Posted 10/20/2009 05:58:00 PM by Douglas

In the face of the current collapse of the credit market, it's no surprise that credit cards are pulling out all the stops. Their once insatiable cash-cow is now faced with dry teats, and how are they responding? By eradicating any perk ever garnered by those that paid their bill. This should end well:

Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.

Citigroup, meanwhile, has started charging annual fees to card holders who don't put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don't use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.

The average credit card user is pretty durn stupid, but they're not that stupid, are they?

If you use your cards wisely, and take the cash-back option, you can make thousands of dollars off your regular purchases. If that dries up, so be it, but it's not like you're really losing anything. If they start charging annual fees, for the luxury of carrying their card around in your wallet, then their profits are really going to tank. Remember they still make up to 3% on every single purchase you make with the card, whether you pay your balance in full or not.

If they take away the incentive to use your credit card at all,, expect the situation to go from bad to worse, because that's when the credit card cash cow gets put out to pasture.

Labels: Credit Card Collapse