var json_comments = new Array("
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chrisexv6
May 19, 2009 1:02 PM
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Well, at least the post office will get some of my $$$: need to buy stamps to send my cut up credit cards back to the card companies.

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3 replies
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HiPwr
May 19, 2009 1:16 PM
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@chrisexv6: I'll save the postage and just cancel by phone and cut them up and throw them in the trash.

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hedonia
May 19, 2009 1:23 PM
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@HiPwr: \"I'll save the postage and just cancel by phone and cut them up and throw them in the trash.\"

But how is that funny?

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adamczar
May 19, 2009 1:47 PM
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@hedonia: LOL, I dunno... I laughed at a lot at that comment.

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HiPwr
May 19, 2009 1:26 PM
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@hedonia: Ok, I'll do it while wearing one of those arrow through the head thingys. Worked for Steve Martin.

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rocketbear79
May 19, 2009 1:14 PM
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@chrisexv6: Be sure to send one of those first-aid kit sized polysporin pouches and label it: \"For after you shove this card up your ass.\"

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KevinReyn
May 19, 2009 1:05 PM
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yep I agree 100% These bastards need to be taught a lesson once and for all. First they should have been allowed to fail, now that they have been propped back up and have decided to stick a shiv in the backs of those of us who propped them up, I think its high time we consumers cease and desist all activities with companies that do this.


If its all about the money then lets play by their rules, you ding us we drop you.

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samandiriel
May 19, 2009 9:34 PM
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@KevinReyn: You're assuming that they won't collude as they have on other matters to present an united face - that there will be competition between companies on these fees. I very much doubt it; it will just suddenly be the 'industry standard'

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KevinReyn
May 20, 2009 4:53 AM
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@samandiriel: I don't disagree that this might be a tactic that they may try and employ.

But I still stand by my original premise. See we have forgotten who we are, that is the collective we not the consumerist we, Consumerist readers are pretty savvy folks its the other folks out there that have lost sight of the way this works.

We the consumer are the ultimate owners of the power, yet we (the collective we :) ) fail to exercise it on a regular basis. If we simply walk away from a company en mass then the consumer credit side of that company ceases to exist.

We tolerate poor service, rough handling, shoddy workmanship etc etc because we feel we have no option. Yet if enough people vote with their wallet then the greedy bastards sit up and take notice and try to figure out how to separate use from our money again and eventually they have to succumb to our demands or wink out into oblivion. It just has to get to the point where we as a collective raise our hands and our voices and say enough is enough we are through letting you beat the money out of us.

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Rachacha
May 19, 2009 1:46 PM
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@KevinReyn: That is exactly what they want though. Assuming you were a \"good\" consumer who used a CC for daily purchases, and paid it off every month and collected bonus points for hotels, air travel, gas stations etc., you were (conceivably) costing the bank money, hence the reason why they want to cut credit limits and increase annual cost of the cards. By leaving, they are only losing the money that would have come in from the merchant for the percentage of your purchase.

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Landru
May 19, 2009 3:39 PM
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@Rachacha: By leaving, they are only losing the money that would have come in from the merchant for the percentage of your purchase.

Don't discount this - they make a huge amount of money from these transactions. They aren't hurting for money, it's all greed. They are bring up this only because it seems like they have an plausible excuse for raising even more money.

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lemur
May 19, 2009 5:16 PM
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@Landru:

They aren't hurting for money, it's all greed.

Right. It is greed in the form of entitlement. The robber barons of the banking system, the members of the RIAA, of the MPAA, and of the Association of American Publishers and others feel entitled to continue making the same profit (or better) as they have historically made. For them, the success of a business model is not contingent on socio-economic factors but is some sort of axiom or a natural law (like the law of gravity). So for bankers if the CC industry has made X amount of profit in past years, it can certainly not be less profitable in the future, irrespective of how society changes. They will do everything to protect their short-term revenue, including enact changes that (ironically) will destroy their industry.

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Trai_Dep
May 19, 2009 2:46 PM
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@Rachacha: Yeah, but originally, the CC companies built a very health, sustainable model without all the predatory \"innovations\".
So we'll go back to that era, and the sleazy ones will go belly-up.
Not a bad thing.

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SacraBos
May 19, 2009 2:38 PM
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@Rachacha: But then, Visa/MC are going to see a drop in their revenues, too. They won't like that. I would love it if Visa/MC started using their leverage against the banks, too.

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mikesfree
May 19, 2009 1:05 PM
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Awesome! Maybe this will help keep people from getting off on a wrong path.

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pecan 3.14159265
May 19, 2009 1:13 PM
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@mikesfree: No, it only punishes the people who got on the right path and managed their money wisely to begin with. Credit cards aren't a \"wrong path\" - people being unwise with how they spend money is how they got on the wrong path. Credit cards had nothing to do with it.

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mikesfree
May 19, 2009 1:35 PM
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@pecan 3.14159265:


I think credit cards are the wrong path for a lot of people. If you wait until you have cash to buy something the risk of overspending is greatly decreased. On top of this, there is a percentage charged by all CC companies that accept credit cards. To make up the money, everyone pays more.


I have credit cards, but dont use them in many cases. If you manage them well, its fine. But in many peoples cases, they can get out of hand. The average debt americans face should tell you that.

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Etoiles
May 19, 2009 1:52 PM
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@mikesfree: But it's not a matter of \"having cash,\" for a lot of people. It's a matter of, say, buying something that costs $1200, so you don't want to be carrying that much cash. It's a matter of purchasing over the internet (airline tickets, train tickets, books from Amazon, whatever), where you can't deal in cash. It's a matter of wanting a paper trail and being able to have the option of a charge back in case Sears loses your lawnmower.

Yes, some people use credit cards to spend money they don't actually have. Some people go way too far with it and are tens of thousands of dollars in stupid debt. But \"that makes credit cards bad for everyone\" is the same kind of logic that says if my neighbor is a 500-pound alcoholic, I shouldn't be able to enjoy a cheeseburger and a beer from time to time.

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mikesfree
May 19, 2009 2:03 PM
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@Etoiles:


Good points, but these issues have always existed. I use a check when I buy large items. For purchases over the internet, I do use a credit card. You might also be able to use a debit card there though.


But you are right, because people misuse something doesnt mean we all shouldnt be able to use. But look at it honestly, the reason it doesnt cost you too much to use a card now is because the saps at the bottom rung of it are paying so much. The companies hope you will miss a payment or choose to pay a little less this next month, so they can make a little more off of you.


Its the business model. If you regulate it to be something else, they have to change how they make money. They have shareholders to report to.

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emis
May 19, 2009 3:51 PM
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@mikesfree: But look at it honestly, the reason it doesnt cost you too much to use a card now is because the saps at the bottom rung of it are paying so much.

Not accurate.

Credit card companies charge merchants a percentage (1-3%) of every transaction as their fee... this alone represents MASSIVE amounts of money for the credit card companies and is generated by all use.

Do the card companies make money off of interest, fees and penalties? Of course ... but if no one ever defaulted and instead paid off their cards on a regular basis, does that mean the CC companies will go out of business? Not by a long shot.

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pecan 3.14159265
May 19, 2009 2:08 PM
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@mikesfree: You shouldn't use a debit card online. Do places still accept checks? I'm legitimately asking, not being snarky. I've never paid for anything at a store with a check.

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mikesfree
May 19, 2009 2:45 PM
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@pecan 3.14159265:


Amazingly yes, most people are more than willing to accept checks. They dont have to pay a percentage of the transaction to deposit a check.


Thats cool that you have never had to use a check though. Its a different world today isnt it?


I think if we demand it, we could get banks to start making secure online numbers available for debit cards. It would be a great way not to have any debt and move away from the credit cards.

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dragonfire81
May 19, 2009 3:12 PM
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@mikesfree: A mastercard or visa branded debit card will work just the same as a credit card for many purchases and you won't risk running into debt since any transaction will draw off your bank account anyway.

Your only risk there would be overdrafts I suppose since transactions take a few days to post.

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pecan 3.14159265
May 19, 2009 3:29 PM
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@dragonfire81: Still doesn't solve the issue of buying online. And no, I'm not going to stop buying online.

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SmaShT
May 20, 2009 6:10 AM
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@pecan 3.14159265: I don't see the big issue for using a debit card online. I've been using it for years with zero issues. You are still protected against all fraudulent charges, and if that isn't enough for you, there are systems like the one used by BofA where you create a single-use number for online purchases. I'm sure other banks have a similar system in place as well.

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oneandone
May 20, 2009 5:14 PM
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@SmaShT: The problem with debit cards, is that if there are problems, they are with your money, rather than the banks/CC company's. It makes it harder to get your money back. An example of this happening with an online purchase:
[consumerist.com]


and another example where a debit card was charged months later due to a 'glitch':
[consumerist.com]

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mikesfree
May 19, 2009 3:39 PM
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@pecan 3.14159265:


Thats fine, you may just have to pay for that convienence through interest then. Every transation has its good and bad points.


