Pay off credit cards monthly = increase taxes on the wealthy

[eridanus]

Advanta has halted it's operations due to losses, and capitalone lost 1.4B in 2008 Q4. I'd bet (without looking at the financials) that the banks with substantial credit card operations currently lose money on those segments.

Advanta was a top 5 subprime lender. Recently, they've had huge delinquencies in their credit card operations.

Capital One has been expanding into regional banks and auto loans. Their yearly loss was $46MM, and the Q4 auto loan loss was $811MM. Capital One is also under pressure from card delinquencies.

Those on the edge, the once most profitable, are skipping payments and going into chargeoff status. This doesn't mean that "deadbeats" aren't profitable -- they just aren't AS profitable as those who carry a balance and make the minimum payment once were.

 

[freebird5825]

New rules coming soon to a theatre near you
Credit card bill closer to Obama's desk - May. 20, 2009

 

[ziggy29]

I remain ready to shred any and all cards that intend to charge annual fees or eliminate the grace period.

 

[IBWino]

I remain ready to shred any and all cards that intend to charge annual fees or eliminate the grace period.

My wife and I are also ready to do the same. But I've read more than once that closing a line of credit will negatively affect one's credit score. Not sure what to do about that. Our credit scores are currently very high, so maybe the impact would be minimal.

 

[ziggy29]

My wife and I are also ready to do the same. But I've read more than once that closing a line of credit will negatively affect one's credit score. Not sure what to do about that. Our credit scores are currently very high, so maybe the impact would be minimal.

One may need to be selective if they have several cards.

In general, all else being equal, closing cards with lower credit lines and the newer accounts are less damaging to your credit score.

I have one card from my CU that I almost never use (maybe one $10-20 charge a quarter) since it gives no cash back, but since it has a $20K credit line and has been open since about 1991, that's one I'd keep. (I'm pretty sure they wouldn't be playing these possible games with annual fees or no grace periods.)

I know the cards I have are fairly hard to get (even before the blow-up you needed pretty good credit to qualify), so hopefully they won't be as impacted by these changes and won't feel the need to do this.

 

[samclem]

If the regulatory changes make credit card purchases less prevalent, there will be other impacts. Those of us planning to start paying with cash should anticipate higher ATM fees (why not? There will be increased demand for the service). The government is always complaining about the costs of printing money and minting coins (and trying to foist those damn dollar coins on me!)--well, they'll need to significantly increase the printing budget if we move closer to a cash economy. And checks--can you imagine the delays as everyone who now pays by CC at the gas station now has to go into the Stop-And-Rob with a paper check? Grocery stores will have to open more lanes (and pay more cashiers) as we all revert to paying via slips of papyrus with our hand-written payment amounts on them.

Maybe increased per-check fees?

We always pay off our CCs and get lots of money back every year. Even if I didn't get a dime back, I'd still use them. In fact, I'd be willing to pay a small annual fee. But if they start charging interest from the moment of purchase, I'd probably switch to cash. Debit card: only if they increase security features and my protection against fraud/theft.

Funny that we're all talking about the small issue and avoiding the big one--why is the government micromanaging the details of contracts I (an adult) and a credit card company can make? I guess at this point in the overall erosion of the natural state it doesn't even cross our minds to ask the bigger question. I hope I live long enough to see the pendulum swing back.

 

[bbbamI]

I never carry a balance, have 3 credit cards but typically only use one of them.R

Yep, me too. So, I got a letter from VISA last week telling me due to my activity (very little) they are decreasing my limit from $10k to $5k.

 

[dex]

I just got a call from Capital One - someone charged $900 of Victoria Secrets purchases using my CC number but the wrong cofirmation number from the back of the card. I asked the guy on the Cap One fraud line how they got my number. He said they just might have got lucky. They are sending me a new card to Colorado.

Great that they caught the fraud and good service canceling my card and sending me a new one.

 

[dex]

We always pay off our CCs and get lots of money back every year. Even if I didn't get a dime back, I'd still use them. In fact, I'd be willing to pay a small annual fee. But if they start charging interest from the moment of purchase, I'd probably switch to cash. Debit card: only if they increase security features and my protection against fraud/theft.

Good points

Funny that we're all talking about the small issue and avoiding the big one--why is the government micromanaging the details of contracts I (an adult) and a credit card company can make? I guess at this point in the overall erosion of the natural state it doesn't even cross our minds to ask the bigger question. I hope I live long enough to see the pendulum swing back.

Comrade, think about it.

 

[dex]

Yep, me too. So, I got a letter from VISA last week telling me due to my activity (very little) they are decreasing my limit from $10k to $5k.

I don't know much about CC accounting.
I wonder if by reducing CC holder limits; the CC company can/does reduce its balance sheet liabilities.

 

[JOHNNIE36]

My wife and I are also ready to do the same. But I've read more than once that closing a line of credit will negatively affect one's credit score. Not sure what to do about that. Our credit scores are currently very high, so maybe the impact would be minimal.

