Well, at least the post office will get some of my $$$: need to buy stamps to send my cut up credit cards back to the card companies.

yep I agree 100% These bastards need to be taught a lesson once and for all. First they should have been allowed to fail, now that they have been propped back up and have decided to stick a shiv in the backs of those of us who propped them up, I think its high time we consumers cease and desist all activities with companies that do this.

If its all about the money then lets play by their rules, you ding us we drop you.

Awesome! Maybe this will help keep people from getting off on a wrong path.

We pay our cards in full every month, taking advantage of the grace period. They make a profit on us by skimming the merchant charges off the top.

I predict that much of this initiative will backfire because of competition: if BofA does this to us, we'll simply move our $3000 worth of monthly purchases to Discover or AmEx. So will every other customer who does what we're doing.

Charging interest immediately on a purchase? Are they trying to lose customers?

@oldgraygeek: great now I have to cancel like 5 cards

(don't use them but haven't bothered to cancel due to buying a house and not wanting to hurt my credit rating).

I wonder how debt cards will play out?

This is a predictable response. I'll be curious to see how much of it will actually happen and what is just bluster. If nothing else there are many decent credit cards offered by Credit Unions that likely will still offer no annual fee and grace periods, if not rewards.

I can and will switch back to cash. Nothing is keeping the CC in my pocket other than ease of use. Besides, maybe if I started just using cash I'd spend less.

@Diet-Orange-Soda:

From the sounds of the article, the banks have a word other than "customers" for people that pay their bills in full every month (i.e. be responsible with their credit).

This is amusing. I pay my balance off every month and use my credit card as a means of convenient payment and bill consolidation, and I do use the card's points program. If they charge interest immediately, the price will outweigh the convenience, and I'll stop using their card. Looks like I am one of many that feels that way. It's too easy to switch to a debit card, and if they start charging for those, it's too easy to just start carrying cash like I did when I was a teen!

@mikesfree: No, it only punishes the people who got on the right path and managed their money wisely to begin with. Credit cards aren't a "wrong path" - people being unwise with how they spend money is how they got on the wrong path. Credit cards had nothing to do with it.

"Those that manage their credit well will in some degree subsidize those that have credit problems."

Socialism creeping in everywhere it seems...

Hrmm, I would imagine that if they start charging annual fees, it would be easier to cancel your card (I would hope anyway...). Also, I think I'll start paying in cash if they make it impossible to use a credit card for free - credit cards are a convenience and not worth paying for, IMO. This may end up hurting online retailers though.

@chrisexv6: Be sure to send one of those first-aid kit sized polysporin pouches and label it: "For after you shove this card up your ass."

@oldgraygeek: Exactly. One guy says they'll charge annual fees and institute interest rates based on purchase, another guy will say they do none of that and gain business.

This reminds me of the scene in Blazing saddles where the sheriff holds a gun to his own head. If you don't lets us have our way then we'll stop doing business.

These changes really just get us back to the classic business model of banks loaning money and making a profit off of the interest. In the last decade or so banks have moved to a fee and penalty based model. Send statements out so they arrive on a Friday where there is a slightly higher chance of that they will be forgotten. Switch from monthly statements to 28 day periods so that there is a slightly higher rate of late payments. Any tweak they can think of to raise the defaults so they can collect a late fee.

Ok, do this and I stop using your credit card altogether. Your move, Yingling.

@chrisexv6: I'll save the postage and just cancel by phone and cut them up and throw them in the trash.

"Those that manage their credit well will in some degree subsidize those that have credit problems." (Yingling)

In a rational world, the reverse would be true. It's at least partially true under the current model, assuming the article is correct about the profit estimates from current late and overlimit fees. Then again, it's now national policy to reward (or at least tolerate) poor behavior, so why should this new idea be a surprise?

Oldgraygeek makes an excellent point, which Mr. Yingling conveniently overlooked: those of us who pay off in full every month still make money for the CC companies thanks to the merchant fees.

Continuing to hunker down, here...

Oh, I suspect the free market economy will sort this out. Credit card companies will contract the available credit (there's too much of it out there anyway, and consumers need to be weened off theier excessive dependence on it). Then any company that offers decent treatment of its better customers will be rewarded, and the the other companies will follow suit.

@cc82: I think it's about time we just stop using credit cards period. I am currently trying to do just that (notice trying). It is harder than I thought since I do not have a regiment for keeping cash in my pocket or in my house.

@aedude01: I haven't tried to pay cash for an airline ticket or a car rental lately, but I've heard it is a pain in the ass.

Are you saying that ALL banks will be doing this, instead of each bank acting INDIVIDUALLY to do what they need to do to both attract customers and make a profit? Hmm... smells a bit like price-fixing or collusion here. Nice for them to admit it in print. I guess they'll need more of my tax money to pay for their lawyers to defend them in court on this one.

Gee. Maybe I should threaten to wean myself off of credit cards. Too late, I've already pretty much done that.

The consumer credit industry is cannibalizing itself, I think.

What this points out is that CC companies SHOULDN'T be giving cards to bad cardholders. Just another example of the dynamic that's gotten us into this mess: indiscriminate credit.

If D.C. wanted to do some reform that would have impact, they'd look at legislation that would seriously reduce the need for credit cards which have become almost the default pay/id system for almost everything. Fix that and a lot of people who shouldn't have cards will drop them, a lot of people who are being screwed by their cards will drop them.

@giggitygoo: The banker at my credit union almost seemed disappointed when I didn't want more money for an auto loan a few months ago. I wonder if going in and asking about a credit card would brighten his mood.