I used the visa branded debit card online once a few times, and of course, the number got stolen. I got the money back, but it was a lot easier when it happened on a credit card. The credit union was just so small, and so ill prepared that they really were of little help. I'll probably still use a CC online and pay a premium if there is enough incentive, unless we can get the Credit Union where I hold the debit card to get us some secure online numbers.


No matter what, these companies are going to have to adapt to keep making money. Dont sweat it! Its just how its going to have to work I think.

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azntg
May 19, 2009 2:35 PM
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@mikesfree: The only exception I can think of are credit unions, many which do issue credit cards.

For many credit unions, the shareholders ARE the very same members that they serve. And I'll be damned if everyone unanimously and intentionally vote towards screwing themselves.

@pecan 3.14159265: Agree with careful usage of debit cards. I personally think it's safest to use them only when you can observe the prices being rung up in front of you and leave with the merchandise by your side.

But some people legitimately can't get credit cards. Can't do much there. But those who can get credit cards and later complains that something went awry... well, they picked their own poison.

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emis
May 19, 2009 3:55 PM
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@azntg: For many credit unions, the shareholders ARE the very same members that they serve. And I'll be damned if everyone unanimously and intentionally vote towards screwing themselves.

You're assuming a lot :)

1) That the members vote

2) That the voting members are also credit card users, many many CU members are probably just using the bank for checking and savings

3) That the voting members who are credit card users see this as an entirely bad thing

I general I've found that CU credit cards typically have lousy rewards programs, but in exchange they provide more reasonable APR rates. My CU has an 8% APR, probably the folks using this card are using it because they carry a balance and this is one of the cheaper (and more stable) ways to carry the balance cheaply

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Guvmint_Cheese
May 19, 2009 5:18 PM
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@emis: My CU's APR is 6.9% on its Visa, and the rewards are 1% (1 pt per dollar) which you can redeem for virtually anything, which is not bad. I highly doubt they would impose an annual fee on it, regardless of the credit reform bill.

I'm more concerned about my 5% back gas/grocery/drug store credit card. I have no fee on that, and I get back hundreds of dollars every year.

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dragonfire81
May 19, 2009 5:37 PM
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@Guvmint_Cheese: You can use a branded debit card for online purchases, I've done it many times.

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Etoiles
May 19, 2009 2:24 PM
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@pecan 3.14159265: When I was working at GameStop in the winter/spring of 2006, someone wrote us a check and literally none of us knew what to do with it. I used to process them a lot when I'd worked for CVS in high school (lots of older customers at a pharmacy) but not a single one of us, including the assistant manager, had the faintest idea what we, as GameStop employees, were supposed to do to process a check. That was the first one any of the four of us on duty that day had received in the time that any of us worked for the chain -- and in a couple of guys' cases, that was 2+ years.

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mikesfree
May 19, 2009 3:33 PM
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@Etoiles:


The fact that gamestop couldnt get a check processed is awesome. It really speaks to how convienent the credit card companies have made the cards. I wish I would have been able to make a product that so many people rely on. Would be so sweet to have 4% of someone elses money.

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pecan 3.14159265
May 19, 2009 2:37 PM
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@Etoiles: I think this is also true of certain places that have upgraded their systems to the extent that they can't take a check - they don't have the technology for it anymore.

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pecan 3.14159265
May 19, 2009 1:42 PM
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@mikesfree: I'm of the \"make your own bed, lie in it\" philosophy...you get yourself into debt, you educate yourself and get out of it. I know credit card companies are evil, but if you can't handle that 25% APR, find a different card. Don't run up purchases and not pay the balance in full. Don't overspend.

But I'm not into hand holding, and I don't think we good cardholders should be punished for the careless mistakes of others.

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morgasco
May 19, 2009 1:50 PM
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@pecan 3.14159265: The only provision that I think I would benefit from in this bill might be the one of gift card expiration dates. But anyone that knows me really knows I hate gift cards.

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morgasco
May 19, 2009 1:29 PM
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@pecan 3.14159265: I agree 100% with you. It will be very disappointing if this happens, since using my credit card to pay for larger ticket items with AMEX allows me to double the warranty on the product, along with giving me protection on the transaction I don't get with cash, along with the rewards. But hell, it's not about those who pay it off and use it responsibly is it?

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oldgraygeek
May 19, 2009 1:08 PM
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We pay our cards in full every month, taking advantage of the grace period. They make a profit on us by skimming the merchant charges off the top.

I predict that much of this initiative will backfire because of competition: if BofA does this to us, we'll simply move our $3000 worth of monthly purchases to Discover or AmEx. So will every other customer who does what we're doing.

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zonk7ate9
May 19, 2009 3:24 PM
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@oldgraygeek: If they charge me fees or interest immediately then I'll just use my check card. I don't carry a balance, I just want the cash back.

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UnicornMaster
May 19, 2009 3:55 PM
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@oldgraygeek: And if all of the CCs want to charge interest immediately and remove grace periods, I'm going all cash and checks. Not even going to give them the benefit of using my Debit Card. Visa/MC/Amex can kiss my butt...

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pecan 3.14159265
May 19, 2009 1:15 PM
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@oldgraygeek: Exactly. One guy says they'll charge annual fees and institute interest rates based on purchase, another guy will say they do none of that and gain business.

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BarbadosSlim
May 19, 2009 1:41 PM
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Or, they'll be more like the airlines and as soon as one cc company starts making up ridiculous fees, they all will.

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Skankingmike
May 19, 2009 1:12 PM
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@oldgraygeek: great now I have to cancel like 5 cards

(don't use them but haven't bothered to cancel due to buying a house and not wanting to hurt my credit rating).

I wonder how debt cards will play out?

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Diet-Orange-Soda
May 19, 2009 1:09 PM
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Charging interest immediately on a purchase? Are they trying to lose customers?

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6 replies
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AbsoluteIrrelevance
May 19, 2009 6:06 PM
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@Diet-Orange-Soda: Bring it on. Me and everyone else switch to cash so fast they won't know what hit them. Websites will learn real quickly how to take a direct deposit or process a 1000% increase in mailed checks. Let's turn back the online purchasing clock by 10 years, you short sited bank bastards.

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Murph1908
May 19, 2009 2:15 PM
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@Diet-Orange-Soda:
Agreed.

The day this happens is the day I start carrying cash again.

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Starfury
May 19, 2009 3:07 PM
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@Murph1908:

If my CC starts playing games I'll pay cash for everything or start writing checks.

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dragonfire81
May 19, 2009 3:15 PM
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@Starfury: Would that mean that you would have automatically have to pay interest on everything you buy since there'd be at least some delay between the purchase and you paying it off?

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chrisexv6
May 19, 2009 1:13 PM
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@Diet-Orange-Soda:

From the sounds of the article, the banks have a word other than \"customers\" for people that pay their bills in full every month (i.e. be responsible with their credit).

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catnapped
May 19, 2009 2:44 PM
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@chrisexv6: Well I have a word other than 'banks' for them, but I won't repeat it here...

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Zegridathes
May 19, 2009 1:28 PM
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@chrisexv6: I heard on the radio a number of years ago that we are lovingly referred to as 'deadbeats'.

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giggitygoo
May 19, 2009 1:12 PM
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This is a predictable response. I'll be curious to see how much of it will actually happen and what is just bluster. If nothing else there are many decent credit cards offered by Credit Unions that likely will still offer no annual fee and grace periods, if not rewards.

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Trai_Dep
May 19, 2009 2:43 PM
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@giggitygoo: Yup.
Sorta like those claims that catalytic converters (Made of pure platinum!) or shatter-proof glass (It cost us $$$ to custom-fab it in the lab!!) was going to drive up the cost of cars to the half-million dollar level.
The more decrepit and flailing the sector, the more grumpy and irate their threats are when forced to change.

Don't worry, free market, I have faith you'll punish the baddies and deliver the good ones running responsible business models to me!

(Although I have to give them credit: for too long, sub-prime mortgage brokers were earning consumer hatred. It's nice to see the credit card industry working so hard to regain their rightful place as most despised financial company in America.)

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White Speed Receiver
May 19, 2009 1:22 PM
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@giggitygoo: The banker at my credit union almost seemed disappointed when I didn't want more money for an auto loan a few months ago. I wonder if going in and asking about a credit card would brighten his mood.

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aedude01
May 19, 2009 1:12 PM
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I can and will switch back to cash. Nothing is keeping the CC in my pocket other than ease of use. Besides, maybe if I started just using cash I'd spend less.

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3 replies
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pecan 3.14159265
May 19, 2009 1:45 PM
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@aedude01: I don't think I'll ever go back to using just cash...it's aggravating, and dangerous (you want to walk around with $800 for a big ticket purchase?)

Not to mention that unless every single credit card company starts charging annual fees and interest on individual purchases, I'll just find a different company to do business with.

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HiPwr
May 19, 2009 1:18 PM
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@aedude01: I haven't tried to pay cash for an airline ticket or a car rental lately, but I've heard it is a pain in the ass.

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edison234
May 19, 2009 2:42 PM
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@HiPwr: That would be the \"Physical Medium Legal Tender Processing Fee\" of $20, please.

