subject: Credit Industry News Of 2010 [print this page] It's official now: many Americans are feeling the credit industry and Banks punches since the credit card act started since February 2010. As mentioned and foreseen, both the banks and credit companies are fighting back against the new credit card act by imposing higher interest rates and new fees for their credit card customers. If you haven't already seen it, it more than likely will come: extra fees and perhaps a interest rate hike on your next statement. However, for only a select few, they may see a slight difference: better perks with their credit cards. This person who may see extra perks is only for those who are in good credit standing. For the rest of you, we are sorry to say; just the extra fees and interest rate hikes may apply.
As an example for this new perks, certain customers with cards that carry the American Airlines logo know they now get 1.2 miles for each dollar they spend, up from a 1-mile-for-$1 ratio. The reason why these new perks are going up for loyal and good credit customers is to lure them to spend more on their credit cards. Clever little buggers the banks and credit card companies are!But just because you have one of these cards, or a similar reward card from a different bank, doesn't mean you'll automatically get an upgrade. Even those people who have shown a good credit standing see little or no added benefits to their credit cards.
Since the Credit Card Act was imposed, banks and the credit industry had to replace lost revenues because they can no longer use restricting tactics like over-the-limit fees and interest rate increases. Yes the Rewards miles are getting back in popularity or in some cases more air miles for every buck spent. Of course this comes at a price: the reintroduction of annual fees to pay for the rewards program.But everything comes at a price because even those who are good folks and pay off their credit card balances in full every month will also have to pay their annual fees.
The only difference banks and the credit companies will not gain as much profit from you good people. Consider that as incentive to pay off your credit card bills at the end of every month. Instead of paying your balance with a hiked interest rate plus the annual fee, you would be paying are a mere $75.00 annually, and still retain your good credit.
However, this is only a small fraction where banks and the credit industry makes their money and are capitalizing their profits from; the merchants. It is no wonder why merchants are upset because every time a card is used, between 1 and 2.2 percent of the transaction is milked off in fees that get sent to the bank that issued the card. Look at the Nilson Report that tracks the card industry: in 2008, the merchant fees totaled more than $40 billion. Talk about serious revenue. One can only imagine what the total will be after 2010. Yikes!
Now you may be thinking: is this hullabaloo worth paying extra on your credit card, such a hiked interest rate, or shall I just cut up that nasty credit card? Well, as we have said from pretty much the beginning, use the credit card wisely. Yes, the banks and the credit industry will always win, but you can cut their winnings drastically. Owing a credit card is not a bad thing. You know that you will have to pay at least an annual fee. Think of it in this way: it's like joining a club. You have to pay a membership. Some clubs offer better rewards or perk with their membership. But if you don't behave yourself, there can be a hefty price to pay. Thinking of the old cartoon the Flintstones, the Grand Old Pooh-Bah's are the banks and the credit industry, by Order Of the Buffalo. Yaa-baa-dabba-Doo!
