[kenberg]

From an article in the WashingtonPost online

"This industry will start looking more like a one-size-fits-all pricing approach which dominated in the '80s -- 18 percent interest and a $20 annual fees," said David Robertson, publisher of the Nilson Report, which covers the industry. Customers who pay in full each month will have "to start picking up the slack, to start pulling their weight."


Indeed. Some of us irresponsible card holders have actually been paying off our balance in full at the end of every month. How is a loan shark to make a buck now that clipping the suckers is being made more difficult?


Being born in 1939 I am actually quite familiar with the buying technique of taking money from my wallet to pay the bill. I got my first Visa card at the age of 40 or so and I have no objection whatsoever to returning to the earlier approach. I imagine the online places can come up with a suitable variation that involves instant payment w/o a third party grabbing a share of the transaction.

[kenrexford]

Maybe we use checks again?

[blackshoe]

Can't do that. After all, we're all dishonest and write bad ones.

[Winstonm]

Ready something interesting the other day - said either last quarter or month that for the first time ever Check card purchases surpassed credit card purchases.

[Phil]

kenrexford, on May 20 2009, 06:52 PM, said:

Maybe we use checks again?

Nope, we get debit cards that look like credit cards, but don't get the flogging when you don't pay on time.

[kenberg]

Not needing to think much about these things, I haven't done so. Check cards and debit cards are more or less the same thing? I can well imagine that for those of us who have not, according to the industry, been pulling our weight the following will be fine: We keep funds somewhere, we buy something, we run the card, the money is transferred then and there, end of story. That's a debit card, am I right?

Having reluctantly taken up the use of a credit card at age 40 I figured that was enough and I have been uninterested in the new variations. If the credit card companies plan on seeing how much they can pick from my pocket I guess I will now get interested. I see the whole industry as extremely predatory, pulling in 20% interest rates and more from the financially unwary.

Start pulling my weight?! Screw 'em. They already bleed off a portion of every transaction. Who needs it? Time for this business to go the way of S&H Green Stamps.

[Chas_P]

Quote

Being born in 1939 I am actually quite familiar with the buying technique of taking money from my wallet to pay the bill.

Being born in 1938 I am equally familiar with rotary dial telephones that could only be used within a 5' radius of where they were sitting, but that doesn't mean I want to go back to them. I, like you, find the "start pulling their weight" explanation offensive to all of us who pay the bill in full when it arrives. But if I have to pay $20/year for the convenience of internet shopping, pay at the pump, motel reservations, concert tickets, etc. etc. I'll pay it.

Years ago when solicitations by the credit card issuers were constant I asked a banker what was up with all that. Here's what he said and these statistics may not be completely accurate, but they're close: 25% pay the bill in full when it comes; 20% will carry a balance a few months of the year..Christmas, vacation time, etc.; 55% make the minimum payment every month and it's that 55% that they're after.

I don't see this law so much as an attempt to protect the "financially unwary" from the credit card companies, but an attempt to protect the financially unwary from themselves.

[kenberg]

You read me correctly, Charles, in that part of this is that I am just pissed by the comment and several other comments by these folks. I actually have both Visa and MasterCharge, Some years back I had just one, I wanted to get tickets for something (Moving Out, I think) and they had it locked up. I could only get tickets if I used whichever card it was that I didn't have. Some sort of kickback arrangement between the theater company and the credit card company. So I had a friend get me the tickets with his card, I gave him the cash, and I got whichever card it was I didn't have. If you gotta, you gotta.

Sure maybe I'll fork over my 20, or even 40 for two, if I have to. I do try not to get into battles with windmills. But I think it is a predatory industry. They say that they need their high interest rates to cover risk. My view is different. If a person presents such a high risk that they need to charge him 20 or 30 percent interest then that is a person who very definitely should not be spending money he doesn't have. The industry doesn't hate this risk, they love this risk. They leap at this risk. Of course the dumb schnooks who get these cards should know better but they don't, and the industry is right there to reel them in. It is not a way I would want to make my living.