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SadSam
May 19, 2009 5:43 PM
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@edison234:


While we still use credit for travel, debit card works just fine as well.


I think this plan makes sense on one level in that if the CC can't make money of the \"bad customers\" they will make it off of the \"good customers\" or they will somehow figure out how to make it off both and those in the middle. I certainly remember when you had to pay an annual fee for a credit card and when they only gave credit to folks who could actually pay it back, all those cash back and free airline tickets cost money and if they can't make it off the bad folks they have to scale back the rewards and return to old models.

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JiminyChristmas
May 19, 2009 7:11 PM
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@SadSam: Problem is, the CC companies need 'good customers' more than the 'good customers' need them. I don't carry a balance. I will never pay an annual fee for a credit card, nor will I use one that doesn't have a grace period. The only reason I usually use a credit card is for convenience and rewards. Take away both of those things and there's no more reason to use a card. I'll be damned if I use a credit card at the supermarket and pay interest on groceries because there's no grace period. People in line behind me will have to wait while I write out a check.

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Michael Lerch
May 19, 2009 1:13 PM
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This is amusing. I pay my balance off every month and use my credit card as a means of convenient payment and bill consolidation, and I do use the card's points program. If they charge interest immediately, the price will outweigh the convenience, and I'll stop using their card. Looks like I am one of many that feels that way. It's too easy to switch to a debit card, and if they start charging for those, it's too easy to just start carrying cash like I did when I was a teen!

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Inglix_the_Mad
May 19, 2009 6:58 PM
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@Michael Lerch: Too true. I guess they'll be happy to lose billions in transaction fees too.

Wife and I will just carry cash and keep one card empty for trips.

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Anonymous
May 19, 2009 1:48 PM
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@Michael Lerch: You've got the right idea, and that makes this statement look ridiculous: \"Those that manage their credit well will in some degree subsidize those that have credit problems,\" If your credit card starts charging you interest immediately, reduces the rewards you may get from using it, and enstates annual fees, i really think \"those that manage their credit well\" like yourself will not be using them and thus will not be subsidizing those with credit problems.

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edebaby
May 19, 2009 1:14 PM
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\"Those that manage their credit well will in some degree subsidize those that have credit problems.\"


Socialism creeping in everywhere it seems...

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Anonymous
May 19, 2009 6:22 PM
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@edebaby: Actually, instead of those who can't manage their debt subsidizing the responsible peoples rewards program, the responsible people will have to pay their own way and the irresponsible people will not be allowed to play anymore. This is capitalism my friend, pure capitalism.

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babyruthless
May 19, 2009 3:26 PM
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@edebaby: I would argue that it is the other way 'round--those who manage credit wisely are subsidized by those poor schulbs paying 25% interest. None of my CC companies have ever gotten a red cent [directly] from me--they are able to remain afloat on the backs of merchant fees and those who pay interest.

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samandiriel
May 19, 2009 9:39 PM
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@babyruthless: Yup, them and the mechants who get charged a higher fee are the source of my card rewards. Where do people think the rewards come from? Thin air?

Nope nope nope. Your rewards are taken directly out of merchants' pockets and from the outrageous fees the suckers or unfortunate wind up paying.

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edebaby
May 19, 2009 7:33 PM
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@babyruthless: The merchant fees are incorporated in the products or services you procure with your credit card. You do pay them, they're just not a line-item on your bill.
And with the rules proposed in the article, you would then be paying directly because you would now be charged interest from the date of purchase, with no grace period.

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Rey
May 19, 2009 3:10 PM
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@edebaby: Socialism?! Ha ha. You need to stop getting your edumacation from the oxycontin-riddled fatman.

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edebaby
May 19, 2009 7:29 PM
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@Rey: not sure what you're talking about; never voted Republican in my life.

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squinko
May 19, 2009 5:30 PM
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@Rey: How socialist of you to make fun of someone.

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dragonfire81
May 19, 2009 5:39 PM
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@squinko: A person can say \"I don't want to give any my money to help poor people\", but the government can say \"We want to help poor people\". Well, the person pays the government taxes and if the government decides to help poor people with the money it gets from you via tax, that's their prerogative.

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squinko
May 19, 2009 2:16 PM
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@edebaby: You really don't understand what socialism is if you are trying to apply it to this situation. Group punishment is not socialism.

Please stop parroting conservative scaremongering points.

[www.everythingisdesign.com]

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Tiber
May 19, 2009 2:13 PM
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@edebaby: Socialism (n): a political theory advocating state ownership of industry.

How does this situation fall under socialism again?

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captadam
May 19, 2009 1:57 PM
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@edebaby: Um, we're talking about private enterprise here. What next: hand-wringing about the socialistic insurance companies?

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edebaby
May 19, 2009 7:23 PM
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@captadam: credit cards are insurance? I don't think so.
The difference is that you know what you are participating in when you buy insurance. And, the insured parties that have the highest risk pay the highest rates to get insured. No comparative value to the situation at hand with the credit card companies.


Regarding the issue of private enterprise; tendencies are tendencies, whether based in political or commercial terms. In this case, it seems like social engineering to me to have the people who manage their finances well pay the costs of carrying those people who do not manage their finances well. In fact, I don't need a credit card at all. I use my one card to make all my purchases simply as a convenience and to obtain the cash-back value that my particular card provides. If they were to impose the structure indicated in the article, I could just as easily go to debit-card only purchasing, leaving me out of the issue entirely; where would that leave the mismanaged debtors then?

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SacraBos
May 19, 2009 2:45 PM
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@captadam: Most insurance isn't socialist. It's legalized gambling. You're betting you'll have a loss they are required to cover. They're betting you won't. They set the odds.

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TouchMyMonkey
May 19, 2009 3:31 PM
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@SacraBos: Actually, you're buying a hedge against the risk of some catastrophic event happening. Yes, the house always wins that \"bet\" just like at the casino, but you're paying for the privilege of sleeping well at night knowing that extraordinarily rare thing actually happening to you won't put you in the poorhouse.

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dragonfire81
May 19, 2009 3:14 PM
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@captadam: I think he's talking about the problem of the government trying to save the people from themselves by limiting the terms on which companies can loan to them.

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cerbie
May 20, 2009 11:42 PM
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@dragonfire81: that's regulation. It happens to industries that go so far against the people they have as customers that they can't even lobby their way out of it.

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HiPwr
May 19, 2009 2:11 PM
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@captadam: The insurance industry is an excellent parallel as to why this isn't socialism. As an honest purchaser of insurance, there is a portion of my premium that goes to cover insurance fraud where the insurer is taken to the cleaners.

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edebaby
May 19, 2009 7:24 PM
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@HiPwr: No parallel, at all. Entirely different business models.

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nataku8_e30
May 19, 2009 1:14 PM
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Hrmm, I would imagine that if they start charging annual fees, it would be easier to cancel your card (I would hope anyway...). Also, I think I'll start paying in cash if they make it impossible to use a credit card for free - credit cards are a convenience and not worth paying for, IMO. This may end up hurting online retailers though.

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edison234
May 19, 2009 2:56 PM
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@nataku83: Sure, companies will reinstate the Annual Fees. But at the same time they can institute an Account Termination Fee, a Zero Account Activity Maintenance Fee, and a Zero Balance Fee (where you pay a fee when you are paid in full). By doing this type of gouging, they might be able to give your credit report a ding if you don't stay on top of it.

All hell, they could create a fee called the 'You Opted Out Of Our Cross Marketing Revenue Path Fee'. Or a 'Good Customer Fee'.

That stupid Spiderman Capital One \"Fraudulent Charges\" commercial comes to my mind.

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s73v3r
May 19, 2009 5:33 PM
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@edison234: So to avoid the Zero Balance fee, all I'd have to do is pay my account off in full except for $1.

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nataku8_e30
May 19, 2009 4:19 PM
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@edison234: Well, if they initiate any fees, I will certainly make every effort to cancel the card as soon as I am notified. I would assume I could get out without having to pay a termination fee due to materially adverse contract change, or is that only relevant to cell phones?

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West Coast Secessionist
May 19, 2009 9:47 PM
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@nataku83: What termination fee are you talking about? I sincerely doubt any bank could get away with charging a fee just for closing your (paid-off) account.

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floraposte
May 19, 2009 1:55 PM
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@nataku83: I bet the fees will simply be charged to the card, though, and untangling yourself will be akin to trying to cancel autorenewals for Acai Berry Juice.

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sponica
May 19, 2009 1:27 PM
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@nataku83: unless we all want to get a bazillion branded charge cards for the stores we shop at....I knew that VS card was going to come in handy someday. You definitely pay off something every month when the interest rate is like 20%.

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Scrutinizer
May 19, 2009 1:15 PM
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This reminds me of the scene in Blazing saddles where the sheriff holds a gun to his own head. If you don't lets us have our way then we'll stop doing business.


