(2 Updates below)
No slouches, them. The Congress is closing in on maybe slowing down a little of their ability to steal and they can't very well plead their case themselves because, well, everybody hates them. What to do, what to do? Not to worry. They've got a strategy, the kind of mean, stupid, obtuse strategy they specialize in, a strategy that's more of a, you know, scam: piss off their best customers and blame it on everybody else.
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.”
(emphasis added)
True to form, their obscene profits being all that count, rather than ratchet down to something a little less, I don't know, Roman Empire-ish, they're going to ratchet up and squeeze even more people.
I'm just guessing but I'm thinking this is going to backfire on them.
UPDATE: (3.30pm) Having already deep-sixed a rate cap, the Senate is currently patting itself on the back for passing a bill that doesn't exactly kill all those hidden fees so much as force a few of them (only a few) into the open. Chris Dodd is calling it "victory for every American consumer who has ever suffered at the hands of a credit card company". Maybe but it's a pretty meager "victory" no matter how you look at it. Even the establishment-friendly AP recognizes that.
The legislation would not cap interest rates as some lawmakers had hoped. It also wouldn't prevent lenders from finding new ways to drain customers' bank accounts or keep consumers from spending money they don't have.
Which is, after all, why the lobbyists were in the halls outside the Senate chamber.
UPDATE 2: (5.20.09) Balloon Juice's John Cole notes that the ccc's have it backwards anyway: it's the high-paying customers who've been subsidizing the "responsible" customers. In fact, John links to this ittle quote from back in the days when a "responsible" customer who paid his bills on time was considered a "deadbeat."
People who routinely pay off their credit card balances have been enjoying the equivalent of a free ride, he said, because many have not had to pay an annual fee even as they collect points for air travel and other perks.“Despite all the terrible things that have been said, you’re making out like a bandit,” he said. “That’s a third of credit card customers, 50 million people who have gotten a great deal.”
Robert Hammer, an industry consultant, said the legislation might have the broad effect of encouraging card issuers to become ever more reliant on fees from marginal customers as well as creditworthy cardholders — “deadbeats” in industry parlance, because they generate scant fee revenue.
So sayeth the banks. Kind of proves my point that the NYT article is propaganda.
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Peter K. Harrell
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Comments
A pox on the greedy wretches.
I've been hijacked by JP Morgan Chase with their card going to 25% and was told since they bought WAMU another card would be going to 25% in September.
Yesterday Capitol 1 sent me a letter that my card would be going to 18.9%
It's important I point out I've never been late or over my limit. However, it appears as though I am subsidizing those that have stopped paying.
I'm considering stopping myself. As the creditors seem to have no obligation to treat me fairly. Why should I be any different?
I've been making payments and being gouged on both ends by bailouts, bad economy, my income down 30%, fear mongering, etc.
Yet I've sucked it up hoping for an economic upturn. I've even had to use the damn credit cards for groceries. So I've been forced to run up debt because of these d-bags, made my payments and still my ethics have not allowed me to just say "I can't do this anymore, I'm done scraping by because of you... and then you kick me in the nuts too?"
So I'm wrestling with my own conscience about the right thing to do...do I just wait until I run out of money or should I bail now, fuck my dignity, before I dig a giant hole because of these pricks?
Personally I'm a big advocate of dumping the card. I dumped mine (after I paid them off - more than $12,000 on a balance of $3600 over the 4 yrs after I stopped using them) and whenever they tried to send them to me after that I cut the "pre-approved application" cards into little pieces and mailed them back in the envelope.
I had paid almost $10K on that $3600 (the principal hadn't been touched yet) before I finally quit and did what cartouche is suggesting. It was a long period of being dunned on the phone, threatened, berated, and verbally abused - about 3 years - while the bank sold the acct to a collection agency who finally gave up and sold it to another collection agency who eventually gave up and sold it to another ca and so on until the last guy (who must have got it for pennies on the dollar and decided he'd be lucky to get anything) decided to be reasonable and work with me.
Of course, it might be different if millions of us did it.
jay, you're the guy they want to get mad at us. I think it's as much about class warfare as the $$$. They want you to get pissed off at the people who got trapped and can't pay. Sounds to me like you're still mad at the banks, not us. I didn't think it was going to work...