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.
I don't mind paying my own way and the banking industry past subsidizing of my card use with high interest rates charged to people in debt really doesn't reflects well on the morality of bankers. It certainly suggests I should be looking elsewhere for moral guidance.
If those of us who paid off our cards had been such a burden they wouldn't have been sending me new card offers or expanding the limits on my existing cards. They sought me out as a customer and I assumed that they knew having me as a customer was profitable. Maybe their grasp of free enterprise is no better than their morality
I love the notion that the end of cash back/points/miles would be huge loss to capitalism. Maybe the idea that you can go around the world snowboarding on reward miles isn't so rational.
Of course, I should trust the banking industry. They've performed so well over the last couple of years. I'm sure they know what they're doing.
If my credit card company got rid of the grace period before charging interest, I would never use my credit card again. I only use it now for convenience and haven't paid a cent in interest in years.
You wouldn't be the only one, and I'm sure they know it. I think that grace period part is a bluff.
l KNEW something was fishy about the way this change is being portrayed. Thank you for explaining what the change REALLY means!javascript:void(0);
That was supposed to be a happy face. All I got was javascript:void(0). I'll try it with the keyboard. Here goes.
Nothing that I can see. Does it show up for you guys?
[polldaddy 1637309 http://answers.polldaddy.com/poll/1637309/ polldaddy]
I'll cancel any card that starts up an annual fee. And I'll stop using any card that has no grace period. The merchant has already paid around 3%, which he passes along via higher prices.
Anybody talking to their CongressCritter lately about the archaic word *usury*? (For the young, there used to be limits on percent interest.)
Maybe they should just get rid of the frequent flyer miles, the free gas offers, and the cash back offers, and just concern themselves with giving credit at fair rates.
P.S. I'm sorry to any bankers I've offended with those last two words. :p
Y'know, I don't think I've ever used any of my bonuses. Except cash back.