These changes really just get us back to the classic business model of banks loaning money and making a profit off of the interest. In the last decade or so banks have moved to a fee and penalty based model. Send statements out so they arrive on a Friday where there is a slightly higher chance of that they will be forgotten. Switch from monthly statements to 28 day periods so that there is a slightly higher rate of late payments. Any tweak they can think of to raise the defaults so they can collect a late fee.

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cc82
May 19, 2009 1:15 PM
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Ok, do this and I stop using your credit card altogether. Your move, Yingling.

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jimconsumer
May 19, 2009 4:31 PM
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@cc82: Agreed. These people are idiots. They might as well have said, \"Fine, we're just going to put ourselves out of business!\"

Hey, fine by me. I have zero need for credit cards. I use them because they're convenient. Make it expensive or difficult and I'll hack 'em up and go back to cash. No big deal.

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s73v3r
May 19, 2009 5:35 PM
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These guys seem to want to make it really hard to buy stuff online. That, and because I don't like walking around with cash are the reasons I have a credit card.

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LegoMan322
May 19, 2009 1:17 PM
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@cc82: I think it's about time we just stop using credit cards period. I am currently trying to do just that (notice trying). It is harder than I thought since I do not have a regiment for keeping cash in my pocket or in my house.

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sponica
May 19, 2009 1:29 PM
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@LegoMan322: When I'd go through my cashpoor periods, I'd put myself on an allowance for the week...it is harder than it sounds (esp in places that are expensive to begin with)

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jeffbone
May 19, 2009 1:17 PM
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\"Those that manage their credit well will in some degree subsidize those that have credit problems.\" (Yingling)

In a rational world, the reverse would be true. It's at least partially true under the current model, assuming the article is correct about the profit estimates from current late and overlimit fees. Then again, it's now national policy to reward (or at least tolerate) poor behavior, so why should this new idea be a surprise?

Oldgraygeek makes an excellent point, which Mr. Yingling conveniently overlooked: those of us who pay off in full every month still make money for the CC companies thanks to the merchant fees.

Continuing to hunker down, here...

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MeOhMy
May 19, 2009 1:26 PM
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@jeffbone: *AND* those of us who pay in full every month can just as easily forego the gutted rewards we were getting and just pay with cash.


There two kinds of people in the world...those that can pay you back and those that can't.


I can't imagine why a lender would prefer to lend to people that can't pay him back, but what the heck do I know?

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secret_curse
May 19, 2009 1:36 PM
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@Troy F.: What the credit card companies want is a customer that barely pays the minimum balance every month and occasionally misses a payment or overdraws so they have to pay some sort of fee. At the same time they collect the fee, they jack the interest rate up even higher. People that pay their balances in full or pay well over the minimum balance make a profit for the companies, but not really high profits like people that pay the minimum and rack up lots of fees.

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morgasco
May 19, 2009 1:31 PM
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@Troy F.: Yeah, but those of us that pay in full, etc will also lose the protection that comes with using a credit card over cash.

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pecan 3.14159265
May 19, 2009 1:51 PM
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@morgasco: Exactly. And I really enjoy my rewards points, which they'll take away...but even if they took them away, there's still a security with credit cards that you can't get with cash. If someone steals my purse, I can call the CC companies and halt all transactions and get a new card.

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pecan 3.14159265
May 19, 2009 1:52 PM
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@pecan 3.14159265: And also, good luck doing any online transactions in cash.

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morgasco
May 19, 2009 2:01 PM
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@pecan 3.14159265: Ah come on! It's more fun to say that you won't use credit cards period!

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NotChoinski
May 19, 2009 1:17 PM
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Oh, I suspect the free market economy will sort this out. Credit card companies will contract the available credit (there's too much of it out there anyway, and consumers need to be weened off theier excessive dependence on it). Then any company that offers decent treatment of its better customers will be rewarded, and the the other companies will follow suit.

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samandiriel
May 19, 2009 9:43 PM
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@NotChoinski: You're assuming that there is a free market. Quite aside from the various regulations imposed federally, the major CC companies can and do collude to create artificial standards of their own across all cards. The problem with the free market solution that people often shout out at these sorts of things is that the free market model only works if all parties subscribe to the model. It's way too easy to game a free market, and in a heavily capitalist me-first culture it will be. Hence the national schizophrenia between 'let the consumers decide via the free market!' and 'the government needs to step in and DO something about it'!

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meadandale
May 19, 2009 2:51 PM
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@NotChoinski:

Wow, a lucid response in a sea of inanity.

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Anonymous
May 19, 2009 1:21 PM
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Are you saying that ALL banks will be doing this, instead of each bank acting INDIVIDUALLY to do what they need to do to both attract customers and make a profit? Hmm... smells a bit like price-fixing or collusion here. Nice for them to admit it in print. I guess they'll need more of my tax money to pay for their lawyers to defend them in court on this one.

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SacraBos
May 19, 2009 2:53 PM
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@OrnellaLuniz: Isn't \"Universal Default\" already ample evidence of their collusion?

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RvLeshrac
May 19, 2009 6:22 PM
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@SacraBos:


\"Universal Default\" isn't collusion, just poor ethics and morals. There's nothing (in a civil sence) *legally* wrong with saying \"Hey, that guy defaulted on his other account, he's probably going to be defaulting here, too. Let's overcharge him BEFORE he doesn't have any money left!\"

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razremytuxbuddy
May 19, 2009 1:21 PM
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Gee. Maybe I should threaten to wean myself off of credit cards. Too late, I've already pretty much done that.

The consumer credit industry is cannibalizing itself, I think.

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dbshaw
May 19, 2009 1:21 PM
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What this points out is that CC companies SHOULDN'T be giving cards to bad cardholders. Just another example of the dynamic that's gotten us into this mess: indiscriminate credit.

If D.C. wanted to do some reform that would have impact, they'd look at legislation that would seriously reduce the need for credit cards which have become almost the default pay/id system for almost everything. Fix that and a lot of people who shouldn't have cards will drop them, a lot of people who are being screwed by their cards will drop them.

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cerbie
May 20, 2009 11:54 PM
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@dbshaw: ...but then CC profits will drop! Blasphemy! Don't you know that a rapidly growing revenue stream is far superior to a lower, yet healthy and stable, one?

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ct_price
May 19, 2009 1:25 PM
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I sense bluster. Sounds like the States' Restaurant Associations that fought smokefree restaurants saying it would signal the DEATH of the restaurant business. After smokefree, restaurants (save for the current economic downturn) have INCREASED business. Now Restaurant Associations like Texas are working for its introduction. I can see the credit card issuers/banks doing just fine if they eliminate these parasitic fees. They will kick and scream until it happens and then be surprised at how profitable the right way of doing this is.

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consumerfan
May 19, 2009 1:26 PM
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Call their bluff. The banks are basically throwing their toys out of the pram over lost profits.

Thing is, you can't make profits off customers you don't have. And, as I've said before, these reforms are nothing new in the UK.

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whydidnt
May 19, 2009 1:26 PM
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Well I have to disagree with the sentiment of \"ill-gotten gains\". It's still not against the law for corporations to profit in this country.

Having said that, let's see what really happens. I put everything on my credit card, spending and paying of around 3k each month. If the bank is getting 3% in interchange fees they are earning $90.00/month simply for processing my charges and payments. If my current issuer doesn't like that arrangement, I suspect It will be easy enough for me to find one that does.

If the big banks follow through on their threats, I suspect Discover and smaller banks will look at this as an opportunity. We may have to move our relationship, but it's likely I'll find a good rewards card that still provides a grace period and doesn't have a fee.

Funny thing is that if banks follow through with these plans, they'll just further erode the quality of their card base, driving the most credit-worthy customers to their competition.

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HiPwr
May 19, 2009 4:27 PM
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@whydidnt: The \"ill-gotten gains\" is the flat screen TV put on a credit card that you don't have the means to pay.

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ztoop
May 19, 2009 2:35 PM
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@whydidnt:

You are right. This is just fear mongering at its finest! They like to pretend we are all deadbeats, but it is the easy consumers like us that give them a _steady_ profits. Even if they only make 1.5% on transactiion fees (3% fees - 1.5% rewards) they are making a crap load of money. Some local governments run on sales tax that isn't much higher than this (say 5-6%).

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RvLeshrac
May 19, 2009 6:24 PM
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@ztoop:


At every place I've worked, the transaction fees are more like 5-6% *plus* a flat-fee on top of that. AmEx, Discover, and Diner's Club charge substantially higher transaction fees than the other companies to boot.

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cerbie
May 20, 2009 11:57 PM
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@RvLeshrac: This is something I have a real problem with. There should not be a flat fee applied to any purchase. It should all be % of the total, end of story.

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JollyJumjuck
May 19, 2009 1:27 PM
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Looks like we've moved from a \"cashless\" society to a \"nickel and dime\" society.

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chris_d
May 19, 2009 1:28 PM
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I hope the bastards DO start charging interest right away with no grace period. I'll stop using the f***ing card and pay cash! I'm sure many others will as well. I'm one of those \"deadbeats\" who pays off his balance every month. Let's see how well the banks do without all the transaction fees they get from our purchases.

