Great credit? Bend over. You're screwed next.

[NickCole]

This is fun.

See, the thing about good policy making is not only what you do but how you do it and how you structure it, looking out for unintended consequences.

When the economy is teetering, the last thing you want to do is create disincentive to spend and financial gotchas on citizens who are financially responsible. You'd think.

But here we go.

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.

http://www.nytimes.com/2009/05/19/business/19credit.html?_r=1&partner=rss&emc=rss

Good times.

 

[naked gent]

Nick, it might be premature to make a judgment—we haven't seen the Credit Card Bill yet.

If not for premature judgments Nick wouldn't have any judgment at all.

And when almost everyone who has a credit card also has a debit card it would be wise for credit card companies to tread softly when it concerns their best customers.

 

[release2]

Privatize the profits, socialize the losses.

 

[Spensed]

Who knows if this is just the credit card lobby sounding off to try to mitigate the changes.

Even with customers, who carry no debt and enjoy the rewards and other benefits, the credit card companies still make money on their percentage of sales, especially on high volume accounts and the credit card companies would be foolish to get their established customers shopping around for better deals.

The trouble with some people is that they believe everything they read.

 

[Spensed]

^ Maybe so, but I doubt it. No one's willingly going to want to lose money especially in a competitive market.

 

[NickCole]

Most people with sterling credit don't have "high volume" accounts. The "high volume" accounts are a small group.

Most with good credit are regular Americans who charge their gas and groceries and other purchases and then pay off their card at the end of the month. They enjoy the convenience of using plastic instead of cash, the ease it brings to record-keeping, and perks like gift cards for Home Depot or frequent flyer miles or hotel discounts they use for vacations.

And if all the major credit card companies impose the same rules, there'll be no choice for consumers. It's not like most of us can function in today's society without a credit card.

What Obama and Congress just did with their Credit Card legislation is typical of what Obama and this Congress have done and will continue to do. It makes Obama supporters feel good but in the end it's going to screw most of us. They're about to write healthcare legislation and they've figured out how to take away the opposition's ability to filibuster -- as I've said all along this is not going to end well.

 

[NickCole]

Ahhh take another jab at my boyfriend why don't you?

You know most people don't think that way. If we're wrong you just get to say i told you so. If we're right, Obama will be venerated like Moses, and then I'm gonna make you do something

I wish I were wrong but I'm not.

I've been around a pretty long time and I'm a perceptive observer. Sometimes I'm right and sometimes I'm wrong but Obama has been proving I'm right about him all through the campaign and this entire four months; he's not going to change. And his enablers are not going to change.

When I'm right most of those who attack me here just say even a broken clock is right twice a day. And that's one reason America has gotten into this trouble -- con men get away with murder (see how Obama's letting Bush & Co off the hook) while people who speak the truth are not respected for what we know.

 

[naked gent]

Who knows if this is just the credit card lobby sounding off to try to mitigate the changes.

The trouble with some people is that they believe everything they read.

Of course they are attempting to mitigate the coming changes and its a little surprising to see some here who claim to be experts at spotting manipulation falling for something so obvious.

I think they will do it for revenge.

Seriously Jockboy this is business and taking revenge on one's customers is usually not the path to greater success and higher profits.

And if all the major credit card companies impose the same rules, there'll be no choice for consumers. It's not like most of us can function in today's society without a credit card.

What Obama and Congress just did with their Credit Card legislation is typical of what Obama and this Congress have done and will continue to do.

Nick in the link you provided it says the four or five major banks control 80% of the credit card industry so if they all decide to screw their customers perhaps that will open the door to some of the thousands of other banks to get into the game which will lead to far more competition which last time I checked is good for consumers.

Further I heard several times yesterday that this will hurt the profits of credit card companies and since they won't let those profits fall they will find new ways to get the money such as annual fees.

Maybe so but seeing as their profits increased by almost 48% from 2003 to 2007


http://www.time.com/time/magazine/article/0,9171,1715293,00.html

it could also be true that, like the oil companies, they will be forced accept a reduced level of profitability because of changing market conditions.

In any case its bad business to go after your best customers, especially when they have options, and anyone who thinks differently knows very little about business.

 

[NickCole]

Nick in the link you provided it says the four or five major banks control 80% of the credit card industry so if they all decide to screw their customers perhaps that will open the door to some of the thousands of other banks to get into the game which will lead to far more competition which last time I checked is good for consumers.

Honest to God, the naivetee here is stunning.

The top banks that control the cc industry will continue to control it because they have the resources to manipulate it.

Further I heard several times yesterday that this will hurt the profits of credit card companies and since they won't let those profits fall they will find new ways to get the money such as annual fees.

