Tuesday, 19 May 2009

Is the Free Ride Over?

Cedar Point - Raptor
Creative Commons License photo credit: Andrew 94

Yesterday’s NY Times contained an article on how the credit card industry plans to make up for lost revenue.

Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

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’m one of those people who pays my bill in full and I LOVE getting all those frequent flyer miles each month.  Getting miles or cash back is definitely a perk so while I would be disappointed if they went away, I would still use credit cards for the convenience factor.  However, I draw the line at paying interest and refuse to do so.  I suspect a lot of card companies will lose customers when/if they make that change.  How will these proposed changes affect your credit card usage?

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