Originally Posted by
friedablass
I don't think it's the 'poor' who are subsidizing well-to-do in this scenario. It's the 'don't-have-the-money-but-spend-anyway' people who subsidize it.
BINGO! You cannot legislate against stupidity, but this is coming awfully close. I like it - hopefully those people who should not be spending that way anyways will no longer be afforded huge lines of credit - but there are some drawbacks to it as well. There will be people who probably cannot get financing to start a business or to manage inventory or the like. Those are situations where I think a more traditional loan is WAY more appropriate as there is a real examination of the risk (or at least more opportunity for such) than in a CC application.
And those people who are financing the miles boondoggle that we're on eventually are very likely going to default on the debt anyways, so that is bad for many, many people.
From a microeconomic level it is arguably bad - likely decrease in churning opportunity - but from a macroeconomic level I think it is rather easily
arguable as good.
Originally Posted by
josephstern
I haven't seen numbers on this. I really wonder what percentage of fees come from where. Are the late fees and over-limit fees really larger than both the interest charges and interchange fees? I would have assumed that the last two are much larger and the first two are just more punitive and annoying.
Does anyone have a rough breakdown?
I don't, but I did stay in a Holiday Inn Express last night.
I'd guess that the income goes, in descending order: Interchange, interest, late fee, other fee (including annual), though it depends a bit on the actual annual costs.