Annual fees is one of the ways they're going to get profits from customers with good credit. Duh. Up to now, people with "sterling credit" could easily get those fees waived. And there will be other ways to get profits from average people with good credit.

Maybe so but seeing as their profits increased by almost 48% from 2003 to 2007 it could also be true that, like the oil companies, they will be forced accept a reduced level of profitability because of changing market conditions.

Yeah, like the oil companies:

Oil company profits soar

LONDON/NEW YORK (Reuters) - Exxon Mobil broke its own record for the highest-ever quarterly profit for a U.S. company on Thursday ...

Shell, the world's second-largest non-government controlled oil company by market value, reported a 5 percent rise in second-quarter earnings to $7.9 billion, and said that excluding one-time items, it beat analysts' forecasts.

http://uk.reuters.com/article/businessNews/idUKN3125663520080801

Despite their output falling in recent years, oil company profits continued to soar in record breaking numbers until the last quarter of last year, and that last quarter loss was because of the stock market taking oil down more than 50% the last three months of 2008, but it's gained a lot since then and profits are certainly on the rise again.

Your example is perfect.

In any case its bad business to go after your best customers, especially when they have options, and anyone who thinks differently knows very little about business.

Their "best customers" are the fools who carry balances and pay interest, and those are the people the cc industry as been "going after" for years. You understand squat about the credit card business.

 

[NickCole]

O the Republicans sure are doing their best to make sure nothing changes. That's why American's booted their ass the last two times.

Well Democrats are in control now and passing legislation the way they want it. This new credit card legislation is what Democrats want, not what Republicans want.

I think it's half-assed and will goad credit card companies into practices we, and our economy, will regret. We'll see how it works out.

 

[sixthson]

People with sterling credit will likely not be willing to pay annual fees and interest just for the privilege of using plastic. They will switch to using debit cards more.

 

[naked gent]

Honest to God, the naivetee here is stunning.

The top banks that control the cc industry will continue to control it because they have the resources to manipulate it.

They control 80% of the market.....is it your position that should they change their businesses practices something will prevent some of us from taking our business to the other 20%?

And please don't tell me the 20% will just copy what the big banks do as thats no way to increase market share........although maybe you believe they have no interest in increasing their market share.

Yeah, like the oil companies:

Despite their output falling in recent years, oil company profits continued to rise in record breaking numbers until the last quarter of last year, and that last quarter loss was because of the stock market taking oil down more than 50% the last three months of 2008, but it's gained a lot since then and profits are certainly on the rise again.

Your example is perfect.

Did you even follow the link you provided Nick? In the quoted quarter the average price of oil was $125 a barrel while its somewhat less today. My point, which evidently I need to spell out for you, is that in the coming yr their profits will be down and thats happening because of changing market conditions.

Now I suppose if the oil companies were not going to accept lower profits and they followed the example of the credit card companies they would start charging drivers of SUV's more for the gas they need to run their vehicles but I haven't noticed that happening where I live.......is that what they are doing where you live?

 

[NickCole]

They control 80% of the market.....is it your position that should they change their businesses practices something will prevent some of us from taking our business to the other 20%?

And please don't tell me the 20% will just copy what the big banks do as thats no way to increase market share........although maybe you believe they have no interest in increasing their market share.

If those little guys could cut into the big guy's market share, they'd have done so. The big guys aren't going to be stupid about how they go about this.

Now I suppose if the oil companies were not going to accept lower profits and they followed the example of the credit card companies they would start charging drivers of SUV's more for the gas they need to run their vehicles but I haven't noticed that happening where I live.......is that what they are doing where you live?

Yes they have started to charge more since the end of the last quarter when their profits were down.

http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html

 

[naked gent]

If those little guys could cut into the big guy's market share, they'd have done so. The big guys aren't going to be stupid about how they go about this.

If they are smart about it and act in such a way as to not alienate their customers then I'm not nearly as worried as you seem to be. More smoke than fire here IMO.

Since I know they were not starving back in 03 when their profits were 48% less I don't think they will blow up their business model in an attempt to return to their more recent levels of profitability.

Yes they have started to charge more since the end of the last quarter when their profits were down.

http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html

Nick all you are illustrating is that oil company profits follow the price of oil over which they appear to have little control. When the price of oil drops but they keep the price of gas unchanged you'll have a point until then all you're doing is proving my point.

 

[NickCole]

If they are smart about it and act in such a way as to not alienate their customers then I'm not nearly as worried as you seem to be. More smoke than fire here IMO.