I just went through all this with Experian. What the credit bureaus don't like is a credit card with a limit of $1000 and to which you may charge $250 on any given day. The ratio of the credit limit to the balance on any given day is to great and this will impact your credit rating in a negative manner. I've cancelled these type cards and kept the ones with a high limit ($10k-$15k) and now only have three cards to deal with. I'll see how my new credit score comes out.

 

[samclem]

Comrade, think about it.

Sorry, I don't know what came over me.

"He gazed up at the enormous face. Forty years it had taken him to learn what kind of smile was hidden beneath the dark mustache. O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down the sides of his nose. But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother."
-George Orwell, 1984

 

[ChrisC]

I'm afraid I don't really see the angst with paying annual fees for credit cards. We have several no fee and annual fee cards. The 3 we use most often are: Discover, no fee, cash rebate, which my wife primarily used in her own business for many years; Chase-Marriott Rewards, $65 annual fee, in which we accumulate Marriott Reward points and obtain an annual free stay at a Marriott Category 1-5 Hotel, which we have used to stay at hotels with rack-room rates of $159-189; and a Costco-American Express Card, tied with an Executive Club Membership; annual fee of $45, and I get a rebate of around $150 each year for my Costco purchases.

I have 3 other no-fee cards, which I seldom use. I calculate, even with the annual fees, I'm coming out way ahead of the game. There's a price point that will likely make annual fee cards unattractive to me, especially if I downsize purchases at Costco or if my Marriott Reward cards downgrades points or removes my free annual hotel stay. Hasn't happened yet, but I think if you shop around enough, the annual fee cards aren't that bad and might be a good deal for many.

 

[Koolau]

I'm afraid I don't really see the angst with paying annual fees for credit cards.

ChrisC, You obviously get your money's worth for your fees. I also have a Costco AMEX - I consider it "free" since I'd pay for a Costco membership otherwise.

If suddenly your Discover or Visa (now "free") starts charging annual fees but with no "perks", will you still be OK with that? I won't. I'll either beat them at their silly game or cost them 10 times as much as they gouge me. Wonder what it would cost them if I call up every day and complain for half an hour? Wonder what it will cost them if I dispute every charge on my card - one charge per call? Sorry, it's just my policy, nothing personal, heh, heh.

 

[REWahoo]

Wonder what it would cost them if I call up every day and complain for half an hour? Wonder what it will cost them if I dispute every charge on my card - one charge per call? Sorry, it's just my policy, nothing personal, heh, heh.

You probably won't have to wonder after the first few times you do it. You'll simply end up on their "don't call us, we'll call you" list with a canceled account...

 

[Koolau]

You probably won't have to wonder after the first few times you do it. You'll simply end up on their "don't call us, we'll call you" list with a canceled account...

Works for me, heh, heh. More than one way to skin a (pick your protected species of the month)! After they cancel a few million other "satisfied customers" like me for their own version of "dirty tricks to play on your S-O-B credit card company", they may REALLY struggle to make a buck.

 

[ChrisC]

If suddenly your Discover or Visa (now "free") starts charging annual fees but with no "perks", will you still be OK with that? I won't. I'll either beat them at their silly game or cost them 10 times as much as they gouge me. Wonder what it would cost them if I call up every day and complain for half an hour? Wonder what it will cost them if I dispute every charge on my card - one charge per call? Sorry, it's just my policy, nothing personal, heh, heh.

My Marriott Rewards Visa was previously a no-fee card; I opted into a Marriott Rewards Visa annual fee-based card because it seemed a better deal to me than the no-fee Marriott Rewards Visa. I have several no-fee cards that I use sparingly -- just to keep them open. My point is that several people are just getting totally turned off by the fee-based cards without fully appreciating benefits that affinity relationship, fee-based cards might offer, like a points-driven program. Some fee based cards are not very good deals, but there are some which I prefer over no-fee cards because of the affinity relationship with a points program or generous rebates like Costco or Chase-Marriott Rewards, Signature Card. For my needs, I'll take these cards over no fee, rebate cards,

 

[freebird5825]

I remain ready to shred any and all cards that intend to charge annual fees or eliminate the grace period.

Ditto.

Sounds like the beginning of a conga line.
BTW, never let go.
.

 

[FUEGO]

Sooo... does this mean my old days of stoozing with $100,000+ in credit card debt at 0% interest are over forever? The deals dried up not too long ago but I was hoping once the economy and CC companies got fat and stupid again I could continue running my racket to the tune of +$4,000-5000 per year (with better yields on money market accts that is).

This is not fair. I feel penalized for being a smart consumer. Where is my bailout yet? I think we need a stoozer bailout! Who's up for a million stoozer march on Washington?

 

[REWahoo]

Looks like we might need to add stoozers to the endangered species list...