FIRE Emergency

[don]

May 19, 2009
Credit Card Industry Aims to Profit From Sterling Payers

By ANDREW MARTIN

Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”

http://www.nytimes.com/2009/05/19/bu...t.html?_r=1&hp

[Jay]

Re: FIRE Emergency

That sucks, I charge everything and collect my rewards. Bummer.

[zoog]

Re: FIRE Emergency

Great.:mad: I guess it's back to cash or checks for everyday purchases, or debit cards where accepted. What about buying stuff online? I can just imagine hitting the "buy" button on amazon or whatever and then quickly logging into my credit card website to make an advance payment before the transaction even shows up.

[ax]

Re: FIRE Emergency

Great.:mad: I guess it's back to cash or checks for everyday purchases, or debit cards where accepted. What about buying stuff online? I can just imagine hitting the "buy" button on amazon or whatever and then quickly logging into my credit card website to make an advance payment before the transaction even shows up.

That's a good point. Wouldn't that be death for online transactions? I know I don't carry any balances and certainly won't. If I can't buy it, I can't buy it then. Not giving my money to Mastercard.

[jiimbergin]

Re: FIRE Emergency

That's a good point. Wouldn't that be death for online transactions? I know I don't carry any balances and certainly won't. If I can't buy it, I can't buy it then. Not giving my money to Mastercard.

I just can't believe with the competition out there that much of this will happen. If so then its back to cash for me and paypal or something similar on line.
jim

[don]

Re: FIRE Emergency

One morning park walk idea- pay in advance, leaving a positive balance. Internet federal tax also being looked at. The death of internet purchases as we have come to know them.

[ax]

Re: FIRE Emergency

One morning park walk idea- pay in advance, leaving a positive balance. Internet federal tax also being looked at. The death of internet purchases as we have come to know them.

Would this be a boon for Ebay and it's Paypal, or a huge blow to them and Amazon?

[Mn_Mark]

Re: FIRE Emergency

I had three credit cards. I only used one of them, the one that refunded me 1.5% of my purchases, and I paid the balance off every month.

Then yesterday I got a letter from one of the three saying I hadn't used the card in more than two years so apparently it "didn't fit my needs" so they were cancelling it. Hmmm. OK. Had it for a long, long time without them every caring if I used it before, but whatever.

So I thought I'd better use the other one that I rarely use, so that I get a charge on it and it doesn't get cancelled too. So at the supermarket today I swiped it through the reader: rejected. When I got home I called to ask why and they said since I hadn't used it for a while it had been cancelled.

So now I'm down to one card. That's fine, since I never carry a balance anyway, but it was nice to have the option of a second card. So word to the wise: don't let a charge card sit there for years without using it, if you don't want to have to reapply for it.

[Slimprofits]

Re: FIRE Emergency

I had three credit cards. I only used one of them, the one that refunded me 1.5% of my purchases, and I paid the balance off every month.

Then yesterday I got a letter from one of the three saying I hadn't used the card in more than two years so apparently it "didn't fit my needs" so they were cancelling it. Hmmm. OK. Had it for a long, long time without them every caring if I used it before, but whatever.

So I thought I'd better use the other one that I rarely use, so that I get a charge on it and it doesn't get cancelled too. So at the supermarket today I swiped it through the reader: rejected. When I got home I called to ask why and they said since I hadn't used it for a while it had been cancelled.

So now I'm down to one card. That's fine, since I never carry a balance anyway, but it was nice to have the option of a second card. So word to the wise: don't let a charge card sit there for years without using it, if you don't want to have to reapply for it.

If you're not either using the card on regular basis and paying it off each month or racking up endless interest charges, than you're costing them money. Many Americans have seen accounts canceled or cutback for this reason during the last two years. It is causing havoc with credit scores too with people seeing their total credit available part of the equation being slashed.

[zoog]

Re: FIRE Emergency

Would this be a boon for Ebay and it's Paypal, or a huge blow to them and Amazon?

Even if you're using PayPal as the primary transaction mechanism, they are then charging your credit card. You can "fund" the PayPal account which would in theory avoid instantly being charged interest, but at some point a credit card transaction has to take place to put the money in PayPal, unless you've given PayPal direct access to a bank account.

Although it seems unlikely that online retailers could match the lobbying power of credit card companies, I would expect a pretty stiff political fight over this issue, particularly the instant-interest-charge bit.

In discussing this issue with a friend, we decided that one approach would be to use PayPal attached to a bank account which is only used to fund online purchases. So you would only put money in that account when needed, or maintain some minimum balance.

[Master Shake]

Re: FIRE Emergency

May 19, 2009
Credit Card Industry Aims to Profit From Sterling Payers

By ANDREW MARTIN

Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”

http://www.nytimes.com/2009/05/19/bu...t.html?_r=1&hp

That sucks. We've been paying for pretty much everything via credit card for the past 5 years or so, and paying it off every month. We've accumulated enough miles on my AA card during that time for several international trips. I use my Shell Card and get 5% cashback on gas every month. In the past, I've financed my car purchases by flipping 0% offers from card to card.

So, once again, the prudent get the shaft because some people are irresponsible with their cards.

[jiimbergin]

Re: FIRE Emergency

Even if you're using PayPal as the primary transaction mechanism, they are then charging your credit card. You can "fund" the PayPal account which would in theory avoid instantly being charged interest, but at some point a credit card transaction has to take place to put the money in PayPal, unless you've given PayPal direct access to a bank account.

When I use paypay I use the direct access to one of my bank accounts.

jim

[flintlock]

Re: FIRE Emergency

The credit card companies are still making money off "deadbeats" who pay their bill every month. They may not be making as much as they'd like to, but they are still raking it in. think about it, 1-3% of everything charged in World!
That's still a lot of dough. More likely they'll raise their take from the merchants a bit as well to make up the slack. And God forbid, they may actually have to become more streamlined and efficient companies. :eek: If they try to hike fees too much, trust me, some lean mean company will step in and fill their shoes. Too much money at stake.

[cmalbatros]

Re: FIRE Emergency

So, once again, the prudent get the shaft because some people are irresponsible with their cards.[/quote]

Not all "the peoples'" fault, blame the greedy bankers for giving cards to those with bad credit risk. Similar game to TARP, bank bail outs and bad mortgages etc.

[Munger]

Re: FIRE Emergency

I think this is completely BOGUS - a last ditch attempt by the CC industry to scare people into not reforming fraudulent credit card practices.

First - they make a forkload off of people who pay off their balances every month through interchange fees. Let's see some interchange fee regulation - ala Australia. Second, the profits they were writing on their books from people who miss payments etc are gone baby - those people are defaulting and will not be paying these bastards. So sorry.

Interchange fees are the 3% or so that the CC companies charge the merchants every time someone uses a credit card. They also write in their contracts that the merchant is not allowed to publicize the fees or surcharge for them. As a result, the merchant raises prices by 3% on everyone - screwing the cash/debit payers (or anyone without a rewards card - coincidentally the poorest people). I read that Austrailia made such contract provisions unenforceable - and as result merchants started surcharging 3% to credit card payers, and credit card usage atrophied.

As far as this particular propoganda piece goes - it ain't gonna happen because of competition, unless they form a cartel to keep prices and rates high. Which is a complete possibility, given the laxness of anti-trust enforcement in this country (see, e.g., telecoms; text messaging rates; etc).