In their never ending zeal to screw people, it seems banks are looking to spread their misery to all credit card holders.
In a NYT article today titled "Reform may mean good card users pay more", it is reported that banks are concerned their usurous card rates may be curtailed by government legislation. The banks answer to this dilemma is to charge more fees on those of us that do not carry a balance. That combined with reducing benefits such as frequent flyer miles, cash rebates etc will maintain the ability of banks to pay fatcat salaries and bonuses to people that contribute little to our society.
Coincidentally, there is another diary on DKos today asking what cards are not predatory as the Citibank card they owned raised their rates without notice. Many people have suggested using local credit union cards as they tend to be more user friendly. The board will get voted out of a job if the union members become disenchanted with card provisions that are extreme and punitive for the union members.
My question here is, has the purpose of credit cards become defunct? While it is convenient sometimes not to have to carry cash, are all the costs truly worth it? It is easy to see how much a card costs on your statement when you look at annual fees plus the outrageous interest you pay on your balance. But, what about the hidden costs of card carrying by others?
Virtually all businesses that accept cards have to pay a transaction fee to the card company. This fee can be as much as 5% or more. Well who pays for that fee? Everyone of course, as the cost of doing card business is passed on to the consumer through product and service pricing. Now, is it only the 5% transaction fee at retail? Well, no not necessarily. I work in wholesale and a great many of our customers (retailers) buy their product with credit cards. Now we are talking 10%+ of fees plus interest on a product sold to consumers. 10% I believe, is higher than any sales tax in any of the 50 states. When you think about how much kavetching over sales tax occurs, how often do you hear discussion about credit card transaction fees? I dare say, not much.
Now yes, I understand that credit cards provide some value in reducing transaction costs. But if we turned to a cash or check economy, I speculate overall costs to society would be far lower.