So, credit card cos want to charge to have cards, huh?

[Uben]

They want to penalize me for being responsible? Okay, I don't NEED any cards, so fuck them! I remember life without them, and I got by just fine. They make 5% off the retailers and now they want to come after the people who make that possible. Again, fuck them! This is a major fuck up by some greedy assed motherfuckers. My credit union will enjoy the extra business.

Any credit card that starts charging me a fee for not carrying a balance will be cancelled, permantly. Credit score? Fuck that nonsense, too. I haven't used credit other than credit cards for 15yrs.

I suppose there are a lot of people who have to have them, but I aint one of em.

[T Wolf]

1. Absolutely. We just cancelled our first card that changed the terms like this. How dare

we pay off our balance each month! That's downright unAmerikan.

They need us more than we need them. Going back to cash transactions would not hurt real people - only the banksters and other financial criminals.

Fuck them.

[Yo_Mama]

24. I think a lot of people will do the same

I hate credit cards, myself. I think they have done a lot of damage to the country's fiscal health.

But you have to understand, companies cannot stay in business doing something for a loss. The first reason this is happening now is that chargeoffs are running between 9-10% a year. Servicing costs on CCs are about 2-3%. Then the companies have cost of funds, so just to keep your portfolio positive you have to be around 13-15% on the interest even if you have low cost of funds and currently adequate reserves. You have to move funds from current interest into ALLL (Allowance for Loan and Lease Losses) in sufficient amounts to cover your expected losses.

The second reason - the reason for the new charges - is the law change, which now will not allow companies to change rates if a customer shifts from being a low-risk customer to a high-risk customer. To compensate, companies are raising rates and pinning them to indexes, plus considering adding fees to accounts that are generally unprofitable.

When you grant a mortgage, you have a backstop for payment - the home - as collateral. Credit cards are unsecured credit and losses are high upon default. The person who pays off their balances every month is generally an unprofitable customer or very marginally profitable. Banks have carried these cards for the fees and in theory that people will sooner or later run up a balance, plus with the idea that if the customer seems to be getting into trouble they can compensate with an interest increase, but now the risks have become so high that the CC banks either need to have more income from such customers or need to lose them.

I think over the next year we will see some pretty massive changes in consumer cards.

Securitized cards generally include a servicing fee of 3%, which means that those fees all go for handling the account. If there's no interest, there is just risk and it is an untenable risk if the creditor can't compensate for the risk by raising rates.

The facts I have just written are the reason I hate credit cards so much. You can pay with a debit card, or you can save money and buy with cash. But I think many people have yielded to the mindset that the cards will always be there if they get in trouble, and think of their credit limits as savings. Then they get into trouble, run up their bills, end up paying very high rates and spend years after whatever (car accident, illness, job loss) getting themselves financially stable again. Paying those high rates is a killer.

As a person who calculates risk and portfolio stuff, I have been warning about this for some time. Carrying such accounts is an uncompensated risk which is a big no-no. As a citizen, I think credit cards are bad in and of themselves.

[dixiegrrrrl]

2. In my little town, many local merchants will not take the cards.

Cash or check, only. If they know you, checks are fine, no ID required, etc.
And for plumbers and other independent contractors, we know to offer a check, they ask about
"a cash price".
About 10% difference.:evilgrin:

[NeedleCast]

3. Some of you seem terribly confused about the purpose of companies issuing credit cards

(they want to turn a profit on them)

If you don't carry a balance and turn a profit for them, it seems perfectly reasonable for them to charge an annual fee. They're not doing this out of kindness. I'm sure someone will be along shortly to accuse me of being a schill for big banks or something, but I don't see it as unreasonable for a card issuing company to want to see a return for the risk.

[Uben]

4. So they want to be profitable?

They already make 5% off of the retailers. That's where they make money off of me everytime I use a card. Now they want to charge me for allowing them to charge the retailers? I don't play that game. Just like fees, I don't offer them anything other than the 5% they make off of the retailers. Now, they will lose that, too! Don't tread on me, you will lose.

At this point, they make about $1000 off of me every year by charging the retailers. Now they will make none. How is that profitable?

[NeedleCast]

5. I don't blame you for not wanting to play that game

I understand that sentiment completely. No one is making you hold on to your cards. I've just seen a lot of screeds aimed at credit card issuers lately and they all seem to run in the same vain. I haven't carried anything beyond my debit card (other than a corporate AmEx when I was traveling for buisness) in ten years. It just seems wierd to me that in a recession economy when fewer people are spending on credit if they don't have to that people wig out about for-profit companies trying to, you know, make profits.

