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

Posted 2/26/2009 08:25:00 PM by Douglas

The other shoe is about to drop in the credit crisis: Consumer Credit. Example: AmEx is going to pay you to take your debt somewhere else while you still can.

American Express may want you to leave home without it.

Battered by mounting credit card losses, AmEx is offering $300 to certain cardholders who pay off their balances and close their accounts.

"We sent the offer out to a select number of card members," said Molly Faust, a company spokeswoman. "We are looking at different ways that we can manage credit risk based on the customers' overall credit profile."

The company did not say how many cardholders would receive the offer.

Cardholders have until the end of this month to accept the offer and must close their accounts in March or April. Each cardholder will receive a $300 prepaid American Express card.

Now that's brilliant. Find the middle rung people, and get rid of them with a quick shot of $300 in a gift card that they're probably going to lose, anyway.

Labels: Credit Card Collapse

Posted 12/01/2008 06:34:00 PM by Douglas

The next shoe in this dismal economic landscape is about to drop.

The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.

The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.

"In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent."

It's bad news when all the credit markets are drying up like scorpion's ass, but if it means I'm going to get less credit card applications in the mail featuring stupid and misleading gimmicks, that's just fine by me.

Labels: Credit Card Collapse