Would the mafia have this chutzpa?

I see a story in the NYTimes this morning that credit card companies, faced with government restrictions on their outrageous fees, high interest rates and profits based on taking advantage of the poor, will simply start charging customers who pay off on time more.

Say what?

The story can be read here (click!) My take: What a screw job.

The story says people who pay off their balances on time are getting a “free ride,” but that’s baloney and I’m amazed the reporter let it pass. People who pay on time still must absorb the transaction fee in the cost of what they buy. You think businesses don’t pass that stuff on?

What’s really going on here is that the banks are acting like the Mafia — they figured out a way to make huge amounts of money by hooking the country on credit and milking the suckers for all they’re worth. Now someone tells them to back off but they’re already planning on making those profits in the future — that money is already committed, if not actually spent.

So, they say to themselves, “Well, we’ve got all these people hooked on credit. Like any good crack dealer, we’ll just raise the price. What are they gonna do?

A pair of scissors, that’s what I’ll do. Go back to cash if I have to. And while that may not be practical, faced with having to pay a fee every time I use the thing, you can bet it will get used less.

Which is precisely what the economy, which they claim to be so concerned about, doesn’t want right now. It’s the people with money to spend — as shown by their ability to pay off their bills right now — who are keeping this economy afloat, not the folks up to their ears in debt and foreclosure.

Be nice to us, or we’ll cut back too. And then where will you be, you greedy banker you?

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3 Responses to Would the mafia have this chutzpa?

  1. Doug Gibson says:

    I agree Charlie, and we’ve got to teach our children and others not to use the plastic. That education is critical, given our nation’s probable economic future, deficits, etc.

  2. Cheryl says:

    hey Charlie:

    I work for Citibank and I agree with cutting some of the fees, some are excessive I agree. However, no one sticks a gun in the customer’s face and forces them to apply for a credit card. And, no one forces them to have mutiple credit cards to the same store, I think that’s just plain madness.

    I think customes have a responsiblity in this mess along with the banks.

  3. ctrentelman says:

    Cheryl, I could not agree more.

    But, as the NYTimes story says — and there’s several stories now, and quite a debate in the comments sections — the question is whether the credit card issuing banks should start charging people who pay their cards off, on time, monthly, to keep their profits up?

    After all, nobody sticks a gun into peoples’ faces and makes them use these cards, but what if they actually stop using them? A lot of that revenue is already budgeted for in next year’s planning. If it doesn’t show up, the stock price will suffer.

    Shifting that need for revenue to the so-called “deadbeats” who don’t generate fees is a basic change in the way these things work. There’s speculation that the banks are talking this up as a scare tactic, to get people to force lawmakers to ease up.

    My thinking is that the banks are so used to the income they’ve been making on cards that they need to find a way to generate more income if the excess fees are taken away just to stay even, and people who pay on time are the only revenue stream left untapped.

    Problem is, people who can afford to pay off, in full, every month, don’t really need to use a credit card most of the time, so it is likely they’ll switch to debit cards, or write checks, or just spend less, and the revenue stream they generate with transaction fees will also disappear.

    I know I make a lot of impulse purchases just because I have a card that lets me. No card, no impulse purchases. In the end, I’d be better off to leave my cards at home.

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