[Vincardog]

12. My CC company just sent me a letter raising my rate from a fixed 9.9% to a Vairable Prime + 21%

I thought they were making money at 9.9%. I am not going to go in the hole paying them 27%

[Dreamer Tatum]

11. They don't charge 5%. That is false.

Interchange is at its highest about 2%.

[Matariki]

17. 5% - 2% - who cares?

They make 2% then off of every transaction made using their card.

TWO PERCENT of a large share of retail sales.

That's TWO PERCENT on items that the card issuer hasn't designed, produced, advertised, warehoused, shipped, or sold. Pretty good deal for them if you ask me.

[Dreamer Tatum]

21. Here's a quick education for you

That percentage mostly goes to Visa and Mastercard. That's how they make their money. Banks pay for the right to issue Visa and/or Mastercard. Feel free to look it up.

[Matariki]

25. Yeah well, tough luck for the banks then.

They've been operating like loan sharks of late, so you are in a lonesome pool of people who have any sympathy for them.

[Dreamer Tatum]

26. Explaining something so people understand actual facts does not equal sympathy

I don't light torches and sharpen pitchforks until I know actual facts, rather than just the convenient or
stylized ones.

[Gormy Cuss]

35. And much of that Visa and Mastercard percentage goes to stakeholder banks.

The money goes in the banks' vaults one way or the other. Interesting that most goes to the associations. It used to be that most went to the issuer and merchant banks and on a small fraction went to the associations.

But back to that "only" two percent interchange rates. That's twice the rate in other countries with comparable systems, and the revenues are in the tens of billions. I doubt that this fee is used mostly to cover the cost of processing, which was the ostensible reason for it in the first place.

[Retrograde]

19. depends on how much volume you do with them

I've heard rates from 2-8%, with the big volume chargers getting the better rates. One non-profit I'm currently working with pays around 5.

[Dreamer Tatum]

20. How's about some actual facts

http://www.ccps.biz/interchangeplus.html

There you go. For the record, American Express has much greater fee rates.

[AllentownJake]

8. The business model was plenty profitable

The issue isn't with profit at this point in time. The issue is that they are under capitilized and they don't like having all these lines of credit out there when they are projecting job losses to continue.

They don't want you to have the card anymore. They are trying to get as many people to voluntarily leave as possible to avoid the bad press of cancelling cards of people with good credit.

They broke themselves with their bad business practices and the US Government through them a life line. The life line was not enough to overcome the bad business practices.

[NeedleCast]

9. No argument from me there

Again though, if they're really looking to simpley get people to unload their cards without the bad publicity, this doesn't seem outside the lines in the for-profit business world. That's why its always important to read the fine print. If you'll pay the yearly fee, great, if not, I'm betting most of the issuing companies are seeing that as a "win" right now too.

[AllentownJake]

10. They are in their death throws

This is a survival move. It is not a sound business move for their future.

[taught_me_patience]

16. +1 so true

This is all about capitalization.

[shintao]

31. Eeeer?

If I don't have a balance what is the annual fee for?

If I do have a balance, what is the interest rate, and why isn't that the risk, because the better and bigger the balance & creditor, the less the risk or interest rate.

I carry a debit so I don't carry much cash, so I don't mind a fee on my money as insurance against robbery ot loss. Yet I can buy whatever I want.

I think we are going to see the end of paper & the treasury.

[TicketyBoo]

32. If you don't have a balance

the annual fee is simply the fee for having the credit available.

Some banks only charge an annual fee if you don't use the card.

We won't pay an annual fee on a card. If you have good credit, you can still find a card with no annual fee.

[lonestarnot]

6. Welp, don't count on that credit union either.

My experience is that they are in the game too. :hi:

[AllentownJake]

7. They are in trouble financially

and all those lines of credit out there with an unpredictable employment situation is a problem for them. They have no clue who is going to become unemployed right now and be forced to live on their cards.

I have a balance I'm trying to pay off, six months ago they were a lot more friendly than they are now.

If the laws were being followed and the accounting rules still in place pre-crisis most of the credit card banks would have been siezed by the FDIC for having a poor capital ratio.

[lefty369]

13. credit card co are in trouble

likely next segment of the economy to get "bailed out".

Best thing to do is get out of debt then u don't have to dear with all the fees and criminal interest charges.

[strategery blunder]

14. Sacrifice Long-Term Viability for Short-Term Profit$

To those defending the cc companies, claiming that imposition of new fees and rate hikes are reasonable:

What happens when the cc companies piss off a critical mass of customers? They might well not come back when times improve. When people learn how to use cash because cc terms are an outrage upon their dignity (not to mention usurious), they won't need the ccs anymore.

