Credit cards again

[jziegler]

I recently got a note from Discover that they are now moving up my payment due date to the 27th of every month instead of the normal 1st of every month. I pay off any ballance every month, so it's not a problem; however, now I'm worried that I'll forget about the new due date and miss a payment. I think that's how they're trying to get me. Once I screw up they can jack my rate.

They did the same to me, so add that to the rate increase (without missing a payment) and reducing the cash back bonus. I plan to cancel the card soon.

[thrytis]

I don't pay a whole lot of attention to rates, but i did get notice that Amex is lowering their cash back rewards. At the end of the rewards year i'll reevaluate if it is worth continuing to use it. That wouldn't be the first card i dropped due to changing rewards, and won't be the last.

If i ever need to carry a balance, i keep a credit card from my credit union. Credit unions are hard to beat long term.

[vaking]

What is wrong with my logic?

Question:
If I were a bank and I knew there was a bill coming soon that would make it difficult for me to raise rates in the future what would I do?
Answer:
I would try to identify all customers for whom I may want to raise rates in the future and I would raise the rates now before the bill will make it difficult.
Question:
A customer has a good rating and gets a notice that his interest is going up. Why is that?
Answer:
The new bill limits bank's ability to raise interest on a customer quickly. One missing payment is no longer enough, etc. in other words - the new law limits bank's ability to apply quickly different rates for good customers vs bad customers. The lines between "good" and "bad" are getting blurry. That means bank has to raise rates accross the board presuming many people will start being "occasionally" late. The new law effectively forces the bank to charge good customers more to subsidise the bad or potentially bad customers.
Question:
But a customer with good rating can simply cancel the card? How does this make it "good business" for the bank?
Answer:
All banks are facing the same bill. You think you can cancel our card because we raise interest from 5% to 13%? Feel free to shop around and find the bank that will give you new card with interest less than 13%. Also note - if you are paying your bill in full every month then you are not paying any interest. What difference does it make to you what interest rate you are NOT paying?

[Uncle Cracker]

All banks are facing the same bill. You think you can cancel our card because we raise interest from 5% to 13%? Feel free to shop around and find the bank that will give you new card with interest less than 13%.

Two things: 1) there will always be some bank somewhere that wants a competitive edge, and 2) if all the banks cobble together a hard line rate that is not justified and reasonable, then that is collusion and price-fixing. I think the government would hit this hard, as it makes a mockery of the controls they are trying to establish to protect me, in return for bailing out the banks with my money.

[radhak]

Alex, nothing wrong with the logic.

I have never (ever) paid any financial fee or interest on credit cards. But I have and use credit cards regularly, as a convenience feature (don't need cash in my pocket, and allows me online purchases). MBNA did increase my % to 22 odd, but I did not care.

But from a business perspective, I know that I am a liability for the CC company. I use all their resources, and get them zilch in return, not even annual fees. If they were allowed to cut me off from their customer list, they would. Since they can't, they are trying their best to annoy me so I get off. But I am not sure I can begrudge them their intent. For all that I can rave about being their 'model customer', I am not. Paying off all my balance every month makes me their worst customer. So how can I expect them to do anything for my sake. They might do better throwing a 'we are here for you' party for my colleague who has a CC balance of $44,000 !

I totally expect that soon, all cards will have annual fee, especially targeting people like me. If they were to ask me, they should waive that fee for anybody who's interest for the year rises to beyond something (say, $100).

[HarmsWay]

...
But from a business perspective, I know that I am a liability for the CC company. I use all their resources, and get them zilch in return, not even annual fees.

Don't the CC companies make a percentage of every sale?

[Russianwolf]

If they were allowed to cut me off from their customer list, they would. Since they can't, they are trying their best to annoy me so I get off.

Um, they have the ability to close any account at any time for any reason. If they want you gone, you're gone. The card is their property, and use of it is at their discretion.

[phrog]

I haven't seen the entire bill yet but if the synopses that I've read are complete then Congress has left out any provision protecting the consumer from the CC companies reporting them to the Credit Reporting agencies for card cancellations. Thus, if YOU cancel your credit card, YOUR credit rating will be adversely affected.

I currently have a card that I pay off at the end of every month. If the company starts charging me an annual fee I will cancel the card. Then MY credit rating will be adversely affected even though that I have done NOTHING wrong. And remember, the CC company was making money from my purchase by charging the merchant a percentage even though they were not making money from me personally. Wake up Congress.

Richard

[radhak]

Don't the CC companies make a percentage of every sale?

at $2.87 for every $100 charged, I'm not a profitable customer...

Um, they have the ability to close any account at any time for any reason. If they want you gone, you're gone. The card is their property, and use of it is at their discretion.

Sure, in theory. But would they really want to get rid of 42% of their clientele with the reason - because you handle your credit too well...? They need something more subtle; best if the customer leaves voluntarily !

[ragswl4]

I think I agree with every post here but reality is the CC companies don't care about folks who make payments on time and even less about those of us who pay them off every month so we don't pay any interest. They also don't care whether our credit score is adversly affected as that just means we have to pay a higher rate when we do need to finance a car or boat or RV or home. The banks are in this to make money, as much as they can as fast as they can. A few lifes get ruined, Oh Well! Guess the customer didn't manage their finances good enough.

The new law has some good points but in the end, won't save money for folks who pay their bills on time. Nice try but no cigar.

[phrog]

According to the evening news the President signed this bill into law today (
Friday 5-22-09). You can view the entire HR 627 at: http://www.govtrack.us/congress/bill...?bill=h111-627

Hope the hyperlink works. If it doesn't you may have to copy and paste the aforementioned address into your browser.

I found no mention of credit reporting agencies being prohibited from lowering a consumer's credit rating when the consumer himself cancels his card (as in not agreeing to new terms being imposed). But the bill was long and it may be there and I didn't see it.

Richard

[gerti]

It wasn't so long ago that rates like they are charging on a daily, usual course of business wasn't called banking, it was called LOAN SHARKING!!!

Been saying that for years!

[alpha]

Actually, I think this is just the tip of the iceberg. The printing presses are running 24/7 cranking out dollars with nothing to back them up. The hyper-inflation will be coming very shortly. Anybody remember when mortgage rates were 19%? So don't feel too badly if you get that dreaded rate increase letter from your credit card company. Everyone's credit card rates will be right up there with you shortly and the low interest rates will be just a faded fond memory.

George Santayana said it best, "Those who cannot remember the past are condemned to repeat it."

[thestinker]

I haven't received anything. I'll keep a watch on the mail though and see if they do anything.