I'd say they are bluffing! They're taking a page from the Bush administration playbook: scare the population to get what you want.

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pecan 3.14159265
May 19, 2009 2:00 PM
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@chris_d: Psst. Do you shop on Amazon? Good luck using cash.

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mikesfree
May 19, 2009 3:26 PM
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@pecan 3.14159265:


Psst. you can use a check on amazon too. Its crazy! I know!

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ninja_in_a_tree
May 19, 2009 1:28 PM
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These banks are all blowing smoke. If they add annual fees to all their cards, and charge instant interest on purchases, and cutback on reward programs, people won't use credit cards anymore. Oh well. Too bad for them, make a bad situation even worse. Suckers. Bye bye credit cards. Time to use cash and only may purchases you can afford! That will teach people to abuse credit cards.

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Crystal Wojcinski
May 19, 2009 1:29 PM
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\"You are going to force us to become MORE despotic, you wait and see!\"
There is a reason my husband and I don't use credit cards. Past all the reward programs and incentives, it really isn't worth it in our situation. I'll not dish on those who do because I've heard some very valid reasons to have a card (Credit score, overseas travel, reward programs) but I dislike these companies so much I'm be hard pressed to deal with them.
Am I a Luddite for advocating less credit as a good thing? Perhaps a society where your average Joe Schmoe buys what he can afford and saves for what he can't is a good thing? Sure, our economy will experience a loss of growth but the slower growth with have a solid footing not based on consumer debt as an industry.
On a side note, weren't good card holders ALWAYS subsidizing bad cardholders? If they were not, how was the company making any money?

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pecan 3.14159265
May 19, 2009 3:38 PM
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@Crystal Wojcinski: You're not a luddite, but society is not the same anymore. Like HogwartsAlum said, what if something happens to your car? What if you need to go to the emergency room? Are you going to have that $200 in cash in your wallet? What if you don't have enough money? Are you carrying around a checkbook? I suppose you could do that...but imagine writing a check for everything. And we're advised not to use debit cards, and there are hassles with security, and...you get the idea.

Credit cards are a tool. I have the money to pay for whatever I put on my credit card. Why not just use cash, you say...well, the problem is, I don't want to carry around cash all the time. I forget I'm out of something, I don't want to have to plan for how much money I'm using every week just to be able to buy the bottle of shampoo I forgot about last week. It's about convenience, for me anyway.

Above all else...I don't want to carry $40 and a bunch of loose change.

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econobiker
May 19, 2009 3:51 PM
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@pecan 3.14159265: Checks are even problematic now with the likes of Certegy check verification service around.


[www.fidelityinfoservices.com]


[www.google.com]


We had a check refused based on Certegy's response to a merchant phone inquiry. Certegy is the next \"worst\" thing to a credit report bureau...

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HogwartsAlum
May 19, 2009 11:09 PM
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@econobiker:

I still have checks, but I only use them for bills that it's easier to pay by mail. Some companies have shitty websites. Or I'd rather pay my utility bill by driving by and dropping a check in the box.

I have Batman checks. They rock. :)

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HogwartsAlum
May 19, 2009 2:01 PM
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@Crystal Wojcinski:

You're not a Luddite. But this makes me nervous because I don't have a credit card and I'm feeling like I might need one if something happens to my car, or something. I just can't lay out what it would cost for a major repair. At least with a card, I could pay it off, even if it took a while. The reason I didn't get one before was the fee game.

Grrrr!

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logicalnoise
May 19, 2009 1:31 PM
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so the credit card companies likely have good credit ratings right(or even their employees)? Well won't they just be hurting themselves?

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Cocoa Vanilla
May 19, 2009 1:31 PM
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They should just add more provisions to the reform to prevent this.

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yso
May 19, 2009 1:31 PM
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where's the house and senate on these threats? make them illegal!

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tard
May 19, 2009 1:33 PM
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If this is the price we have to pay so that the gov't can save its citizens from themselves, then so be it!

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swearint
May 19, 2009 1:33 PM
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America needs to rediscover an old concept called 'lay-away'. I bought my living room furniture that way, and since it had to be ordered anyway, the instant gratification of using credit was not an issue.

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3 replies
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econobiker
May 19, 2009 3:54 PM
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@swearint: Walmart bailed on layaway and offered up some credit card they own.

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SacraBos
May 19, 2009 2:56 PM
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@swearint: Amen! I think we are going to start to see a comeback of that practice. As a society, we really need to get away from this instant gratification thing.

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razremytuxbuddy
May 19, 2009 2:51 PM
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@swearint: Layaway is totally awesome. When I've put something on layaway, it has kept me from spending my money on other things until I've got my layaway paid off. I think Kmart still does layaway. I know Walmart did away with it a couple of years ago.

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morganlh85
May 19, 2009 1:33 PM
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Good. Then fewer people will bother using credit cards in the FIRST PLACE.

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frank64
May 19, 2009 1:34 PM
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It's funny. The banks say the reason for late fees and over limit fees was to compensate for higher risk, however now they are saying those that don't pay the fees are deadbeats? Inverse world they live in. Sorry I don't live there.

They will still make very good profits on people who carry a balance and even those the PIFers. They just won't be as obscene as they were. The problem is they were really raking it in for a few years and now they expect it. I guess the normal credit card services were just a loss leader for the fees?

They can't start treating the PIF customers bad, they can go elsewhere.

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pkoutoul
May 19, 2009 1:36 PM
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Well, I knew it couldn't last forever. For the past few years, we have enjoyed our Chase Speedway Mastercard on which we earn about $100 in free gas every couple of months. We use it for just about every purchase we make and pay it off every month, while earning 3% on the money being held to pay them in our hi yield checking account. Guess we'll have to go back to using a debit card.

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Saboth
May 19, 2009 1:37 PM
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Personally, I'd rather pay the higher price. I'm tired of subsidizing people in life. They suck out social security and medicare so I can pay for low income people and the retired (because it won't be there in 35 years when I retire), and use my tax dollars to pay for people to sit around on welfare all day and pop out kids. No need for me to subsidize their credit cards too.

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RandomHookup
May 19, 2009 2:12 PM
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@Saboth: In theory, however, we all subsidize someone. I pay taxes that support the schools, but don't have kids. I buy health insurance, but may not use it as much as others. Some people pay into Social Security for years, but die before collecting.

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TrueBlue63
May 19, 2009 1:37 PM
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This is the typical corporate non-sense. They will still be competing for customers to generate those sweet 2-3% per transaction fees. If the big boys don't want those fees expect smaller players to emerge, with strict underwriting criteria, who will want them.

Next thing they will tell us that if they can't make huge salaries, the entire economy will go under and they need their own TARP program.

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joellevand
May 19, 2009 1:38 PM
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So, essentially, this bill will be the end of credit as we know it, because here's how it's gonna break down:

1. Credit card companies reinstate annual fees and charge interest even if you pay the bill in full every month.

2. Smart consumers who always pay the bill in full every month and only use the card for the rewards will do the (relatively simple) math and figure out that they're now losing money no matter how you slice it by using a credit card.

3. Smart consumers who use debt wisely leave the credit cards behind (or throw all their collective weight behind one bank that decides not to redistribute the pain).

4. Burdened by people with poor credit who don't make payments on time and otherwise are a drain on the CCs, many banks shut down their credit card divisions.

The end.

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Easton21
May 19, 2009 5:17 PM
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@joellevand: Nice post. All of the above.
The CCs are starting to eat their own tail, so to speak, and I'll be actively waiting for them to realize it.

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emis
May 19, 2009 3:03 PM
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@joellevand:

Spot on.

I put ~$20-25K through cards every year--I pay for literally everything with them, then every 2 weeks I pay whatever the balance is, never pay interest.

The card I use most pays 1-2% cash back on average, but has a 24% APR (which I've never paid) ... if the \"immediate interest\" portion of this threat were to occur then I would end up paying ~1% interest if I continue to pay off my cards every 2 weeks, at that point it would still be about a wash when I consider the cash back. If the cash back goes away, then I would be paying money for the convenience of using the card, at which point I would be looking for every route to avoid paying that--such as paper checks, ETF, debit cards, cash :shudder:... whatever...

This is only going to hurt the CC companies on the long run by decreasing usage by responsible users, and increasing the burden on those groups that are already defaulting.

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joellevand
May 19, 2009 1:39 PM
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@joellevand: Oh, I forgot...

5. Dave Ramsey laughs maniacally in triumph.

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bikeoid
May 19, 2009 1:39 PM
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These bozos have been making a profit for the last 15-20 years without charging the end user annual fees and no grace period. If they start doing that now, there will be mass defection to 3rd party payment methods: PayPal, WalMart, etc.

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Michael A. Diaz
May 19, 2009 1:39 PM
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I have a checking account simply to mail a single check once a month for my mortgage only because Wells Fargo wouldn't do EFT unless I had an account with them.

But then I refinanced and now US Bank will let me do EFTs, so I thought I was done writing checks.

Why? Because I put EVERYTHING on my credit card. My electric bill, my cable, my groceries, gas, whatever. If I spend money it's going on my credit card, which I then pay off every single month, all for the rewards that I earn.