I still have my Bank of America card, but it will not last one second past the opportunity to replace that line of credit. I used to carry a balance, but in response to an unwarranted rate jack (which came with a slander against my credit in the notice) I switched usage to emergencies only. I don't expect that account to last longer than maybe a year before I replace it at a credit union.

Now, multiply that across the entire country saying "fuck you" to the banks. They won't have a whole lot of customers ten years from now. People remember when they get ripped off.

[strategery blunder]

15. self delete

dupe

[TicketyBoo]

18. I won't use a credit card

that charges an annual fee, either.

We only use cards that pay us cash back and pay them off each month.

We do it for the cash back and the convenience.

If they eliminate the cash back program, we would look for another card that gives us that. We currently use two different cards that give us cash back with no annual fee.

The moment we get a letter saying there is an annual fee, we will cancel the card. Not gonna pay one. They're making money from the merchants.

Our dentist gives us a 5% discount for paying cash. He's the only one who has let us know that he will give us a break for paying in cash, so we do. We get from 1% to 3% cash back on all our purchases with credit cards.

[SoCalDem]

22. Lots of places will negotiate for cash..

just another reason why the demise of the true small business is a real shame.. A place like Lowes or Home Depot cannot "bargain" because they don;t own the business.

I have always paid a fair price for carpeting, furniture and even cars, by showing them the money..

If I have $700 budgeted for a couch and I see a nice one that's higher-priced, I just show them the money and say.. "It's too bad..I really like that one, but I only have $700."..and then they deliver my new couch/dishwasher/refrig/washer/dryer/whatever

[TicketyBoo]

27. That may be,

but you can also negotiate with a credit card. (You can say you can only afford $ XX.XX, and I've done that when buying a car.)

When I mentioned my dentist's cash discount, that 5% off is specifically if you don't use a credit card for payment.

[MattBaggins]

33. Actually Lowes will bargain like they were in a Middle East Bazaar

I and my friends are always getting things marked down to near free prices. Just talk to them and hew and haw a bit. I needed some stone to put under some concrete footings for some deck posts so I asked the sales guy if he had any smaller bags since I did not need the size they had. Guy looked down and saw one bag had a tiny penny sized hole so he put it in a secondary bag and marked it half price. Just last week I wanted a "faux" cabinet to cover a spot in my kitchen that is actually an encased chimney. I wanted to cut the entire cabinets back off so that it would be about 10 inches deep and stick it in place just to create a complete look. I told the guy what I was doing so he found one that was cracked on the bottom and sold it to me at 75% discount.

Don't get me started on what you can do when you point out the dings, scrapes and mill marks on the wood they sell. If you pay full price at Lowes, you are doing it wrong.

[SoCalDem]

34. Don't go to Lowes or Home "Despot"

When I got my washer/dryer I ordered them online from New York.. free shipping no tax and deeply discounted from a wholesaler :) I saved about $800..and had them delivered to my front porch in crates:)

[scarletwoman]

23. I've never had a credit card. Somehow I have survived.

The sooner these companies go under, the better, imho.

I grew up in the days before Big Bank credit cards. There were store credit cards, but I always put things on layaway, or saved up until I could buy what I wanted with cash.

There's no reason you can't survive without credit cards. People did so for decades before the Visa/Mastercard business model took hold.

sw

[TicketyBoo]

28. We never carried a credit card

until we went on vacation via rail and wanted to rent a car at our destination. No credit card meant no rental car. As soon as we got home, we got a credit card, and we've carried one ever since.

When we got an offer for a card that gave us cash back with no annual fee, we accepted that offer, and that is the only kind we've used since. They pay us to use the card, and the only way we use a credit card these days is if they pay us money for using it.

[Art_from_Ark]

29. Same here

After being embarrassed at the rental car counter because I didn't have a credit card and they wouldn't accept a cash deposit, I decided to get a card.

[pinniped]

30. I like how Crank Of America and others claim they're not jacking rates up on anyone.

B.S. They did major jacking many months ago when they got an early heads up on this CC rules change thing. The crooked senators gave their masters ample time to send out those millions of rate increase letters.

I closed six CC accounts from bankster assholes in the past year.

[TicketyBoo]

36. There was a story on NBC Nightly News

tonight about a guy who has been paying on his Citibank card, never missed a payment. His rate went from 8% at the beginning of the year to 16% in June, and now he has a letter jacking it up to 30%. Man, I'm glad we don't carry a balance!