Credit card industry fights back by proposing fee increases for best customers
I’ve written several posts about the proposed legislation currently being debated in Congress that seeks to prohibit some of the most deceptive and unfair credit card practices. Today’s New York Times has an article that shows how the credit card industry may push back against the proposed regulations. According to the story, credit card companies have set their sights on consumers that pay their credit card bills on time and in-full to make up for the loss in revenue that the proposed legislation would supposedly cause. Credit card companies are expected to revive annual fees for cardholders, limit or eliminate rewards programs, and begin charging interest immediately after a purchase is made, rather than allowing a grace period until the next billing cycle. The story quotes Edward L. Yingling, the chief executive of the American Bankers Association, who argues that “[t]hose that manage their credit well will in some degree subsidize those that have credit problems.”
I’m not completely convinced that this isn’t another scare tactic by the credit card industry in an attempt to create some public opposition to the proposed legislation. Sticking it to your most reliable customers doesn’t seem to be the wisest business practice. But credit card companies haven’t always made the best long-term business decisions, evidenced in part by the record number of credit card accounts currently in default.