subject: Is A Backlash Coming To Credit Card Companies? [print this page] Is A Backlash Coming To Credit Card Companies?
Like most corporations, credit card companies, of course, are in the business of making the most profit that they can. And, over the years, they have come out with some flat out ingenious ways of racking in the dough.
One of their most imaginative ideas, by far, has to be the offering of the zero percent interest rate credit cards. For those who are good at handling credit, this is a great deal. you get to charge for stuff - merchandise, food, trips, and so on - and as long as you make your payments on time, this is the best deal you can get.
The brilliant part of their plan is what happens later. Especially, if you are late on a payment or if you fail to pay the full minimum payment for a month. Then, as mentioned in the small legal sized print that you probably ignored, your interest rate suddenly jumps from zero to eighteen percent or more.
The credit card companies keep detail demographics data on their customers. As a result, they are very aware that at some point of the cardholder will almost inevitably make a late payment for some reason or other. And, from that point on, the company is in a position to profit hugely. But, even for those thrifty consumers who are good with credit, fortunately for the credit card company, the zero percent interest rate was only an introductory rate. After six months or a year, the zero percent rate will morph into a much higher rate. The credit card company wins again.
Other card incentives may not be as imaginative, but they still remain hugely profitable for the company. For instance, numerous card companies will give you airline mileage points whenever you use their credit card. But, what a lot of card holders don't realize is that most of these cards have what is known as "blackout periods". And, just by coincidence, blackout periods tend to be those high traffic periods where lots of people are traveling by plane. You know, those high traffic periods like Thanksgiving, Christmas, and so on. Since, these are precisely the times when many people might choose to use their mileage points, the points become practically worthless to them.
Lately, the financial institutions have been very much in the news. Almost everyone has begun to realize that the credit card companies are some of the most profitable companies in the world. And that shocking realization is beginning to cause a massive backlash against some of their many practices. In fact, the backlash is so severe that, in order to save their seats, congressmen are being forced to develop tougher regulations against these very companies that have given them so much money over the years.
But, is that going to be enough to allay the wrath that is increasing across the country? No one really knows. But, right now, is seems that the backlash is only in its early stages.
