The Obama administration and many in Congress – including our good friend Sen. Chris Dodd (D-Conn.) – are pretty disgusted at the contracts that are in place between credit lenders and credit card holders. The exorbitant fees and interest rates are just too much, and the federal government is planning regulatory legislation to stomp out the mean big-business practice.
In short, people who were provided credit they should not have received can not pay their bills right now due to the economy., so therefore, stop the banks from making any profit from those people. The issue is that the banks need to make a profit, so if the government steps in, the banks will need to find other sources of income.
What you’ll see happen is banks refusing to provide credit cards to those with lower credit scores and they will probably reduce benefits (cash back, airline awards, points…) and bring back or increase yearly fees.
The government will not refer this new banking practice as a “loophole” that must be closed since it is designed to “screw the rich.”
Hot Air has more and a poll up. This again is one of those situations where if you do the right thing on a month-to-month basis, you’re going to have to pay more in the future.
If you pay off your bill monthly, you must be rich and can afford to pay more. If you don’t pay your bills, spend more than you can afford, the government will come in to squeeze banks into giving you a better deal. If the banks do not do the bidding of Congress and the Executive branch, they will get crushed by those in power.
So for those of you who pay your monthly credit card bills on time and within the grace period, how do you feel about this? My emphasis in bold.
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 use a credit card for convienence, and I’m known for accepting new cards if I can get free money over time, but I play the game correctly and pay it off so I pay zero interest. Provide me with a better deal and I’ll pay cash every time.