I NEVER carry a balance. EVER.

So go ahead, charge me interest immediately, and Chase will see how quickly I stop using that card.

I guess I'll have to dig my checkbook back out.

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sonneillon
May 19, 2009 1:40 PM
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This sounds like collusion and price fixing to me.

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chigaimasmaro
May 19, 2009 1:41 PM
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having credit cards these days is almost similar to being in an S&M relationship, with the consumer being on the receiving end. Will it be the whip like sting of annual fees or the hot wax like dripping of being charge immediate interest? Pick your pain... I mean pleasure.

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Anonymous
May 19, 2009 1:42 PM
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So, banks think they can threaten me by telling me I will have to pay for the behavior of bad customers. Can they explain how I am not doing that already?

* Didn't they just increase *my* interest rate to 30% \"because of market conditions\"?
* Haven't they for years been increasing fees, penalties and surcharges for every possible insane reason?

Do these guys really think I am that stupid?

I have been paying for year for their poor judgment.

If you threaten someone, you need to make sure you can make good in the threat if you don't get your way. Banks can't. They have been punishing their good customers for years.

In line with other commenters, they will only hurt their business, because people will stop using their products. Do they really think 1% chargeback is enough to keep me? Seriously, I'll go cash again, and I'll keep one card for online purchases.

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Ed H.
May 19, 2009 1:44 PM
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My family is planning to go to cash-only. We had been using the card for the cash back and the convenience, but if they aren't bluffing and take their ball & go home, then we will be ready to revert to cash & checks. It'll take some behavioral changes but nothing that will destroy our quality of life. Heck, we'd probably spend a lot less all around, so we win again and again.

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pastabatman
May 19, 2009 1:51 PM
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I think they're blowing smoke and simply creating talking points to oppose both the current legislation and any future legislation.

By going after \"good credit\"customers and those who pay off on time, they will be creating a vacuum in the credit business that I assure you WILL be filled. That vacuum is simply cheaper credit.

First people will move to debit cards. But in this case we're talking about the same companies so fees and restrictions would quickly apply. Remember no ATM fees? They added them and it never halted ATM transactions.

The idea that one/everyone would go back to strictly checks and cash is highly unlikely.

Eventually people will turn to \"something else\".

One major binding issue that banks have is that they're publicly held and therefore have to constantly increase profit no matter what. Like I said above: a vacuum will form - Cheaper credit for a more \"modest\" profit.

maybe the next great financial industry lies in the current Credit Union business...?

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TouchMyMonkey
May 19, 2009 1:51 PM
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As I suggested when I turned this article in this morning, welcome to 1980. Back then, you had to have good credit and a longish credit history just to get a credit card at all. Unemployed nineteen year olds with plastic? Forget about it.

It's limit (yes, you only got one of these cards, from your own bank, with which you had to have an account) was much, much lower, the APR was around 20%, and yes, there was an annual fee, usually $10 - $15 a year, unless you were one of their high rollers. With inflation, expect that to jump to around thirty bucks. The bank didn't solicit your business by bombarding your mailbox; you had to go there and ask for a card.

Remember the American Express green card? That was the card most people aspired to, after a couple of years of not screwing up their credit with their BankAmericard (now Visa) or MasterCharge (now MasterCard). Forget about the gold card or the then-nonexistent Platinum card. Those were for the kind of high rollers who lived in a big mansion with a Mercedes and a sauna and room for a pony. Not you.

The original Amex worked like this. It had a higher (or no) limit, but you had to pay it off in full every month. If you didn't, you couldn't use it anymore until you did. And the annual fee was higher for those of you who wanted to keep up appearances.

It was a lot harder to really fuck up your credit on credit cards. It could be done, but going completely bankrupt solely on the basis of your abuse of plastic was rare.

So what I see happening is that most people will go down to one or two cards with smaller limits, or even zero cards if they can't find one with acceptable terms. We might not go all the way back to the Carter era, but we might go back to about 1985 as far as plastic goes. I think I had one card with a $1200 limit that kept getting maxed out because my car was a typical 1980s shitbox that liked the inside of our mechanic's shop.

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PeteyNice
May 19, 2009 1:56 PM
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I agree, call their bluff. Some banks may impose interest from day 1 and raise annual fees but they all won't. There is so much competition in the credit card space that moves like that will simply drive people to other issuers.

And if they all decided to follow suit, debit cards are a perfectly good alternative. Mine even gives me extended warranty coverage. I only use credit cards for the rewards. If things like this or the idea of making credit card payers pay extra to cover the merchant fee come to pass I just won't use them any more.

So, go for it banks. Cut if your nose to spite your face - I dare you.

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I Love New Jersey
May 19, 2009 1:56 PM
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I had a feeling that this bill would screw responsible people who pay their bills on time. Typical!

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econobiker
May 19, 2009 3:57 PM
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@I Love New Jersey: Those responsible people are not as profitable as the irresponsible ones. Banks are sad to see the money going away...

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Pixelantes Anonymous
May 19, 2009 1:56 PM
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The credit card companies are making a fortune on people like me who pay the bill in full every month.

I charge EVERYTHING on my reward credit card(s). The transaction fees my credit card company is charging from retailers are making them a LOT of money over the course of the year.

I will never use a credit card with annual fees, and if they start f***ing with the terms on my credit cards, they will be cut and I will just go back to using cash.

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Cant_stop_the_rock
May 19, 2009 1:56 PM
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You guys knew this was going to happen, right? I mean, you couldn't have been naive enough to think that they'd be happy with lower profits. Right now the bad customers are subsidizing the good customers. As a good customer, I like it that way.

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Rachacha
May 19, 2009 1:56 PM
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I want to personally thank the Credit Card Companies for allowing me to place my mortgage on 0% interest* cards for 3 years and pay down the principle. My once 30yr mortgage is set to be paid off in 10 years. I guess those days are long gone.


*WARNING: doing this is not for the faint of heart. If you are late on a payment, the 0% immediately goes away, and you are charged +30% interest, and that will trickle through all of your CCs. I had a HELOC so that if I needed to unload all of the CC balances I could do so immediately, and I could lock in a reasonable 4-5% interest rate.

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econobiker
May 19, 2009 3:37 PM
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@Rachacha: You are like a credit bad a.ss that the companies would hate. Good for you.


I understand the concept but this type of thing would explode Dave Ramsey's and Suze Orman's brains...

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Rachacha
May 19, 2009 5:52 PM
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@econobiker: Absolutely! It was fun calling up and asking for $25K-50K credit limits, trying to extend the 0% balance transfer period and limit the balance transfer fee to $100 max. Once they agreed, we would promptly transfer over an amount of about 90% of the CC limit.
When we started this, our credit limit was stellar, and we did take a hit on our credit score and the CC offers that once stuffed our mailbox started to stop. Once we paid off our \"CC Debt\" and cancled some of the credit cards that we used to do this, the credit score immediately bounced back. My spouse and I calculated that we had at our max credit cards with a combined credit limit of almost $1M. And then the CC companies wonder why American's are drowning in debt...why does an upper middle class family need a $1M credit card limit, 75% was with the same bank (except to borrow the bank's money for 18-24mos interest free.)

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Mary Marsala with Fries
May 19, 2009 1:57 PM
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Your last sentence says it all: They were screwing people, and now they're angry that they're going to be told to stop, and threatening to screw other people so they can make up their (somehow, in their minds, deserved) profits.

Nobody deserves to make a profit from ripping people off. Quit whining and find a way to make money honestly, will you?

20% interest is usury, plain and simple. The fact that they were charging more than that, and doing worse besides, is indefensible.

My credit cards make nice emergency stashes and I use them responsibly -- but having them isn't worth supporting companies like these. They can go ahead and \"clamp down\" on me, and I'll leave forever, and we'll both be better off for it. Yay.

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allpaws
May 19, 2009 2:03 PM
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@Mary Marsala with Fries:
exactly - keep pushing guys, I don't need your cards.

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captadam
May 19, 2009 2:02 PM
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Well, I put all gasoline and food purchases and most restaurant visits on one Bank of America rewards card and pay it off each month. I AM carrying a balance--way too large of one--on my credit union credit card. But the BofA one gets paid off. And I AM bringing the bastards profit because they charge the merchants a fee to run those transactions.

I do this because of the rewards and the convenience. Obviously, I pay no interest fees. If I am going to have to start paying interest from the first moment, then I'll stop handling money this way. I can easily do it, since there is money each month to pay off the previous month's balance. But, the hard part will be that first month of the switch--I will, in effect, have to pay two months' worth of groceries and gasoline that month. That's been the deterrent each time I've considered switching to paying cash (or debit) for all those purchases.

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It's not my baby, baby!
May 19, 2009 2:02 PM
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I think it is a tad disturbing that so many people think the credit card companies are bad. I never have any problems with my cards and know to-the-penny what my bills are going to be every month.

The language of the card agreements gives the issuers significant leeway in changing rates and fee structures, so how is any of this deceptive?

