Banks Outraged Over On Time Payments

May 20, 2009 at 2:21 am Leave a comment

Credit Card issuers to customers who aren’t late on their payments: You are free-riding bandits!

That’s the message coming from the credit card lobbyists.  They’ve set up agreements with customers and are now crying “foul” when you don’t have to pay late fees and over-the-limit fees.  Paying on time?  We’re coming after you!

“Those that manage their credit well will in some degree subsidize those that have credit problems.” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks.

People who routinely pay off their credit card balances have been enjoying the equivalent of a free ride, said David Robertson, publisher of the Nilson Report, which tracks the credit card business.  “Despite all the terrible things that have been said, you’re making out like a bandit,” he said.

http://www.msnbc.msn.com/id/30829066

 

If you’re losing money on people who have credit problems, here’s an idea: Stop extending them so much credit.  We on the left side of the political spectrum are tired of mega-businesses crying for welfare over their own failing businesses.  You’ve got one hand out taking my tax dollars and with the other, you’re reaching out to me directly.  I guess you’re not suggesting you “pull yourself up by your own bootstraps”?   

Aside from the big F.U. message they’re sending their customers, going after good customers is just STUPID.  It doesn’t make any sense in a free market.  First off, as far as a free ride, we use credit cards to pay our bills because the credit card company offered us the incentive to do so.  They aren’t offering the incentive for our sake – they offer it because the more transactions, the more money that comes in.  Each transaction brings in revenue from the vendor.  Now they are complaining that they want payment from both the vendor and the customer.  Well here’s the market side of it.  When the incentive to use the card to pay my bills goes away, I will no longer pay my bills with credit cards, and the percentage you earn from the vendor will disappear with it.  

I pay with credit not for enjoyment, but because it’s saving me money.  If that is no longer true, I’m just as content sending payment via online bill pay.  And if that were to go away…I’ll be happy to go old school and mail you a check.  So feel free to stop offering incentives for good customers to use your products and see if they don’t find other solutions.  See if a competitor doesn’t spring up and offer them the incentive you are no longer offering. 

20 years ago the credit card companies offered no incentive and charged annual fees.  Along came Discover offering cash back for good customers and today – every credit card gave way to the competition.  And along with the incentives, came an exponential increase in the amount of credit transactions. 

I’m not saying I’d never use a credit card – that’d be over-dramatic. But remove the grace period charge me interest immediately for using your credit card and you can kiss the fee from the vendor goodbye because that vendor will get a electronic check.

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