Uh-huh: Anti-credit-card legislation hurts just about everyone
October 21st, 2009 | by mbhunter |Caught this in a tweet from Wise Bread:
Latest bank fee is for paying off credit card on time every month
The target of new fees for credit card issuers is people who haven’t paid them yet, among others. I mean, why should people who carry a balance, miss payments, or go over their limit have all the fee-paying fun?
The CARD act hurts just about everyone with regard to the price they pay for credit, including people who use it responsibly. The extra regulations restrict how credit card issuers conduct business, and add non-productive cost to doing business. This raises the cost that issuers must bear, meaning that consumers, on average, get less of a good deal than they did before.
The article mentions that people with good credit have the opportunity to negotiate with the issuer, as well as to look for greener pastures. Canceling the newly-non-free card could hurt that person’s credit rating though, as it affects the extent of credit history.
Though I don’t like that I, and others, could end up paying for credit even without carrying a balance, I can’t say that I really blame the issuers. People who don’t carry balances are the least profitable for the credit card companies. They get a free ride, and the merchant’s fees that are triggered by the purchases they make probably barely cover the administrative costs. It’s difficult to argue that convenience users of credit cards, after having gotten the convenience for free for so long, should continue to get the convenience for free as the issuers’ costs rise.
I haven’t been notified yet of any new fee action on my account, but at least I won’t be as shocked if it happens.
5 Responses to “Uh-huh: Anti-credit-card legislation hurts just about everyone”
By titl on Oct 21, 2009 | Reply
The CARD act IS helpful, of course it was expected that banks will try to find their way around it, they have to make money after all. I am sure that not every bank will impose those annual fees though.
By Cassandra on Oct 21, 2009 | Reply
Chase just sent me a nasty little notice yesterday that raises my rate from 12.5% to 19.24% in December (even though I have perfect payment history with all my cards). I’m trying not to be shocked that credit card companies are trying to make money before the new law goes into effect, but it sure hurts when you’re trying to pay down debt…
By Credit Card Chaser on Oct 21, 2009 | Reply
What is even more ridiculous is that Bank of America is losing money hand over fist on its credit card operations and people act as if BOA has no right to do things like add an annual fee to actually try and make some money and make up for the deadbeats that are delinquent on paying their cards: http://www.creditcardchaser.com/boas-credit-card-business-is-losing-money-yet-still-catching-flak/
By jennifer888 @ Negtiation Board on Oct 22, 2009 | Reply
If an individual doesn’t carry a monthly balance and just uses the card for convenience, why not just use debit? The only benefit I can deduce from using a credit card, when you have the money sitting in your account, is to build credit. But there are surely other ways to do this that will not cost you these new fees, right?
By Len Penzo on Oct 22, 2009 | Reply
I am certain that competition will ensure that the number of companies that charge fees to those of us who refuse to carry revolving debt and pay off our credit cards every month will be kept to a minimum.
I know if MY credit card company tries to pull that stunt on ME, I will close my account faster than you can say…
“Supercalifragilisticexpialidocious.”
(Funny, my spell-checker doesn’t recognize that one. Note to self: Fix my dang spell-checker ASAP.)
My $0.02 (after taxes)
Len
Len Penzo dot Com