Well, if the banks had to operate with only good customers with good credit, they wouldn’t have any excuses for paying all those Big Buck Bonuses that the MOTU seem to think is their birthright.

Jane that’s fun and true as far as it goes, but “deadbeats” – and I count myself among the progressive variety – DO generate revenue for the banks because the merchants where we buy our things are paying the credit card companies a % on every sale, irrespective of when the balance is paid. He’s still a jerk, though. sleon

Well them not reading, does this surprise anyone? Seriously.

I sometimes wonder if they are on the same planet at we are.

I got and email update from David Vitter assuring me he was working to criminalize flag desecration and was making progress…

I mean seriously is flag desecration a pressing problem in this country? Don’t we have a few other more pressing problems at this time.

What a wanker.

“for people who pay their credit card bills on time” and “if you generate no revenue, you give the banks no reason to extend their services to you”

The Banks collect betweeen 2% and 6% from the merchants. What do you mean “generate no revenue?” — “generate no extra revenue?”

He probably used a flag for his diaper.

I got and email update from David Vitter assuring me he was working to criminalize flag desecration and was making progress…

Apropos of Vitter: a few years ago, HellMart was selling flag diapers.

Is someone making diapers with a flag design? Poop.

Really, what a stupid person, er pundit. And why’d he name himself Allah?

Well maybe he’s pissed that they don’t make ‘em in adult sizes?

Excessively high opinion of himself?

Piss on *that*

Jane writes:

The NYT should charge them for advertising.

In which case, so should ABC, since their lead story on the nightly news was the same crap.

I have a different take on the article. I think consumers will read this and be able to know who the bad guys are. It’s the banks and their “business model”. But I do wish some of this info was higher up in the article.

Citigroup and Capital One referred comments to the A.B.A. Discover and American Express declined to comment. Bank of America intends to “provide credit to the largest number of creditworthy customers possible, while also remaining prudent in our lending practices,” said Betty Riess, a spokeswoman. Together with JPMorgan Chase, which has said the changes will force it to limit credit availability and raise fees, these banks account for 80 percent of the credit card industry.

Banks are not required to publicly reveal how much money they make from penalty interest rates and fees, though government officials and industry consultants estimate they constitute a growing portion of revenue.

1. use of the word “remain” is debatable
2. used to be that the banks wanted to limit who they extended credit to. That was the whole point.
3. a return to regulation is going to cause a huge case of crack withdrawal for crack addicts (the banks).

There is something hugely wrong when banks want people to have crappy credit and are banking on people not being able to pay the money back.

IOW, I think it’s pretty clear that the highway robbers are complaining about not being able to steal money anymore.

Oh, are you making less money because some kind of protection showed up? Gee, that’s too bad.

jane==not only will they be charging fees to the ‘undesirable-pay-balance-people, wait’ll he finds out that since he is an ‘pay-on-time-undesirable’ his credit limit will be lowered and so goes his credit rating which is partly based on his credit limits…..

and absolutely nothing he can do about it–except close his account, which will lower it even further…

yep, i wanna see what words of wisdom he has for that one.

The funny thing is that these changes will likely come about because credit card companies are losing their cash cow…but it’d be their idea, i.e., the free hand of the market. So they’re going to call credit card companies socialists now?

The whole idea that the CC companies lose money on customers who pay is BS. They still make their transaction fees. Of course, they prefer to make more $$$, and so are making this threat. If we all stop using CCs, the whole business model is upside down, it seems to me.

Personally, I try to use my debit card (not linked to MC/Visa) as much as possible, but the CCs are important for on=line transactions, so I confess it would be tough to give them up entirely. However, no need for more than 1 or 2.

He’s a dweeb

Oh, but the credit card companies are doing everything they can to turn people who pay on time into people who don’t. Citibank changed the PO Box number that my bill gets mailed to this month.

If you pay on line, do you look carefully to make sure the address didn’t change? Once you’re late, they slam you hard, so check that address every month.

and when you move, it has to forwarded, some have shortened the time of notification, so may not get to you in time to mail it back out….

i thought i would share something one of my relatives does…

he uses those ‘application’ credit card junk mails to indicate whether his mail has arrived that day…..

he uses the envelope, makes sure nothing personal is in/on it, sticks part of the propoganda in it, and puts it in the mailbox, flag ‘up’…he mails it to the credit card company with their own self-addressed postage paid envelopes…flag ‘down’ he knows the mail is here…

he says they never will figure out that they’re losing money with it…
he was a corporate accountant…

i cancelled that junk mail by calling an 800 number… on those offers in the mail there is a number that is required by law to be printed on there to get off of the list…but he says, no, stay on the list and mail the envelopes in, it’s getting expensive…….one ‘postage paid’ at a time…he’s been doing it for years. and lots of people he has told about it….and hopefully more now that i am telling it.

he cracks me up.

forgot to add, he hates credit card companies and warned me about them in the early 80’s…said it was a way to make people poor….

he only uses ones that he can get things back for using them….like money/rebate toward a car with the ford one, or somethings like that, as soon as he gets the points he changes to another one…they purchase everything on them and pay them off every month, so they accrue whatever it offers as quickly as possible….he said he is an ‘undesirable’ that’s where i got that phrase.

he puts it to them any chance he gets. it a beautiful thing to watch a retired corporate accountant get back at credit card companies and banks…reminds me of that song ‘high hopes’ that ‘little ant can’.it’s sumpthin’.