@HiPwr: "I'll save the postage and just cancel by phone and cut them up and throw them in the trash."

But how is that funny?

I sense bluster. Sounds like the States' Restaurant Associations that fought smokefree restaurants saying it would signal the DEATH of the restaurant business. After smokefree, restaurants (save for the current economic downturn) have INCREASED business. Now Restaurant Associations like Texas are working for its introduction. I can see the credit card issuers/banks doing just fine if they eliminate these parasitic fees. They will kick and scream until it happens and then be surprised at how profitable the right way of doing this is.

Call their bluff. The banks are basically throwing their toys out of the pram over lost profits.

Thing is, you can't make profits off customers you don't have. And, as I've said before, these reforms are nothing new in the UK.

@jeffbone: *AND* those of us who pay in full every month can just as easily forego the gutted rewards we were getting and just pay with cash.

There two kinds of people in the world...those that can pay you back and those that can't.

I can't imagine why a lender would prefer to lend to people that can't pay him back, but what the heck do I know?

@hedonia: Ok, I'll do it while wearing one of those arrow through the head thingys. Worked for Steve Martin.

Well I have to disagree with the sentiment of "ill-gotten gains". It's still not against the law for corporations to profit in this country.

Having said that, let's see what really happens. I put everything on my credit card, spending and paying of around 3k each month. If the bank is getting 3% in interchange fees they are earning $90.00/month simply for processing my charges and payments. If my current issuer doesn't like that arrangement, I suspect It will be easy enough for me to find one that does.

If the big banks follow through on their threats, I suspect Discover and smaller banks will look at this as an opportunity. We may have to move our relationship, but it's likely I'll find a good rewards card that still provides a grace period and doesn't have a fee.

Funny thing is that if banks follow through with these plans, they'll just further erode the quality of their card base, driving the most credit-worthy customers to their competition.

@nataku83: unless we all want to get a bazillion branded charge cards for the stores we shop at....I knew that VS card was going to come in handy someday. You definitely pay off something every month when the interest rate is like 20%.

Looks like we've moved from a "cashless" society to a "nickel and dime" society.

I hope the bastards DO start charging interest right away with no grace period. I'll stop using the f***ing card and pay cash! I'm sure many others will as well. I'm one of those "deadbeats" who pays off his balance every month. Let's see how well the banks do without all the transaction fees they get from our purchases.

I'd say they are bluffing! They're taking a page from the Bush administration playbook: scare the population to get what you want.

@chrisexv6: I heard on the radio a number of years ago that we are lovingly referred to as 'deadbeats'.

These banks are all blowing smoke. If they add annual fees to all their cards, and charge instant interest on purchases, and cutback on reward programs, people won't use credit cards anymore. Oh well. Too bad for them, make a bad situation even worse. Suckers. Bye bye credit cards. Time to use cash and only may purchases you can afford! That will teach people to abuse credit cards.

@LegoMan322: When I'd go through my cashpoor periods, I'd put myself on an allowance for the week...it is harder than it sounds (esp in places that are expensive to begin with)

@pecan 3.14159265: I agree 100% with you. It will be very disappointing if this happens, since using my credit card to pay for larger ticket items with AMEX allows me to double the warranty on the product, along with giving me protection on the transaction I don't get with cash, along with the rewards. But hell, it's not about those who pay it off and use it responsibly is it?

"You are going to force us to become MORE despotic, you wait and see!"
There is a reason my husband and I don't use credit cards. Past all the reward programs and incentives, it really isn't worth it in our situation. I'll not dish on those who do because I've heard some very valid reasons to have a card (Credit score, overseas travel, reward programs) but I dislike these companies so much I'm be hard pressed to deal with them.
Am I a Luddite for advocating less credit as a good thing? Perhaps a society where your average Joe Schmoe buys what he can afford and saves for what he can't is a good thing? Sure, our economy will experience a loss of growth but the slower growth with have a solid footing not based on consumer debt as an industry.
On a side note, weren't good card holders ALWAYS subsidizing bad cardholders? If they were not, how was the company making any money?

so the credit card companies likely have good credit ratings right(or even their employees)? Well won't they just be hurting themselves?

They should just add more provisions to the reform to prevent this.

@Troy F.: Yeah, but those of us that pay in full, etc will also lose the protection that comes with using a credit card over cash.

where's the house and senate on these threats? make them illegal!

If this is the price we have to pay so that the gov't can save its citizens from themselves, then so be it!

America needs to rediscover an old concept called 'lay-away'. I bought my living room furniture that way, and since it had to be ordered anyway, the instant gratification of using credit was not an issue.

Good. Then fewer people will bother using credit cards in the FIRST PLACE.

It's funny. The banks say the reason for late fees and over limit fees was to compensate for higher risk, however now they are saying those that don't pay the fees are deadbeats? Inverse world they live in. Sorry I don't live there.

They will still make very good profits on people who carry a balance and even those the PIFers. They just won't be as obscene as they were. The problem is they were really raking it in for a few years and now they expect it. I guess the normal credit card services were just a loss leader for the fees?

They can't start treating the PIF customers bad, they can go elsewhere.

@pecan 3.14159265:

I think credit cards are the wrong path for a lot of people. If you wait until you have cash to buy something the risk of overspending is greatly decreased. On top of this, there is a percentage charged by all CC companies that accept credit cards. To make up the money, everyone pays more.

I have credit cards, but dont use them in many cases. If you manage them well, its fine. But in many peoples cases, they can get out of hand. The average debt americans face should tell you that.