You very well may be considered a “deadbeat” to several credit card companies.  The credit card industry doesn’t consider the people who have trouble paying on time and/or staying under their limits deadbeats, this term is used when referring to good cardholders.  Yeah, you do the right thing and still get a negative label.

For years, penalties have been racking up for people who have had trouble paying their bills on time while the best customers racked up cash-back rewards, frequent-flier miles and other perks.  This sounds about right doesn’t it?  It makes sense for a business to reward good, paying customers while being more rigid with questionable customers.  Well, since congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry, good customers will be forced to pick up the slack. 

So Long To Incentives

Annual fees, cash-back and other reward programs as well as interest charges on purchases immediately instead of a grace period are all making comebacks in the credit card industry.  Interest rates will also be on the rise and banks can raise them as they wish since they have no cap – it is time to dig in and really read the fine print before using those cards!

The industry is rapidly moving towards a one-size-fits-all philosophy instead of rewarding good customers, but this is occuring for a reason.  “They aren’t charities.  They have shareholders to report to,” said Robert Hammer, an industry consultant.  “Whatever is left in the model to work from, they will start to maneuver.”

How can a move like this stimulate the economy?  It will more than likely upset many consumers and cause them to put the credit card on ice.

The Scales Will Not Be Balanced

In the past, riskier cardholders and those with higher credit scores didn’t pay the same interest rates.  Better rates were reserved for those with higher scores while the riskier segment made up the difference with high rates.  Well, it would seem like this disparity would be disapearing with the way the industry is moving, but that might not necessarily be the case.  Many of the risky cardholders have been axed, cut off and sent packing while the companies still want to turn the same or higher profit.  Yes, those who remain will pay!

How Does This Help The Industry?

The end result seems to be less credit cardholders, those with good credit paying more to maintain their accounts and possibly less spending due to decreased incentives and higher interest rates.  Although not a good situation, this seems to make sense to me until I consider the bailout money.  I could very well be wrong, but the list I looked at showed many of the credit card companies getting billions of dollars in bailout money.  If this is accurate, why are the customers still getting treated like this?  Have the situations caused by the risky customers caused the banks to force those who remain to pay more and need money from the government?  Has all of this been a way for the shareholders and high ranking bank officials to continue to get paid?  I know I will think long and hard about pulling out some plastic from now on.