[helene_t]

kenberg, on May 21 2009, 02:54 AM, said:

We keep funds somewhere, we buy something, we run the card, the money is transferred then and there, end of story. That's a debit card, am I right?

Yes.

I used to have a credit card because it was the most convenient way to play online, and sometimes abroad, too. Now that you can do everything with a debit card I see zip reason to have a credit card. Online purchases are typically 2 pounds cheaper using a debit card. If I needed a loan I would just have taken a bigger mortgage when I bought my house.

Btw I dunno if credit card companies are sharks. They loose a lot of money on people who buy things they can't afford, and on fraud. The fact that the interests are so high may be explained alone by the inefficiency of the system. Credit card payments are much more expensive than other kinds of payments and someone has to pay for it.

[Al_U_Card]

Fees and more fees.

The credit card companies charge a fee (several % at least) to the retailer for his being able to process their cards for purchases in the store in question.

My bank debit card has a fee structure which I used to use at $12 for unlimited use. I paid my MC bill every month but since I MUST pay the fee to the credit card company (it isn't really a direct charge but it is still there) I went to a per-use charge on my Bank debit card with included minimum fee structure.

My MC is a no annual fee card (and I would switch to another one tomorrow if they started charging).

My "card use" fees went from $12 / mo. to between $4 and $6 by using my MC to pay everything and only use my bank debit card when absolutely required. IT makes absolutely NO difference to me which piece of plastic comes out of my wallet and my wallet/bank account now has more cash in it....

[TimG]

I pay no usage fee or annual fee on my debit card. It is linked to a no fee/no interest checking account which requires no minimum balance, but I think does require direct paycheck deposit of some sort.

Is this type of account and debit card not available most places?

[kenberg]

TimG, on May 21 2009, 07:54 AM, said:

I pay no usage fee or annual fee on my debit card. It is linked to a no fee/no interest checking account which requires no minimum balance, but I think does require direct paycheck deposit of some sort.

Is this type of account and debit card not available most places?

I have something similar. I haven't much used it. We have a MasterCard, put almost everything on the one card, pay it in full monthly. No fees and maybe we even get some sort of "frequent spender" bonus. I guess one plus is that once a month we are sort of encouraged by the bill to sit down and look over our expenses. The credit card people are talking of how they need to cut off our free ride and depending on what they mean by this I may start looking at this check card or whatever it is. It also allows me to get money from an ATM but I have joked that someday a guy will put a gun to my head and tell me to withdraw cash. When I tell him I don't know how to use it he will not believe me and shoot me. So maybe I need to learn.

The transaction fees (fees to the retailer for card use) are complex but average around 2% I understand. I don't know if this applies to debit cards.

My wife noted that recently that a couple of places no longer allow tips to be placed on the credit card. Presumably because if the waitress gets a $19 tip, the retailer is charged 20 cents for handling it. If a waitress makes, say, 40K in tips (that's 20 bucks an hour, hardly impossible in a decent restaurant, probably a good one makes more) that's $800 in transaction fees that the retailer pays on money he never sees. Multiply by the number of waitresses. It's not completely trivial.

Many things seem to go something like this: People who have their lives more or less together have little incentive to think about these things. It's only this bill and the obnoxious comments from the industry that got me thinking. But with folks living more on the edge, who maybe are not the most savvy, it's sort of a rot. A good deal like sub prime mortgages really. People who should not be running up large debts are being enabled, then their interest rates are jacked up, then they are screwed. Individually it can be ruinous, but as we saw with the subprimes it can also have a very destructive effect on the whole economy when it crashes. A large number of people are in way over their heads, and I imagine there will be a crash. No doubt the bankers will again explain why we have to give them some money.

[helene_t]

kenberg, on May 21 2009, 02:40 PM, said:

The transaction fees (fees to the retailer for card use) are complex but average around 2% I understand. I don't know if this applies to debit cards.

According to New York Public Interest Research Group (http://moneycentral....king/P86737.asp) it is 7.5 cents to 10 cents.