They acted in a way that screwed customers who were their best profit source for years, and figured out ways that didn't alienate customers. And yet you think if they "act in such a way as to not alienate their customers" with new profit-making rules that's nothing to be worried about.

I see how Obama was able to fool you.

Since I know they were not starving back in 03 when their profits were 48% less I don't think they will blow up their business model in an attempt to return to their more recent levels of profitability.

Again I see how Obama's able to fool you, if you think credit card companies are going to accept a profit loss without doing everything they can to preserve and even increase profits, including if it means screwing customers.

Nick all you are illustrating is that oil company profits follow the price of oil over which they appear to have little control. When the price of oil drops but they keep the price of gas unchanged you'll have a point until then all you're doing is proving my point.

It's fascinating how Obama supporters are so used to lying that they do it right to the face of the person who knows it's a lie.

Your post is right in this thread! Your point was:

Now I suppose if the oil companies were not going to accept lower profits and they followed the example of the credit card companies they would start charging drivers of SUV's more for the gas they need to run their vehicles but I haven't noticed that happening where I live.......is that what they are doing where you live?

And the information I linked to proved that oil companies have started charging more for gas.

 

[Spensed]

Most people with sterling credit don't have "high volume" accounts. The "high volume" accounts are a small group.

Most with good credit are regular Americans who charge their gas and groceries and other purchases and then pay off their card at the end of the month. They enjoy the convenience of using plastic instead of cash, the ease it brings to record-keeping, and perks like gift cards for Home Depot or frequent flyer miles or hotel discounts they use for vacations.

And if all the major credit card companies impose the same rules, there'll be no choice for consumers. It's not like most of us can function in today's society without a credit card.

What Obama and Congress just did with their Credit Card legislation is typical of what Obama and this Congress have done and will continue to do. It makes Obama supporters feel good but in the end it's going to screw most of us. They're about to write healthcare legislation and they've figured out how to take away the opposition's ability to filibuster -- as I've said all along this is not going to end well.

Credit card companies make money from retail commissions on customers, who pay in full each month whether they're high volume or, as a group, even if they're not. They don't service those accounts out of charity and they don't want to lose them to direct debit or on-line bill pay.

So a modicum of critical thinking suggests that the idea that credit card companies are going to penalize good credit customers to make up for the loss of interest and fees on others is questionable to say the least.

And, even if that is the consequence, that's no reason not to address credit card abuse or not to deal with that consequence if, indeed, that's what the credit card companies try to do.

Your animus against Obama recently put you in bed with a homophobic dolt of a beauty queen and now you're carrying water for abusive credit card companies. Funny.

 

[naked gent]

They acted in a way that screwed customers who were their best profit source for years, and figured out ways that didn't alienate customers. And yet you think if they "act in such a way as to not alienate their customers" with new profit-making rules that's nothing to be worried about.

I see how Obama was able to fool you.

I understand that in order to make what passes for your point you must conflate the issue. The title of the thread concerns people with "great credit" who, according to the link, "pay their bills on time and in full" yet the people you refer to above who the industry build their increased profits on are not those people.

They are the ones who are charged late fees and must endure huge leaps in the interest they pay beacuse they can't pay their credit card balance off.

They are also the ones who are gaining protection from this bill and it was your contention that the people with "great credit" who pay their bills on time will now suffer.

The CC companies screwed them because they didn't have the choices of those who pay their bills on time and since those who pay on time have options, debit cards being just one of them, should the CC companies screw them they can simply take their business elsewhere.

Obama didn't fool me and neither can you.

Again I see how Obama's able to fool you, if you think credit card companies are going to accept a profit loss without doing everything they can to preserve and even increase profits, including if it means screwing customers.

I agree they will do everything they can I just don't think they will risk losing customers. Thats ever the balance in business which I'm guessing is news to you as you seem to believe businesses can charge whatever they like without any fear whatsoever.

It's fascinating how Obama supporters are so used to lying that they do it right to the face of the person who knows it's a lie.

Your post is right in this thread! Your point was:



And the information I linked to proved that oil companies have started charging more for gas.

They charged more because the price of gas went up and not because they wanted to protect their falling profits. Had they wanted to protect their falling profits the price of gas would not have declined by 50% from last summer.

I hope thats not over your precious little head.

 

[fabulouslyghetto]

The credit system needs an overhaul anyway. When it takes months to correct fraud and identity theft on something as important as your credit score, something is seriously wrong.

 

[smelter]

Nick, here is the newly revised gas price chart:

 

[opinterph]

Credit card companies make money from retail commissions on customers, who pay in full each month whether they're high volume or, as a group, even if they're not …

Indeed. In 2006 merchant fees amounted to over $30 billion. [Link]