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Ear to the Ground

Got Good Credit? Too Bad

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Posted on May 19, 2009
credit cards

Those credit card holders who pride themselves on paying their bills on time, and who have enjoyed rewards in the past for so doing, are in for an unpleasant surprise: They may soon be targeted by the very companies that used to ply them with perks.

The New York Times:

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.”

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By nobelboy, October 21, 2011 at 5:42 am Link to this comment

The companies make money on the merchant fees, and if I accrue several hundred dollars of charges per month, they are in fact earning money from my account without the fees.  I suspect this issue is something of a mountain from a molehill.
accept credit cards

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By Plastic_Door, May 21, 2009 at 10:28 am Link to this comment

Banks issuing credit cards are like crack whores.  They make plenty of money whoring for their investors, but because they have to pay their pimps, they charge “fees” and “interest” like it’s crack. They will never get enough, and they think it’s their God damned right.

Then they get syphilis and say it’s YOUR fault.

Nationalize. Then bust them up completely. Banks for checking/savings instruments only. Investment and insurance—separate institutions. Usury laws. Bust the monopolies.

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By Jess, May 21, 2009 at 9:21 am Link to this comment
(Unregistered commenter)

So yes, the credit card companies will lose the delinquent customer fees under this new bill.  I don’t understand the necessity of making that back.  They don’t have to charge the consumer who pays their bill on time to make up for their loss because there was a time when the companies survived without insane increases on late payments.  It gets to the point where the consumer will never get caught up. Is this new bill hindering or helping?

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By Bisbonian, May 20, 2009 at 6:31 pm Link to this comment
(Unregistered commenter)

“Those that manage their credit well will in some degree subsidize those that have credit problems.”

No we won’t.  We will continue to manage our credit well.  We simply won’t patronize such credit card companies.

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By Plastic_Door, May 20, 2009 at 6:03 pm Link to this comment

“Those that manage their credit well will in some degree subsidize those that have credit problems,”  says the Bankster.

Firstly, ‘subsidy’ comes in many different forms. Secondly, the consumer subsidizes the banks making gambling bets day in and day out. These are what usury is.

The banks are parasites. That’s a subsidy.

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By knute, May 20, 2009 at 5:23 pm Link to this comment
(Unregistered commenter)

Our gutless politicians threw us a small bone…..but stopped far short of what needs doing. The american people lend them billions and still, even though we are part owners now, they, the banks get to charge interest rates that are 5 times and more what they are being lent money at ? So what - now they have to give us a warning before screwing us alittle more. Thats the best our representitives can do ? Sounds more like they still represent the banks to me.

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By oxnardprof, May 20, 2009 at 5:03 pm Link to this comment
(Unregistered commenter)

I will naturally drop credit cards that decide to charge an annual fee.

I have always paid on time.  In my case, once or twice my payment got to the bank late, or I accidentally underpaid by a few cents, I made a phone call to the credit card company and they reversed the charges, due to my long history with them. 

The companies make money on the merchant fees, and if I accrue several hundred dollars of charges per month, they are in fact earning money from my account without the fees.  I suspect this issue is something of a mountain from a molehill.

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By Lester Shepherd, May 20, 2009 at 4:01 pm Link to this comment
(Unregistered commenter)

I do not care what the hell the card companies do ‘cause I do not need the damn things.  So stick it up ur ass Credit Card Tarts.

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By samosamo, May 20, 2009 at 10:49 am Link to this comment

By mike112769, May 20 at 10:51 am #
““BlueEagle and Jackpine Savage are right: credit is a scam tailor-made for suckers.”“

Well, yes it is but if you played the scam as long as I have and now this warning comes out, I feel I did good because it helped to have a credit card but now I will have to dump my card because I don’t want to get to the sucker stage.

And credit, period, is the federal reserve’s ‘debt based economy’ at work as credit appears here as a good word and debt bad, so to end it, just repeal the Federal Reserve Act of 1913 and things should get better.

But dealing in cash can be dangerous not just because of the robbers, hell look what they are stealing from us now, but if you just happened to be ‘carrying’ a wad of cash and some eager beaver ‘authoritative’ figure decided to shake you down, he might just be authorized to confiscate your cash as you might be a terrorist laundering money.

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By Shift, May 20, 2009 at 10:07 am Link to this comment

Credit Cards are unsecured, stop paying them.  The banks are abusive.  Give it back to them, what can they do?  Nothing!  Get rid of them and find a way to live without them. 

Credit Collectors will call you and want to settle the account for a portion of what is owed.  If you ignore them, then the debt will eventually be written off by the banks. 

So you credit rating suffers a little, what good is credit anyway when you cannot get a loan?  Reduce your lifestyles and learn to live absent credit.

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By G.Anderson, May 20, 2009 at 8:16 am Link to this comment

When you make a deal with the Devil, don’t be surprised when that deal goes south.

It may not be because you didn’t pay on time, or follow all the rules - 45 pages worth.

There’s quick cash to be made, by those companies when they cancel your cards and send you to collection, at least double your balance. And you will have no choice but to pay.

