josephstern

Brilliant. And there's no law in that regard, correct?

So what about cars here, my friend? Law + safety, or do I have something wrong in my conclusion?

Happy

Seatbelts come in play when there is a crash.

School buses generally are not speeding, and enjoy Yield from other cars. However when a school bus involved in an accident - be it crashed or overturned, the casualties were high partly due to there were no seatbelt constraints.

In some countries even passengers at the back seats are required to buckled up.

EasternTraveler

I'll just wait and see.... and keep my fingers crossed.

biggestbopper

Yes, there may be some issues with the way the Aussies implemented the plan, but, the reasoning is sound. Why should the poor subsidize the well-to-do via the credit card system? No good reason.

I love my many, many miles (that I paid very little or nothing for since I, too, am a "free rider). But, its not hard to see the problems with this--which should be corrected.

Maybe there should be some controls on what the add-on charges for credit cards are? The French have similar controls. And, the EU is moving in that direction (recent cases against Visa and MC brought interchange way down).

Credit cards do provide certain economic efficiencies, but, as everyone should be able to see now, uncontrolled banks are a danger. @:-)

Mountain Trader

As I said on a similar thread on the "Other Credit Cards" forum, the pay-each-month market is lucrative and without much risk, and I doubt the banks will walk away from those fees. If the existing ones do walk, others will fill the gap.

Also, if I get a notice that one of my issuers has imposed a fee at purchase (via no grace period or otherwise), I'll cancel all my accounts with that issuer within one hour.

Or sooner, if I've already had lunch.

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. If people would spend within their means they would be able to pay in cash for all their purchases, but would choose to use their cards in order to earn rewards, miles, etc... However, many people do not spend within their means and end up carrying balances and sinking further and further into debt because they are unable to finance their lifestyle.

In any case, I don't believe banks are going to charge APRs from the minute of the purchase - they would lose TONS of business as all those who never carry balances and don't want to pay a premium for using a card cease to use cards.

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?

sbm12

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.
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.

Counsellor

The OP said it was New York Times. That's warnng enough, I'd think.

3rivers

I can see annual fees coming back for many credit cards. In fact many cards have the annual fee, but with first year "free". It would not be difficult for say CITI to simply get rid of the "free" 1st year.

There will always be a grace peroid for a credit card, though that could be cut to something like 10 days. I dont think reward programs will disappear though, as for many, this is a HUGE incentive to use one credit card over another.

Caged

Such BS!

This is not the first time in history that the banks had these kind of rules. Credit cards have been around for a long time and I remember in my lifetime when the minimum grace period was 35 to 60 days. I remember when APR's were 7% in certain states and 15% to 18% in some states. I remember when merchants paid 10% to accept credit cards and thought it was a deal when it went down to 5%.

This new fangled credit card charges came into effect when they started giving credit cards to people that did not deserve credit cards. You may see those people lose their cards and not be able to get them without a HIGH apr to begin with.

Rewards were never paid by you the user, they were paid by the merchant. Many merchants think they are paying 1.5%, but they are not! The card that cost that amount is a general classic visa. Try finding somone carrying that card. There is a surcharge for signature cards, corporate cards, rewards cards, etc... They run the rate the merchant pays to 3% and up. Merchants think AX is more expensive than the rest, but it is not! They charge the same fee regardless of the card. If you average a merchant VI and MC charges they are higher than the flat rate AX. Rewards are not going away since the income that produces them is NOT being regulated.

All this regulation will do is tighten credit lending and stop predatory practices...maybe

Caged

If you want to regulate against stupidity there are some credit card companies that need to be out of business. Providian?

The reason this law is good is because when these idiots that did not deserve credit in the first place default. And enough of them default.., guess who pays the bill? If it is certain Presidents it will be us in the form of bailouts? YUK

Mountain Trader

Card companies are far more likely to look for new ways to get fees out of the folks who don't pay in full each month. And the competition for those that do pay in full will increase.

The new Schwab card with no fees, 2 % cash back on everything and first-class (eg. US) service, means it costs me 2 cents every time I charge a dollar with another card to earn a FF mile (1.6 cents w/ Starwood Amex, assuming a 1.25 airline conversion). At that cost, the value of getting a FF mile I will use in 4-5 years, with capacity limitations, etc., etc. is of very questionable added value.

The card companies would be wise to see that the cards they hold aren't nearly as good as one might think.

Jazzop

She could be using a third-party "POS" company that installs and manages the CC charging equipment at her business. I think they tack on an additional fee to the transactions.

Many merchants go about it in a different manner. Haven't you ever seen this sign at a cash register: "Min. credit card charge $n"? This is the merchant's way of reducing their fees paid to the CC companies. This is also a direct violation of their merchant agreements. And for those of use who want to keep reaping the rewards of CC use, we should not stand for it. If the CC companies are going to have to find new ways to make money, the first thing they should do is stop losing money from these types of merchants. We can help by reporting these violations of contract to the CC company. I am starting my own personal crusade here in NYC where just about every deli, bodega, and franchise (i.e., non-corporate) fast-food restaurant has one of those damned signs.

This is a horrible "argument." The wearing of seatbelts has no bearing on the number of motor vehicle accidents; it only affects the health outcomes of those accidents. The actions of the FAA, among other things, are designed to prevent accidents.

pinniped

I don't disagree that the Schwab card is a good one - perhaps the best Visa/MC product out there - but the comparison to SPG Amex is a bit unfair. Converting Starpoints to air miles is a very poor use of Starpoints except in extreme cases. 1 Starpoint is conservatively worth 3-4 cents (typically more like 5-7 cents).

Plus, the beauty of Starpoints is that they are very usable. The lifespan of any given point in my account is rarely longer than a year. (That is, I earn them and burn them at approximately the same pace.)

Once I've fully cycled out of the Thank You Network I'll probably add the Schwab card as my Visa/MC backup to the two hotel Amexes.