Archive for May 19th, 2009

The Freeloader Myth

More BS from the credit card companies. From the NY Times:

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.”

Two things:
(a) I thought blackmail was illegal, and (b) those that manage their credit well will NOT be in any degree subsidizing those that have credit problems. The banks are trying to divide the middle class from the poor. Right now there’s a united front, a coalition of poor and middle class Americans who’re fed up with the credit card companies’ piracy. For the banks, it’s divide-and-conquer time or their ride on the gravy train is over. No, those that manage their credit well will not be subsidizing those who have credit problems. Those who have credit problems would ALSO be paying these new annual fees and the immediate interest, and they’d also lose their bonuses. What we would ALL be subsidizing are the banks’ profit margins.

In that article, they describe the responsible credit borrowers as “freeloaders” because they generate few fees while enjoying the benefits. But after years of sky-high interest rates giving the banks astronomical returns on the loans they make to the millions of Americans who can only afford to pay the minimum each month, I think most Americans know who the freeloaders are.

└ Tags: , , , ,