The first response of any threatened animal is to intimidate the threat.
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.
The whole article is here.
Featuring quotes from unnamed bank officials & trade groups, American Bankers Association, Nilson Report, industry consultants, etc. I get it.
This is akin to a mob retaliating from a sting operation by terrorizing the neighborhood. "See what happens when you snitch? Next time you call the cops on us you'll wish you never lived." Then the neighborhood, feeling helpless to stop the mob, directs its anger at the whistleblower. The NYT wilfully plays the role of the mob's messenger.
David Robertson of the Nilson Report claims, "Despite all the terrible things that have been said, you're making out like a bandit. That's a third of credit card customers, 50 million people who have gotten a great deal," but we know that's bunk. Nowhere does the article mention that credit card companies make 2-3% off all merchant transactions. No, wait, I found it -- it was hard to spot because it's rather difficult to parse from the message being pushed:
A 2005 report by the Government Accountability Office estimated that 70 percent of card issuers' revenue came from interest charges, and the portion from penalty rates appeared to be growing. The remainder came from fees on cardholders as well as retailers for processing transactions. Many retailers are angry at the high fees and plan to pass them on to shoppers once the Congressional legislation takes effect.
The howl of outrage that proclaims the credit card companies are being repressed miss an important detail: Credit is increasingly tied to various important services. Want to book a hotel room? Rent a car? Tough to do without a credit card. Also, checks are under increasing scrutiny these days; try writing one at a mall without having the store make you fill out an application to send your financial information to a third-party verifier. Our economy increasingly makes credit cards essential, so an overhead fee is just one more "fuck you" to poor people. It's rather absurd that an industry is allowed to restructure the economy to make its existence both essential and unregulated, which goes a long way towards explaining why people are so mad.
They're going to punish their best customers? It's a bluff, folks, designed to make reform unpopular among those with good credit. The credit card companies are so accustomed to obscene profits that they might actually be crazy enough to pull the trigger, but the consequences would be disastrous. A large percentage of their revenue comes from merchant-side transaction fees made by financially sound consumers, which would transition their spending to debit cards and cash.
They're trying to re-draw the battle lines by pitting those with good credit against credit card reform. Bluff or no, this is a talking point that needs to be beaten back.