Credit Card Companies to recoup dollars from folks who pay off their bills.

[dude1394]

This will be interesting. So the credit card companies get 3-5% on every purchase but o' woe is me, that's not enough since they can no longer screw over any and everyone. So they'll now "stop the free ride" from those who pay off their bills monthly. Boy they are dumber than I thought if they think that's going to work.

First -- To heck with it, get a debit card.
Second -- Go back to writing a check.

Then their percentages go down from all of the stuff that those folks have been buying on their card. Really smart there budda'..
http://www.nytimes.com/2009/05/19/bu...er=rss&emc=rss

Credit Card Industry Aims to Profit from Sterling Payers
Published: May 18, 2009
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.

[Underdog]

Originally Posted by dude1394

This will be interesting. So the credit card companies get 3-5% on every purchase but o' woe is me, that's not enough since they can no longer screw over any and everyone. So they'll now "stop the free ride" from those who pay off their bills monthly. Boy they are dumber than I thought if they think that's going to work.

First -- To heck with it, get a debit card.
Second -- Go back to writing a check.

Truth.

If you can't afford it, you probably don't need it...




(I just agreed with Dude in the Political Forum - did hell freeze over?)

[dude1394]

Originally Posted by Underdog

Truth.

If you can't afford it, you probably don't need it...




(I just agreed with Dude in the Political Forum - did hell freeze over?)

I think so...I felt a deep, deep chill right when you posted this.

[DirkFTW]

I'm going to miss my Amazon points. My brother and I got a PS3 for $20.

[Mavdog]

well, the average fee paid by the business for accepting the credit card is 1.5%- 2%. Amex previously was able to get 3%, but they wanted more points of sale out there so they lowered their rate.

on one hand, if you pay cash you are in effect subsidizing the other consumers who use their cards. the business charges the same to the consumer regardless of if they pay cash or charge the purchase, and the net is lower for the charge customer.

the industry who has been really hurt by the use of cards is the gas stations. these guys worked off of about a dime in profit/gallon sold, as the price of the gas rose the amount they paid to the card company rose as it's based on a %. that's part of the reason the major oil cos are all getting out of fuel retailing, and why the mom and pops have to sell all those 300% margin colas to stay in business.

so one of the ideas many retailers are tossing around is to pass onto the consumer their cost of providing this convenience to the customer. are you willing to pay an extra 2% to use your card to make the purchase? probably not, and the card companies have prohibited the retailer from doing just that. but they may not be able to stop this pass thru anymore...

I pay an annual fee for my card but I also get 2 advantage miles for every $I charge, so I charge just about everything. the bill is paid in full each month so i don't pay anything else for using the card, and I get about 2 free trips/year on aa.

I'm not sure the industry needs any more regulation than it currently has. they are required to give a voluminous notice to all the cardholders, and if the cardholder gets too much in debt they have only themselves to blame. there's usury laws on the books limiting the amount of interest they can charge.

[bernardos70]

Usury sucks. It played a role in getting the US where it is now (well, I guess it somewhat got the US to its peak).