TBogg has reptiles on the front page!
Insane Clown Prince of Alien Race of Lizard People sues blogger

I appreciate that, but having just researched online credit card fees for my friend’s knitting business, I think the figure is closer to 2.5-3.5%. After you factor in operating costs, I seriously doubt they’re making money on that, even with the Fed discount rate at .5% (I think it was 2.25% a year ago).

You pay higher prices for the convenience of revolving credit. The cost to merchants is passed on to the consumer. Moreover,

Fight Unfair Credit Card Fees

The credit card interchange fee is the biggest credit card fee you’ve never heard of. Nearly $2 of every $100 American consumers spend using credit cards goes directly to the credit card industry through the interchange fee.

In 2008 alone, Americans paid over $48 billion in interchange fees, more than twice what was paid in credit card late fees and three times ATM fees. The average American household paid $427 in credit card interchange fees last year. Total interchange fee revenues have tripled since 2001.

But unlike credit card late fees or ATM fees, credit card interchange is set in secret – consumers don’t know they’re paying it through higher retail prices. What’s more, the same reckless, predatory lending practices that led to the sub-prime mortgage meltdown still prevail with credit cards. Fat interchange fees have created a perverse incentive for the big banks to abandon responsible lending practices in favor of maximizing fee income.

Arrest the owners of HellMart. Post haste.

I read some congress critter proposed to make it legal for people to give two prices. Cash price and credit price. Some places in NO do this. Some only accept cash. If places offered two prices you would know what you are paying in these fees.

I thought that already was illegal. I stopped seeing it years ago, and understood a law forbidding it had been passed.
Or it may have just been that the card issuers forbade it in their merchant agreements.

RE: the substance of the post – I am now able to admit that until Nov., I worked for a credit card company—why couldn’t I say so before? Because it was a terminating offense to mention either the company name or even the fact that I worked in the “financial services” industry on any blog or internet website.

I never heard the term “deadbeat” for pay-in-full-on-time customers – but they were known as non-profitable. People who pay late, go overlimit, etc., etc., account for the profits. In training we were told not to waive too many fees (we had more discretion to waive then than we did by the time I left) because that’s where our raises came from.

Those “non-profitable” good payers would get irate about being a “best customers” because they never missed a payment etc. – having no idea that, in fact, that did make them undesirable.

I’m not sorry, by the way, to be out of that business. I kept trying to transfer to a less evil-feeling job, but I wasn’t good enough at it to be allowed to get out of it. For one thing, I waived too many fees, and I spent too much time explaining things until the caller actually understood.
We also got paid based on our talk time – how long it took us to complete a call. I never earned much at all, mostly nothing, that way.

I am really glad to see, according to the NYT primer on the new law that people under 21 can’t get cards in the future without a parent’s permssion. It is amazing how many students had no idea how credit cards worked, or what effect not paying them would have on their futures. Financial education in this country is obviously pitiful. It’s no surprise kids graduate with huge credit card bills. Thank dog such offers didn’t exist when I was in school – I had no more clue than today’s kids about money or credit.

Thanks very much for your insight tejanarusa. I think Federal Data is still a major merchant fee processor. I guess they’re an intermediary between the merchants and banks and get some sort of cut.

Thanks, MsAnnaNOLA, for reminding us of the old ways still ongoing in NO. Most decent of those merchants to offer the option, still.

Tejanarusa has it exactly correct, the merchant agreement we have to sign has, in it’s 25 pages of fine print, the requirement that there be no differentiation of credit price and cash price.

I don’t even try to read the 200 page book that is the fee structure, I do understand that tiny people like us get to pay way more as a percent of each sale, and since we’re extra crazy in only selling at the wonderful artsy-crafty event out in the woods, and we avoid charges for wireless terminals that communicate instantly with CC headquarters but keypunch it in later on an ancient terminal we got special permission to use, the payments that were taken out of my bank account without notice a month later were like 8% of sales — they do pay nicely, it’s in your account in 48 hours. If you actually wanted written records of all this, you’d pay like 10 or 20%.

Well, at the risk of beating a dead horse – and this is in no way a justification for the bank’s or the wing-nut’s behavior – let’s do the math. In my household we pay our balances every month, but we put most routine expenses (grocery, gas, food, etc.) on the card to the tune of about $1,300/month and I’m guessing that’s low for your average “deadbeat” who probably tends to be in the higher income range (I’m not). Anyway, that’s $15,600/year and 3% of that is $468/year. That’s a pretty significant number compared to an annual fee in the $15-$25 range. Further, your assertion that these amounts are eaten up by overhead is, I believe, mistaken. The process by which the banks cream off their percentage is fully automated; there are no incremental operating costs based on volume of charges. I think we’ll find that these revenues, after expenses, far outweigh any proceeds from card fees. Why do it then? Scale if you have 100,000,000 cardholders x $15 that’s $1.5 billion/year. And as a banker would say, “every little bit helps.”