I have to laugh at this transparent ploy: Let us keep our usurious interest rates, Senator, or your American Express card is gonna get it! Apparently the fine folks of the credit card industry seem to believe they have an inherent right to obscene profits. Uh, ixnay, fellas. Usury is not only a sin, it's bad economic practice. Legislators have a right to control your out-of-control industry because credit has become something akin to a necessary public utility - especially when people can't even get a job due to a poor credit rating.
Seems to me it's time these companies learned to trim their expectations to fit current reality. I wonder if credit card executives have been asked to take off one day a week to save their company a day's pay?
Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.
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.
[...] As they thin their ranks of risky cardholders to deal with an economic downturn, major banks including American Express, Citigroup, Bank of America and a long list of others have already begun to raise interest rates, and some have set their sights on consumers who pay their bills on time. The legislation scheduled for a Senate vote on Tuesday does not cap interest rates, so banks can continue to lift them, albeit at a slower pace and with greater disclosure.
“There will be one-size-fits-all pricing, and as a result, you’ll see the industry will be more egalitarian in terms of its revenue base,” said David Robertson, publisher of the Nilson Report, which tracks the credit card business.
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.