The Devil isn’t that particular about how he makes his money.

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By mike112769, May 20, 2009 at 7:51 am Link to this comment

BlueEagle and Jackpine Savage are right: credit is a scam tailor-made for suckers.

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By jackpine savage, May 20, 2009 at 5:08 am Link to this comment

Growing up in an old-fashioned, UAW town i learned a few important things from the un-educated factory rats that Americans love to hate.

One of them was to pay cash.  What good reason is there to finance your short-term ease for the sake of someone else’s long-term profit?

And if you play the game well with credit cards, you’re hated by the banks.  They’ve never been fond of the “pay the balance monthly” motto that’s the correct way to handle personal finances.

But note that all these changes and Congress still doesn’t have the guts to limit interest rates…only to force the banks to tell you that you’re rate’s going up in 12 point font.

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By coloradokarl, May 20, 2009 at 3:24 am Link to this comment

Pay cash, rent, if you “lost” your job in this rescession it was not worth having. credit cards are the feel good drugs for straight people….......

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By BlueEagle, May 19, 2009 at 8:01 pm Link to this comment

felicity - I don’t want to bankrupt anyone. That is not the correct phraseology. I wish that people who made bad decisions to deal with the consequences, sometimes bankruptcy is a consequence.

I also want people who make good decisions to reap the rewards. We never want to take the savings or capital from a hard working person and give it to a gambler.

People who gave Bernie Madoff money should not be bailed out. They got conned. Happens all the time, especially in Vegas. If someone wants to work and give charity to those that get conned, defrauded and stolen from that’s their prerogative.

You’re right many people preach capitalism until they themselves get burned. There are many two-faced capitalists/socialists, such is life, but we should not give into them when they start to cry.

The banks are “a den of vipers”. Put your money in the bank or take a loan and you will get bitten - I guarantee it. Credit cards are just bank products and they will bite you too at the least opportune time.

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By samosamo, May 19, 2009 at 7:22 pm Link to this comment

I will say that my last BANK credit card is about to be closed out and they won’t like the explaination either.

Then I will call my credit union and see what and if they have any surprises for my good credit because for everything put on a credit card the place of purchase has to pay the bank a fee for not just the purchase but for the ‘priviledge’ of being able to take credit cards, which that cost is passed on to the customer in higher than usual prices on everything in that store.

Banks are into making money at any drop of a pen or hat that their ‘wonder boys’ in marketing can come up with and when they do devise a ‘new’ gimmick, expect to hear in some shape form or fashion that old ‘win-win’ situation and that means they win in getting you to come to them for that situation plus they win by getting your money.

About overdrafts or nonsufficient funds on checking accounts, most people know this I think, but say you cut 10 checks in one day without realizing you cut more than the money you have, the banks will take the biggest checks that are covered by your account and pay them, say out of those 10, your money can cover 3 of them, after that, those 7 checks are all ‘overdrawn’ so each of those checks incur a ‘nonsufficient funds’ fee and for every day that money is not put in to cover those 7 checks and the penalty fee for being overdrawn you are hit with another round of fees and that creates a really big source of ‘legal’ income for those big banks on a daily basis.

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By felicity, May 19, 2009 at 1:33 pm Link to this comment

Blue Eagle - I assume you are including in your wanting “people who made bad decisions to fail and go bankrupt” those people who made bad decisions with OTHER people’s money to fail and go bankrupt? 

Let’s include them, the brokers, salesmen or agents who sold bad paper knowing it was bad.  Let’s work it so that bad paper comes back to bite them in their asses. Let’s bankrupt them. As it is now, they’re hiding behind that great capitalist axiom of buyer beware. Rather lets fraud off the hook, doesn’t it.

As it stands, the champions of laissez-faire capitalism American-style love to shout its merits to the roof tops.  But when it comes to actually practicing it, they don’t when it might eat into their profits.

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By BlueEagle, May 19, 2009 at 12:07 pm Link to this comment

Felicity - We DO NOT want to nationalize the banks. We want the people that made bad decisions to fail and go bankrupt.

If a bank does something shady, then take your money out of that bank and move to another one. That’s called a free market. Capital moves to the trustworthy.

We DO want to nationalize the Federal Reserve! The Fed is a private banking cabal. They are in charge of the printing press and are debasing our currency.

We need to legalize sound money.

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By felicity, May 19, 2009 at 11:14 am Link to this comment

Nationalize the banks, now.  How about this little ploy:  Banks automatically enroll customers in overdraft loan programs (in 2006 banks collected $17.5 billion in this gem of a ripoff) and then through a series of bank-friendly manipulations of checking account transactions ends up collecting an average fee of $34 on an (average) $17 overdraft. 

Overdraft fees are actually a form of usury (surprise, surprise) - small, extremely high interest loans that target the underemployed and working poor, who else.

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By Tom Semioli, May 19, 2009 at 10:49 am Link to this comment
(Unregistered commenter)

Yet another great reason to cut up my credit cards.

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