If you do not understand the agreements, do not use the cards! Take a lesson from Warren Buffet: \"If I don't understand it, I don't buy it!\"

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econobiker
May 19, 2009 3:43 PM
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@My father was a service droid!!!:


\"The language of the card agreements gives the issuers significant leeway in changing rates and fee structures, so how is any of this deceptive?\"


Because they deliberatly engineer it for failure by the consumer via the mouseprint sized terms and condition documents.


Example: That they move the due date around so that it encourages late pays by automatic deduction payers.


Example: Why do you think a card company would issue two or three low credit limit cards to the same person versus combining the limit onto one card? Because that is 2s or 3x more opportunity for that person to be over limit and late paying.

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mbgrabbe
May 19, 2009 2:05 PM
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I love cash back credit cards, but I'm willing to give up those benefits if we can level the playing field for everyone. CC debt is a HUGE problem in America, and any step we can take to make the system more transparent is going to benefit our citizens in the long run.

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Corporate_guy
May 19, 2009 2:39 PM
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@mbgrabbe: There is a problem, you are ignoring that credit card companies already tax the business like 2-3% of the purchase price. That is where most of your bonuses come from. If they remove bonuses, they have to drop the business tax. They shouldn't get to keep the business tax and remove bonuses.

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pecan 3.14159265
May 19, 2009 2:18 PM
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@mbgrabbe: I don't think there is anything of the kind. CC companies don't care about anyone...they just want their money. They don't care if you go into financial ruin and can't get out, because it means you're carrying a balance and they make money off you and your interest fees.

Leveling the playing field is false. There is none of that happening. Credit card companies will continue to attempt to screw over people.

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chris_l
May 19, 2009 2:05 PM
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@ joellevand: Count me as one of those people who charge everything they can on a CC to earn rewards that pays it off every month in full. If Chase, my sole CC provider, starts dicking me with annual fees, then I'll stop using my cards for everything except for purchases that have to be made online. And even if that is the case, I'll destroy this card and switch to a bank that doesn't charge instant interest.

Or even better, maybe I'll have to cut back on my online purchases since I won't have a usable CC, saving even MORE money.

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Nogard13
May 19, 2009 2:30 PM
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@chris_l: You can use the PayPal \"one-time use only\" credit card for online purchases. That's the way to go because you can't be charged for a second purchase on that card so you're protected automatically.

I always pay my bill in full at the end of the month. If, however, my CC company (Amex) starts to charge an annual fee or instant interest, I will find a credit union that doesn't and just use them. The way I see it:

Those banks that try to screw the good customers will end up losing them and having to close their CC divisions. Consumers are smart and will flock to those companies/credit unions that don't screw them.

It will be the end of Credit Cards as we know them but that's a GOOD thing!

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incognit000
May 19, 2009 2:09 PM
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Great, I'll just go back to using my debit card like I did in college.

I love how credit card companies think they're magical and important.

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Jonax
May 19, 2009 2:16 PM
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Sounds like a game of chicken between the government & the CC companies.

Hopefully the gov will call their bluff...in a Toyota Hilux of course. ;)

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LionelEHutz
May 19, 2009 2:24 PM
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Considering that the fucktards at Chase just upped my credit limit (I'm one of the evil pay in full monthly folks) without asking me I doubt that these fools will go through with these threats. If they do, I'll take my business elsewhere.

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takes_so_little
May 19, 2009 2:25 PM
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There WILL be some companies who don't penalize me for good behavior, and those are the ones who will get my business. Period.

And if there are none, it's debit card time. I get pissed at any company (or group of companies) who ASSUMES I need them (ex: Cable company, dropped my service last year).

I'll make do. I have standards for how I'll be treated.

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Corporate_guy
May 19, 2009 2:27 PM
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Annual fees? Laughable. I would rather get a secured credit card. They tax all purchases by 2-3% then charge interest on the balance. It's impossible for them not to be making money.

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Daniel Lew
May 19, 2009 2:33 PM
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They seem to be under this impression that they can continue to make money off the responsible by changing the rules, which isn't true; the responsible find better ways of spending money in those situations.

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JGKojak
May 19, 2009 2:39 PM
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Collusion anyone?

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xrmb
May 19, 2009 2:51 PM
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GO, DO IT!

Charging interest immediately on a purchase
...awesome, less CC use...

Reinstating annual fees
...awesome, less CC users...

Further curtailing cash-back and other rewards programs, like frequent flyer miles
...awesome, because only people that have money/CC get rewarded, poor people w/o CC pay extra markup so stores can offer CC payments, but dont see anything back from it

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SacraBos
May 19, 2009 2:52 PM
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I welcome this.
1) We have too much outstanding credit, anyway. I needs to shrink. Remember the days of getting a CC offer nearly EVERY DAY!
2) If he thinks we will \"subsidize those that have credit problems\", we can always remove ourselves from that pool - which will put them in the hole even more.
3) After a while, they will be begging us to come back.

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Aleron Rognlie
May 19, 2009 2:53 PM
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I'm sure there will be some card companies that see the opportunity of NOT charging the fees to \"good\" customers, as a way of attracting credit-worthy customers from cards that charge fees. As soon as one of my (2) credit cards tries to charge me a fee, I'm out of there.

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Sunny Yeung
May 19, 2009 2:57 PM
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Next headline: Responsible Borrowers Threaten to Punish Bankers in Retaliation

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takes_so_little
May 19, 2009 3:05 PM
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No credit card company will ever, EVER get my sympathy.

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Anonymous
May 19, 2009 3:15 PM
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One of the concerns I have is that if they start charging yearly fees, I would want to cancel, but then my credit rating would take a hit. Length of credit history is one of the criteria in figuring the FICO score. If I cancel my long held citibank, then my credit history is shorter and the FICO goes down. Sure I can probably find a card that won't charge yearly fees, but I'd probably be stuck keeping my oldest card just to keep the FICO score up. If all cards enact fees, then we are all screwed. Its effectively collusion in the marketplace, and someone should sue for antitrust activity.

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azntg
May 19, 2009 3:26 PM
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Except for American Express, I have a banking relationship with the same banks that issue my credit cards. Yes, I know about the right of offset and other potential nasties if our credit relationship goes sour (which is why I also have banking accounts with a third bank and two credit unions not issuing any credit product to me).

I always thought that I can afford to cull some of my deposit accounts. So, Bank of America (through FIA Card Services) or Chase... your move. This undergrad values package relationships and will match moves accordingly.

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Snarkysnake
May 19, 2009 3:31 PM
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Deadbeat here. Fuck them. FUCK THEM.

These arrogant assholes are conceited enough to believe :

That lots of good customers will not abandon their payment system for something with less transactional friction.They will. Smart customers don't pay fees now. That won't change because they have to please Wall Street.

That some hungry competitor won't change the game completely,making them obsolete.The margins in this business are too damn high to shut out competition forever.

That alternative service providers like credit unions and such won't undercut them on price and service.It's happening now in a smaller way,but as their customers explore altenatives and move their business from the giant card issuers to local competitors,there will be less marketing $$ to try to rope in new customers.Lather ,rinse, repeat the cycle as they raise fees and charges.They are fucked,I tells ya, FUCKED.

We can almost stand back and watch the old banking order crumbling here,right before our eyes. To be sure,something bad will replace it,but to see these guys humbled will too good to miss.

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pastabatman
May 19, 2009 3:56 PM
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@Snarkysnake:

Agreed. They THINK they're threatening everyone, but they're just digging their own grave.

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Anonymous
May 19, 2009 3:32 PM
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Punished for paying in full every month? Leave it to the money-grubbing vultures we're supporting. Fxxk them and their banks! Off to the credit union we go!

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giggitygoo
May 19, 2009 3:32 PM
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Not disagreeing with you, but one point to keep in mind is that a good deal of the 3% fee goes to Visa/MasterCard/etc. The card issuers themselves make most of their money on interest/fees.

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axiomatic
May 19, 2009 3:34 PM
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Yeah simple fix. Stop using credit cards. I don't think these idiots have thought their dastardly plan through very well. this kind of attitude works for about a year. After that they will be loosening every rule they can to get people back.

Don't believe the hype.

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Thanatos
May 19, 2009 3:41 PM
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Well, considering that most of these banks \"borrowed\" money from taxpayers such as myself, I'd like to take a play from their playbook.

1) Increase the interest rate on the money they have to pay back, about 200% should do nicely.
2) Charge exorbitant late fees (these guys never pay on time)
3) Lower their credit limit without warning (then tell them they are over their limit and charge for going over as well).

And last but not least, we can always demand our money back and let them fend for themselves. I'd like to be able to call a few of those banks and say \"I don't like the way you do business, please send me my portion of the $10 billion you borrowed, I never wanted to give it to you anyway. Thank you and have a nice day.\"

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Michael Hyland
May 19, 2009 3:49 PM
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Amazing. If any one of the many credit cards I have in pocket does this, they are getting cut and cancelled immediately.

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aftercancer
May 19, 2009 4:02 PM
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Go ahead, I dare you!!! Watch how fast those of us with good credit close those accounts. I can't tell if this is a case of foolishness or greed.

