two credit cards with citi. Each one has about a 10,000 credit line, if I combine them both and make it one large credit line, does that increase the chances of them lowering the available credit? Need help?
Just do what I did, cut the damn things up and live without them! If you can’t afford to pay cash for it you don’t buy it, real simple
(Reply to #16 ) not true, 80% of the processing fees goes to the issuing bank.
Just because someone is poor doesn’t mean they don’t pay credit cards off each month. Just because someone is richer doesn’t mean they do so. This isn’t a matter of class warfare. It’s penalizing anyone no matter their income, who’s responsible with their debt. Credit card companies were deregulated under the Bush administration to the degree that they can charge usury. Who ever heard of 28 pct rates, much less 15pct years ago???
Hi
For all those who don’t like the terms of their card .GO GET ANOTHER CARD . that meets your needs .. a CREDIT CARD is not a right its a privilege that the company extendeds to you ….
When has AMERICA become a nation that regulates us and dictates to private companies how to operate their buisness … OH I forgot first it was cigerattes ..then guns … then transfats .. next we are on to calories , and soda /.. soon we will have a guide that will tell us what we can do from when we are born until we die
i think the USSR was reborn … the only diffrence is that now its America and the old USSR is trying to become the AMERICA that we once knew
it seems from the article that the people who didn’t just swipe their cards and used their brains. are getting punished for make good judgement calls with their credit cards. I never liked cc because basicly wat it is gives u $ u don’t have. I am not saying that its not helpful but once u mess up that’s when they start getting u &if u don’t get help after that one mess and fix it it only gets worse. all around me I see people having trouble with cc I am happy I only have one card. and these past years are making me think to cut that one up.
back to cecks and cash. who uses credit cards to fill up at agas station any more . pay cash o and we buy less and more important items and eventually crdit card companies will see that they do not have as big a base as they thought and guess what will happen, discounts and deals for new customers and the return of the old, but if u get used to not using the card, hobbin mir zey tif in …….
I hope all you Obama, Pelosi, Barney Frank, etc., lovers are very happy with the way they have completely messed up the economy and our confidence in it.
As soon as they start charging me a fee for my credit card, I’m closing the account. Now they won’t even get their transaction fees.
Y’all have such short memories. You think the credit card companies just started this in the past few months? They’ve been steadily raising rates and cutting back credit lines for a couple of years. When the Republicans were in control of Congress. When those slimy politicians were paid off, I mean given campaign contributions, by the banks and credit card companies and corporate America so that they were given carte blanche to do whatever they wanted. Now, I’m not saying the Democrat slimy politicians are any better, but at least this time throw the blame where it belongs.
you never know if a poor is in such a matzev that he can`t think of a plan how to pay back
Credit cards became an internal lifestyle in the us. Truth is, a person should try not to use a credit card. When you spend cash, you feel it, and you make a true calculation wether you need it or not. Credit cards you spend easily, because in your head you know I have a 5000 limit, it means I have 5000 dollars. When in fact you – 20000. So it is better to pay everything in cash, it also helps if the uncle sam is after you, then you get away much more easy.