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I was talking to some people in the banking industry who work with the Credit Card division about the topic of CC interest and service charges. I was told that the amount of competition in the Credit Card business continues to go down. More than 80% of Credit Cards are now controlled by Chase, Citicorp and Capital One.
Anyway, they hope to eventually control enough of the market so they can start charging interest from the date of purchase for all customers including people who pay their accounts in full each month. Basically all customers who charged during the month would pay some interest unless they had a Credit Balance on their account larger than the charges.
Reduced competition in the Credit Card industry has already:
Increased interest rates, late charges, returned check charges, fees for cash advances and convenience checks, annual fees, etc. It is only a matter of time before we all pay alot of interest regardless of our payment habits.
I was talking to some people in the banking industry who work with the Credit Card division about the topic of CC interest and service charges. I was told that the amount of competition in the Credit Card business continues to go down. More than 80% of Credit Cards are now controlled by Chase, Citicorp and Capital One.
Anyway, they hope to eventually control enough of the market so they can start charging interest from the date of purchase for all customers including people who pay their accounts in full each month. Basically all customers who charged during the month would pay some interest unless they had a Credit Balance on their account larger than the charges.
Reduced competition in the Credit Card industry has already:
Increased interest rates, late charges, returned check charges, fees for cash advances and convenience checks, annual fees, etc. It is only a matter of time before we all pay alot of interest regardless of our payment habits.
If that happens, I suspect people will be using credit cards only to guarantee things like hotels and car rentals until they can pay cash. Debit cards will be used for airline purchases and other online shopping.
I, for one, am working furiously to pay off credit card debt only to shred all but two (one personal and one business). The personal one I only plan on using as I stated above. The business one I'll use for purchases that I can pay off in 1-3 months.
I was talking to some people in the banking industry who work with the Credit Card division about the topic of CC interest and service charges. I was told that the amount of competition in the Credit Card business continues to go down. More than 80% of Credit Cards are now controlled by Chase, Citicorp and Capital One.
Anyway, they hope to eventually control enough of the market so they can start charging interest from the date of purchase for all customers including people who pay their accounts in full each month. Basically all customers who charged during the month would pay some interest unless they had a Credit Balance on their account larger than the charges.
Reduced competition in the Credit Card industry has already:
Increased interest rates, late charges, returned check charges, fees for cash advances and convenience checks, annual fees, etc. It is only a matter of time before we all pay alot of interest regardless of our payment habits.
Not really. I will just start paying bills with check or direct pay etc. No way I'd pay interest for using a credit card. <Shrug>
If that happens, I suspect people will be using credit cards only to guarantee things like hotels and car rentals until they can pay cash. Debit cards will be used for airline purchases and other online shopping.
I, for one, am working furiously to pay off credit card debt only to shred all but two (one personal and one business). The personal one I only plan on using as I stated above. The business one I'll use for purchases that I can pay off in 1-3 months.
Someone eventually should come up with a much better alternative to cc's for hotels or car rentals. Besides that, do you really need them vs a debit card?
The problem with CC issuers is that they do not own your debt. The banks mentioned, as well as all the rest, excepting some local banks that carry the debt as a portfolio loan, use the "securitization model", meaning that they bundle your debt with that of other cardholders, and securitize it as bonds for investors to buy. The only part they play in it from then on, is as servicers of that debt.
Servicers (the "CC issuer") make their money with a cut of the interest and any annual fees charged. This latest bright idea of theirs is just another way to line their own pockets. Personally, I see little reason to pay interest or anything else to someone who does not even own my debt.
Whoever does not get rid of the grace period will take a lot of the market, the other credit card companies may make enough money charging interest on the daily balance, but the one that takes the large market share will end up getting the bulk of merchant fees, if it is Discover, or American Express they will end up really raking it in. Merchant fees are 2-3% of the purchase. On average the money is lent out 30 days or less for people paying it off at the end of the month, that represents a ROI of 24-36% annualized on average if the company lending the money also owns the POS equipment and network, they get the entire merchant fee, companies like American Express, and Discover do it that way, if they decide to keep the grace period, and get the bulk of transactions they will be making lots of money. Sure the others might get more ROI on the little money they invest, but they will not be able to invest more money into it, since people just won't buy stuff using their cards anymore, unless they trick people into using their cards, I don't think paying to use a credit card will be as popular as they expect, and they will lose a lot of business.
When is this supposed to happen? Inever read those notices they send out. There is so much fine print, that i give up.
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