BTW - If you have any annoying mail that comes with a postage paid envelope fill that sucker to the brim with anything you want. It'll keep the postal workers busy and make the stupid companies have to pay to get the junk back. The ultimate recycling!

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u1itn0w2day
May 19, 2009 4:07 PM
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These credit card bankers are begining to act like junkies except in their case they were addicted to exhorbitant fees & interest . Oh no ! there goes that bonus .


They're acting like a kid being punished threatening to run away from home .


Don't cry credit card bankers I'm sure your accountants & lawyers will show you the loopholes and tell you how to make money as usual .

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conn88h
May 19, 2009 4:50 PM
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I've been waiting to get up to 25,000 points on my card (no fee MasterCard WorldPoints rewards card offered through BOA- 1 point for every dollar spent) so I can redeem the points for 1% cash back- $250. I am at about 17,000 points now and I hope they don't change anything...and yes, I am a 'deadbeat.'

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diasdiem
May 19, 2009 5:19 PM
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And then the Age of the Checkbook will come again, people will pay in cash more, and then these smartass bankers will kiss their merchant fees goodbye, as well as interest revenue.

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haoshufu
May 19, 2009 5:22 PM
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So even banks are already screwing good credit customers now, they PROMISE that they will screw them more if the reform passes?


I think banks needs the type of regulation that government puts on utility companies. Banking has sort of become a utility in today's society and should be regulated as utility companies.

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Anonymous
May 19, 2009 5:30 PM
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I've read through most of these comments and am afraid to say this without being attacked for what I'm about to say.

Most people here are upset that they no longer will have the convenience of a credit card because they are unwilling to pay annual fees or immediate interest. While I don't support the immediate interest, I'm beginning to not feel so bad about paying a fee. Truth be told, you are getting a \"tool\" as many have refered to it that allows you to make transactions without having to carry around a lot of cash.

Last time I checked, most useful products available to consumers cost money. If a company like Chase is going to charge me $30/year for the convenience of putting the down payment on a car which I pay off at the end of the month, I don't see an issue. I don't want to carry around $2500 in cash which can get lost or stolen. If I lose or have my credit card stolen, I simply call up the company and tell them to turn it off and send me a new one, oh and any purchase made during that time can be easily disputed. I'd like to see you go into a bank and try to get that $2500 back because someone mugged you, you'd be laughed out of the bank.


On top of this, these fees will discourage a lot of bad credit card users from ever getting the card in the first place. Most of these people have a horrible concept of currency and telling them they owe $30-$50 a year just to have the card in their pocket will only make them think twice before getting card after card.

Now if they start charging interest right away, I'll probably cancel all my cards, but depending on the annual fee and my other options, I wouldn't totally be against paying for the convenience of having a credit card. It sure beats paying a licensed gun carrier to be at my side at all times whenever I'm carrying more then $100 in cash.

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Dillenger69
May 19, 2009 5:46 PM
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Of course they do. The same way Microsoft fired all their contractors when the order came down to hire or fire them. Businesses are amoral entities that don't deserve the \"individual\" status they currently enjoy.

The current crop of executives in the U.S. don't understand how business works because they've never been anything but executives. Give me a worker who has risen through the ranks over an MBA any day.

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azzie
May 19, 2009 6:01 PM
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The biggest problem is not with credit card companies, but with people hooked up on having debt and buying things they can't afford.

So many people in America would whine about credit cards companies being greedy rather than managing their own debts. They don't mind being greedy themselves when buying things they can't afford, but they DO mind others being as greedy. You can't have a pie and eat it too.

I think the best thing to happen is exactly that - let credit card companies to raise APR, annual fees, and lower credit limits. It will only help educate the audience that debt != free money.

And if it causes few more bankruptcies, we won't even notice it across the mortgage mess anyway.

Responsible people who pay bills in full will just switch to check cards or debit purchases.

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Weakly
May 19, 2009 6:02 PM
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\"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.\"

This must not be counting the 10ยข plus 1-2% on every transaction the credit card company takes.

Well, time to dust off my checkbook.

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savdavid
May 19, 2009 6:12 PM
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They are sleazy bastards, those banks. If they can't make an extra nickel driving the poor and middle-class further into debt one way, they will find another. This is evil. You say it is just business? Yes, dirty business.

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Anonymous
May 19, 2009 6:25 PM
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If my credit card company wants to play that way, fine by me! I have great credit, pay off my card monthly and so on. I don't mind using cash, I've just liked the reward points from the cards. I will cancel my cards (2) the second I am charged for anything by those scums.

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randombob
May 19, 2009 7:06 PM
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Here's the way I look at it: they're LYING.

I know this because, if ONE of my credit cards tries this bullshit, I'll just not use it. I'll give my business to the company that DOES NOT fuck me over. The company that tries to do pull these shenanigans will go out out business, if all goes well...

See here's the problem: Their salaries are WAAAAAYYYYY too much. They've been making WAAAAYYY too much money for what value they bring. The might have to take pay cuts if they want to stay wealthy and employed as head execs of these companies. That or go out of business because we all stop using the damned things.

I got cash in reserves. I live within my means. You fuck with me, I cut up your card, and you stop making money off of the transactions too.

GO AHEAD. FUCK WITH ME. FUCK WITH ME, I FUCKING DARE YOU.

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MightyCow
May 19, 2009 7:12 PM
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What's with the recent move to punish intelligent consumers by forcing them to pay for the mistakes of unwise consumers?

Bought a house you couldn't afford? That's cool, we'll pay for it and make sure nobody else can get a loan for years.

Spent more than you could pay on your credit card? No problem, people who pay theirs off will help you out against their will.

Spend, spend, spend! Someone else will pay it off for you!

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alienshards
May 19, 2009 7:27 PM
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What, do credit card companies not know about debit cards?

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Anonymous
May 19, 2009 9:40 PM
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Give me a break, these guys make so much money off the fact that people don't pay off their balances each month. This is nothing but scare tactics so they can get people to complain to Congress in hopes they won't pass legislation to regulate these snakes. Charging someone 35% interest because they were late with one payment should be illegal. Do we really think that these sharks will stop issuing cards or make it more difficult to get a card? Get real, they want people to go into debt, they want people to pay late, and they don't want people to pay off the monthly balance. So you can bet that for every one company that it makes it difficult to get a card there will be ten more passing them out like candy on Halloween.

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Extended-Warranty
May 20, 2009 2:21 AM
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Great, another edition of irresponsible Americans ruining it for all of us.

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nocturnaljames
May 20, 2009 5:47 AM
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The reality is many of these rewards and bonuses from credit card use, came from all the profits of people being taken advantage of with high late fees and such, that's where all the revenue comes from. So these 2%+ rebates and such really shouldn't exist in the first place. It should be enough that you get interest free credit during your grace period, which most certainly some credit cards will offer. If credit card companies start jacking up fees, it will only tarnish their reputation and drive away reliable customers. Credit card companies are just angry that they have very little recourse, and now they are going to have to start playing fairly, that is until they find new ways of taking advantage of people... ah capitalism at it's finest.

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hedgeland
May 20, 2009 2:02 PM
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Just give me a good reason to cut up my credit card forever. Annual fee? Instant interest? Do it.

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tworld
May 20, 2009 3:37 PM
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I closed my American Express account because I thought it was ridiculous I should pay them for the \"privilege\" of using their card. My current card is a Chase Visa, which my husband and I use for EVERYTHING, and we pay the total bill each month. If Chase starts to charge me an annual fee, interest on what I charge from the charge date to the payment date, and stops giving me 5% on my purchases, we will cut our cards in half and mail them to the Chase corporate office. From then on all our purchases will be made with cash and PayPal. F U credit card companies for being so greedy and disloyal to the very card users keeping you in business. You created the problems by being greedy and dishonest, and now you want to take it out on your customers? F U . . . case closed.

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Anonymous
May 20, 2009 5:15 PM
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@TessTalks: They tried to make money from people who couldn't pay in full each month but that didn't work because they defaulted. Now they are lowering interest rates for them not to default but make up the difference by charging people like you and me who pay in full! I don't understand why they can't see that we won't let that happen because we are going to revolt by having a Card Cutting Parties. Government is totally out of control. It took me 40 years of hard work to get to where I am now ... paying everything on time in full - now I find that they are punishing my \"bad\" behavior. The common sense is out the door! We should recall everyone in Congress and the President.

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RogueWarrior
May 20, 2009 10:38 PM
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I've said it many times. No law will force the target of the law to take it up the a$$. The target will always find a way to pass the a$$f*cking on to somebody else and eventually the consumer who has nowhere else to go.

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jbrains
May 27, 2009 3:51 PM
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I only use credit cards to simplify my cashflow. I haven't carried a balance in almost ten years now. I choose to use a specific credit card based on the perqs, favoring cash back over all else. As long as they don't start charging interest from the date of purchase, I don't care what they do. Sure: I enjoy the 0.5-2% discount on almost everything I buy, but I can live with losing that, just as long as they don't take away my grace period.

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