Charging your best customers just won’t work

I’m a credit card deadbeat, and I’m proud of it. And if credit card companies think they’re going to start making any more money off me, then they’d better think again — and they better make sure that every single card issuer sticks with the party line.

Credit card companies have taken it on the chin lately. Many of the banks that issue credit cards have already gotten hurt with bad mortgages and other toxic assets. Four card issuers — American Express (NYSE: AXP), Citigroup (NYSE: C), Bank of America (NYSE: BAC), and Wells Fargo (NYSE: WFC) — saw card charge-offs jump over the 10% level in April. Delinquencies are also up, and Washington will likely pass new restrictions on practices like increasing interest rates on existing balances without notice and charging over-limit fees.

But recently, some have talked about trying to get those with good credit to contribute more to credit card company profits. While it’s easy to understand why card companies would like to find any way they can to earn profits, there’s a simple reason why imposing fees on the customers they call «deadbeats» won’t work: Unlike balance-carrying, interest-paying borrowers, we actually have a choice — and we’ll vote with our feet, happily leaving the credit card industry with even less revenue. Read the rest of this entry »