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The end of the "Free Ride" for credit card holders with good credit?

The end of the "Free Ride" for credit card holders with good credit?

Old May 19, 09, 1:13 pm
  #16  
 
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I had my grace period cut from 25 days to 20 on a Chase card. Happened without any notification and I almost missed my payment due date (it moved by the same 5 days). As it was, since payment was now due before I got my paycheck, I could only make minimum payment. But I then paid it in full 2 days later, once my paycheck had deposited. Cheeky buggers. In my opinon trying to pull a fast-one to get a late fee and/or change my interest rate and T&Cs.
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Old May 19, 09, 2:44 pm
  #17  
 
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Originally Posted by mwalsh View Post
I had my grace period cut from 25 days to 20 on a Chase card. Happened without any notification
I don't know about Chase, but Citibank has had in their T&C's for many years that the grace period is "20-25 days." If you carried a balance, they'd set it at 25 days, and if you paid in full the previous month, they'd set it at 20 days. The reasons for this variance are obvious. But, at least with Citibank, if you called and asked, they'd set your account to be always 25 days. I don't know if Citibank has changed their policy in this regard recently, or if Chase ever was this way. I bring it up here because it's at least worth a phone call to Chase to find out.
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Old May 19, 09, 2:46 pm
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Originally Posted by mwalsh View Post
I had my grace period cut from 25 days to 20 on a Chase card. Happened without any notification
Are you sure? Often the notification is a bunch of fine print on the statement itself, so it's incredibly easy to miss. I'm sure your agreement states that they will notify you 30 days in advance of any change, so they very likely did "notify" you by putting it in tiny print someplace you aren't likely to read it.

As to the premise of the article: meh. I can envision some changes, but rewards and no-annual-fee cards aren't going anyway anytime soon. Not only have cardmembers come to expect it, there's just too much competition in the marketplace. Rewards have shrunk over the last decade, for sure, but they're not going away. If at any point it stops being profitable for me to use credit cards, I'll stop using them... and I'm sure many consumers feel the same way.
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Old May 19, 09, 7:14 pm
  #19  
 
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Originally Posted by pinniped View Post
That's kind of what I was thinking... I thought most small businesses paid around 3% to handle a typical MC/Visa purchase.
Closer to 2% for MC/Visa if they accept the cards in person and swipe them.
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Old May 19, 09, 7:18 pm
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I feel like the real problem, here, is that the lobbyists for the banks have forced laws in most states to disallow merchants to charge extra fees to use a credit card in their stores.

Remember "cash" prices for gas? Gone now.

There are ways around the rules, but the banks have successfully made it hard to treat cash preferentially. If I got a 2% discount for cash at every place I shopped, I wouldn't bother with the whole "reward" thing - I'd just take the savings on the front end.

Granted, the convenience of a credit card and the security of a credit card is worth something, but not 2%. If it were maybe .5%, I'd be interested.
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Old May 19, 09, 7:36 pm
  #21  
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Originally Posted by pinniped View Post
We are obviously a very profitable segment: why else would the card companies offer us hundreds of dollars in benefits simply to accept their credit cards? It's because most of us go on to use the cards a lot, generating merchant fees. The few of us who churn heavily to game the system might get nipped in the bud a little bit, but given how much custom software development it would take to isolate points/miles churners (without nipping out the profitable customers simply attracted to points and miles) I can't imagine all banks being able to do this.
The brunt of the "cost" of the points that we all get is borne by the folks who don't realize that when they are carrying a balance the points they are getting for "free" are costing them a ton of money. That is where the profit margins are for the banks. The bill appears to be limiting the (possibly usurious) rates that some CC companies charge to some customers. That is a good thing for the economy as a whole but has a potential to hurt the churning crowd.

I'm actually completely OK with that happening. I generally love to play the games, too (though I don't churn the CCs) but the money is coming from somewhere and that is something that has to be considered when deciding whether a change like this is good or bad. It may hurt mileage earning potential in some scenarios but that doesn't necessarily make it bad overall.

And, no, I'm not a huge fan of the government legislating against stupidity, but sometimes it happens and we all learn to live with it.
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Old May 19, 09, 7:56 pm
  #22  
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Originally Posted by mwalsh View Post
I had my grace period cut from 25 days to 20 on a Chase card. Happened without any notification and I almost missed my payment due date (it moved by the same 5 days). As it was, since payment was now due before I got my paycheck, I could only make minimum payment. But I then paid it in full 2 days later, once my paycheck had deposited. Cheeky buggers. In my opinon trying to pull a fast-one to get a late fee and/or change my interest rate and T&Cs.
In other words, you are spending on your income that has NOT yet received - note there is still 20 days grace period, plus the charges could be spreading for the full billing cycle... and Yet, you have to wait for your paycheck in order to pay it in full...

