Credit card companies respond to threat of legislation by saying they’ll need to charge ‘good’ cardholders more

I think I can respond on behalf of every non-delinquent cardholder in America:  I dare you.

The story is all over, but here’s my usual source’s article (The New York Times):

“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 aregoing 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.”

I call bullshit.

Even considering the recent spate of poor decisions that have blown up in the faces of banks and credit card companies, even they aren’t stupid enough to pick on customers who have choices.  Granted banks and credit card companies probably do not make much money on clients who never pay any interest (I think I paid $7.49 in interest on my credit cards in my lifetime… I misplaced my statement once and paid it a week or two late) but they do make money off retailer fees and annual fees.

And who the hell with a good credit score and good income is going to stick with a company that eliminates the beloved grace period, increases annual fees above its competitors, or removes our favorite travel and cashback perks?  We are not the chronically-delinquent cardholders that the proposed legislation is meant to protect: We have options.  And we can take our business wherever we want.

Let’s see how many retailers are willing to pay American Express service fees when AmEx holders no longer benefit from grace periods or card rewards.  And let’s see how many new cardholders are gained from competing companies when the first credit card company eliminates their perks.  If my credit cards no longer offer me any real benefit, I’m more than happy to return to making my purchases with cash or debit and save the retailer some fees.

This is a bullshit bluff meant to stroke outrage among the influential moneyed classes and nothing more.  There is no substance behind this threat and that should be patently obvious.  Let’s see what equally bullshit news organizations pick up on this argument in service of ignorance or the companies that stand to lose should the legislation pass.

… and the cow goes moo