Wednesday, May 20, 2009

The future of the credit card?

The financial blogging world was all atwitter (well, that, too, I suspect) about this article in the New York Times:

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.

Of course, another story in the Times also suggested that this is sabre-rattling, or that companies may impose conditions such as waiving fees, etc, if you spend X amount of money per year.

As for me, I've been one of those "freeloaders" who pays the bill every month, and I have no plans to change that. Actually, I take that back. Since everything I purchase generates merchant fees, I think I contribute plenty to the credit card company's profits.

But ... if I'm going to be charged an annual fee, or immediate interest on purchases ... then I'll be bringing my checkbook out of retirement.

We shall see. But in the meantime, I'm going to look very carefully at any credit-card related mail that arrives at my house.

The full story:

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