Credit Card Fees
May 19th, 2009 7:41 am | by John Jansen |I find this story amazing. Apparently those with pristine credit histories will subsidize those with a checkered record.
I stand by a statement I made here a few weeks ago when I offered a modest Swiftian proposal. The gene pool should be protected and anyone who carries a credit card balance and pays interest on that balance should be sterilized!!
I have to believe that step will protect the species from serious harm.
9 Responses to “Credit Card Fees”
By Jon on May 19, 2009 | Reply
As much as I pay off my cards monthly and enjoy the rewards, in truth we’ve been subsidized by those with bad habits. So I’m not sure I agree that we will be subsidizing them, now. Those with bad habits are simply playing the “company store” game. I’m not sure some of this regulation isn’t appropriate. However, I will rebel as much as possible to paying fees.
By orbital on May 19, 2009 | Reply
you’d end up sterilizing 90% of the country.
By cars on May 19, 2009 | Reply
Poor reporting by the NYT, just parroting the credit card industry lobbyists. They are full of it.
By Jay on May 19, 2009 | Reply
I took an office poll. If the CC cards do this they will lose 100% of their customers that pay off their balance on a monthly basis (sample size of 10).
Sounds like a recipe for disaster.
By lcs on May 19, 2009 | Reply
Customers who pay 100% of their balance are getting a 0% interest loan from the banks for one month. What’s to complain?
By Dave on May 19, 2009 | Reply
Cry me a river. I’m sorry, but there was no mention of the merchant fees the card companies charge on each transaction. If customers who pay off their balance each month weren’t profitable they would have been dumped long ago. We aren’t being “subsidized” by anyone, we’re just less profitable than the sucker paying 30% + $50 over limit fees.
BTW John, great blog.
By Rick Ballard on May 19, 2009 | Reply
“What’s to complain?”
No need to complain. Just write checks and deprive the banks of the fees they derive from the vendor. Everybody should be happy about that. The vendor loses the use of the immediate cash while the check is clearing, the bank loses the fee income and the purchaser loses the interest interest income on the “free” loan from the card issuer.
Sounds like a real “win-win” to me.
By Bman on May 19, 2009 | Reply
Redistribution. Has no one been listening for the last 6 months?
By Namazu on May 19, 2009 | Reply
Statistically speaking, nobody is subsidizing anyone else on a risk-adjusted basis. Some customer segments are more profitable, but so are business vs. holiday travelers and so on. Within segments, or among customers with the same offer, “good” behavior rewards the free rider (e.g., the free flyer). The real issue is how good is the CC co’s segmentation and how are the economics of each segment going to change under the new rules. I’m almost certain the economics of a FICO 600 “I’m in debt up to my eyeballs” lifetime revolver will have no impact on the high transactors, and I’ll bet that rate and fee caps on the least risky segment won’t change enough to be material. Of course, if we move to a socialist paradise with barcodes on our foreheads, all bets are off.