Living on credit is a dangerous habit ... A slippery slope if you would...
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Old May 19, 09, 7:58 pm
  #23  
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Originally Posted by Beckles View Post
I don't think the impact of these changes will be as dramatic as the speculation that is rampant in the media today. The credit card industry is still very competitve and there's still plenty of money to be made, even if maybe it is a bit less than it used to be.
+1. ^

People who pay balances in full are also ones with the most leverage to change cards or stop using them altogether. If the big issuers like Chase and Citi tried to sock them with more costs, they could just get on the Bankrate site and find other issuers.

Also, in most cities there are now credit unions big enough to open membership to everyone living in a particular county or geographic area. Some also issue credit cards. They're more conservative about raising limits and don't do teaser-rate promotions, but they often come with great things like no cash advance fee, a points-based rewards program, no annual fee and far fewer other fees. I don't think these changes are going to affect my credit union Visa card at all.
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Old May 19, 09, 7:59 pm
  #24  
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Originally Posted by josephstern View Post
I feel like the real problem, here, is that the lobbyists for the banks have forced laws in most states to disallow merchants to charge extra fees to use a credit card in their stores.

Remember "cash" prices for gas? Gone now.

There are ways around the rules, but the banks have successfully made it hard to treat cash preferentially. If I got a 2% discount for cash at every place I shopped, I wouldn't bother with the whole "reward" thing - I'd just take the savings on the front end.

Granted, the convenience of a credit card and the security of a credit card is worth something, but not 2%. If it were maybe .5%, I'd be interested.
Agree. If the banks do away the grace period, it will immediately lose the portion of cardholders who always pay in full each month. Last time I look, it is approximately 50% of the cardholders, and the stats have not changed (up or down insignificant %) over the last decades or two. We have not paid a fee of any kind in 20 years of credit card usage history, except when the AA cards annual fee back in the old days when the industry was less competitive (no such thing as first year annual fee waived promotion.) I dont see why we would need to pay any fee or any interest in the future. We can always switch to cash, and convenience would be the only thing we give up.

Who are these bankers kidding? Even Congress dont believe in such BS.
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Old May 19, 09, 8:14 pm
  #25  
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I think if you already have a balance, then the big issuers start charging interest on purchases from day one.

If they tried doing that to "convenience" users who paid every month, though, they'd get dropped like a lead balloon.

The big issuers are gonna have to accept less profits. But when a portion of profits depends on practices like they had been doing, it's ill-gotten, anyway.

If the big issuers can't live with a business where profit sources are mainly merchant fees and the interest-rate spread, there are plenty of others who can.
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Old May 19, 09, 8:19 pm
  #26  
 
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Old May 19, 09, 8:20 pm
  #27  
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Originally Posted by josephstern View Post
Remember "cash" prices for gas? Gone now.
Really? Where've you been?

Fully half to three-quarters of the gas stations I pass have different prices for cash vs. credit.
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Old May 19, 09, 8:43 pm
  #28  
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Originally Posted by BigLar View Post
Really? Where've you been?

Fully half to three-quarters of the gas stations I pass have different prices for cash vs. credit.
It's regional.
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Old May 19, 09, 8:48 pm
  #29  
 
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Originally Posted by mwalsh View Post
I had my grace period cut from 25 days to 20 on a Chase card. Happened without any notification and I almost missed my payment due date (it moved by the same 5 days). As it was, since payment was now due before I got my paycheck, I could only make minimum payment. But I then paid it in full 2 days later, once my paycheck had deposited. Cheeky buggers. In my opinon trying to pull a fast-one to get a late fee and/or change my interest rate and T&Cs.
If the due date continues to be a problem, I suggest calling Chase and asking them to change the cutoff dates in your billing cycle so that your payment due date comes after you get your paycheck. Most banks will do this.
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Old May 19, 09, 8:53 pm
  #30  
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I also don't think the credit card companies are going to do away with awarding ff miles and such. Rewards are what drives heavy card spending.

If it costs the customer money, the customer will find another way to pay. Like with the bone-headed move to charge higher foreign transaction fees -- now about 3% on most cards. I guess they'll take advantage of less-frequent int'l travellers, but as those transaction fees have increased, I've paid for more expenses overseas in cash (1% ATM fee). I don't think that's a trend the card companies would want to see expanded.
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