So what do the new credit card rules mean for me? I like to think of myself as a "good" credit cardholder. I've carried a balance once, for two months. For the last ten years, I've paid the full bill every month, with maybe two late payments due to sheer forgetfulness. Of course, "good" is in the eye of the beholder. Credit card companies call cardholders like me deadbeats, because I don't generate profits for them. Heck, with rebates and no annual fees, I'm costing Citigroup and Chase money. Who wants a customer like that?
There have been some suggestions in the news that credit card companies may nuke those cashback awards and other perks and impose more annual fees in order to recoup what they'll lose now that they'll be forced to play fair with borrowers. And if Citi does hit me with an annual fee, then I face the choice of eating that cost or cutting up my card and dinging my credit score. Ouch.
But you know, I've been having a free lunch for years. Citi has been providing me a service and losing money. Worse, I've been making money, in the form of cashback rebates, on the backs of folks carrying more debt and suffering from the very predatory, usurious practices of which I've been so critical. There's a bigger ouch.
Ezra Klein reminds us that there is no such thing as "good" and "bad" credit cardholders. Each of us is just a layoff or a car wreck or one lost envelope away from finding ourselves on the wrong end of the credit card companies' big guns. Why should I profit from folks just like me whose abuse at the hands of credit card corporations is triggered by nothing more than bad luck?
The new credit card regulations will give Citi a convenient excuse to jack up fees and cut benefits (but wait a minute: even before these new regs, was anyone getting letters from Citi et al. announcing lower rates and fees?). If Citi decides it can no longer afford to pay me for using its card, I won't like it. But I can live with it. Nobody should profit from deceptive business practices... not even me.
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