[Winstonm]

This sense of entitlement which the financial industry exudes is repugnant to me. I say let the beggars try to get by by issuing nothing but credit cards to sub-prime holders.
If they want me to pay my part by fee, I'll cancel their card and get another.

C'mon, guys and gals, we'll use an Atlas Shrugged attack: all the decent credit folks will simply disappear and allow the schmucks to run the world.

[PassedOut]

kenberg, on May 21 2009, 12:53 AM, said:

My view is different. If a person presents such a high risk that they need to charge him 20 or 30 percent interest then that is a person who very definitely should not be spending money he doesn't have.

And should not even have a credit card!

I'm willing to pay a small amount for the convenience of using a credit card, but I don't want to pay extra to make up for the defaults of those who should never have had credit cards in the first place.

As I always understood it, the advantage of credit cards over debit cards is that you aren't responsible for most fraudulent charges added to your credit card, but with a debit card you are out of luck.

[barmar]

Winstonm, on May 21 2009, 10:52 AM, said:

This sense of entitlement which the financial industry exudes is repugnant to me. I say let the beggars try to get by by issuing nothing but credit cards to sub-prime holders.
If they want me to pay my part by fee, I'll cancel their card and get another.

Isn't that a "sense of entitlement" on your part? Why do you think you're entitled to use a credit card for free?

I admit that all my MC and Visa cards have no annual fee, either, and I always pay my balance in full. And my American Express card offers cash rebates, which usually comes out to more than the fee, so it's effectively free. I've always gone this route because the credit card companies seem to have been happy to offer them to me. But if this practice goes away, I'll live with it reluctantly; I don't expect to get something for nothing.

I think their theory was that if you keep giving someone lots of credit cards, he'll feel the need to use them and build up a balance, so they'll start getting finance charges. But I have cards that I practically never use.

[luke warm]

i'm one of those not pulling his weight ... i mainly use one card, put about $1,000 per month, and pay it off... that doesn't count using my debit card, for which there are no fees (yet)

[mike777]

"Now that you can do everything with a debit card I see zip reason to have a credit card. Online purchases are typically 2 pounds cheaper using a debit card. If I needed a loan I would just have taken a bigger mortgage when I bought my house."



One reason for a credit card is the same reason for why you took out a mortgage when you bought a house. Keep in mind you could have used your debit card to buy your house but you chose not to.

No doubt using your debit card to buy a house could have saved you 2 pounds.

btw I have had a debit card since around 1980, nothing new.

[JoAnneM]

We have never had debit cards because I have read that they are very dangerous (suseptible to fraud), and we have two credit cards that we pay off every month.

What is interesting is that our credit rating fluctuates with how much we put on those cards in a quarter, not the fact that we are paying them off every month. The credit report companies don't even know that, they just see average balances. We have a credit report service because of a robbery some time back, so get quarterly reports. Our rating was always 799-803 but suddenly for no reason last time jumped to 812, and I wonder if it is because of the poor economy and a lot of other people's are going down. If so, that is really odd.

[helene_t]

JoAnneM, on May 22 2009, 04:49 AM, said:

We have never had debit cards because I have read that they are very dangerous (suseptible to fraud), and we have two credit cards that we pay off every month.

This must apply to off-line debit cards which can be used like credit cards. I don't see why they would be more fraud-prone than credit cards but maybe in case of fraud you have less coverage than you have with a credit card.

Online debit cards are safe. They can be used in online transactions (requiring a pin code, and identified by a chip which cannot be copied, unlike the magnetic strips). They can also be used on the internet, but then my bank will send me an SMS telling me I have made an internet payment, and I can still block it if it wasn't me who did it.

Dutch banks offer safer debit cards which cannot be used in ordinary internet purchases but only through the iDeal system which is an extremely safe way of confirming pincodes via internet. It is impossible to fish a pincode in that system. Even if I was trapped by a scam site pretending to be iDeal, they couldn't record my pincode because it isn't entered on the computer but via another device (iDentifier) which scrambles the pincode.