Don’t You Worry About Credit Card’s Income Drying Up

I kept thinking with all these new guidelines that have been put forth by the government, limiting the fees that credit cards can charge their customers, and also limiting things like late fees, interest rate hikes, and minimum payment hikes, that credit card companies are going to be hurting. But alas, of course they have already thought of tons of new loopholes and fees to charge customers.

This is to make up for the fact that they will probably be losing billions due to the new restrictions. They also have had to limit who they give new cards to, since so many Americans defaulted on their credit cards during the recession, and there is still such a huge problem with unemployment now. This makes it even more likely that people will be putting their credit card bills on the back burner in favor of more urgent bills like groceries, mortgages and utilities.

What we keep forgetting though, is that credit card companies get a hefty chunk of their profits still form the fees that merchants pay them. Anywhere you see a Mastercard, Visa and American Express (or whatever combination) sign in a store, that store is paying a portion of every sales transaction that goes through with one of those cards, to the credit card company. It’s a fee that the creditors will get regardless of what happens, so they will always have these fees to increase their profitability.

So, in a way, they are really suffering that they don’t have more customers out there with higher credit limits on their cards because they aren’t spending in these merchants stores and virtual spaces because they don’t have the credit limit to do so, or their minimum payments were increased.

Credit card companies that offer rewards like gas or travel are also looking at various ways to ramp up fees for customers who use their cards frequently but pay off the balance every month (that would be me). So I’m looking forward to (not) seeing how they try to stick it to me with nonsensical fees if they figure out a logical way to add more fees to my account.

One thing is for sure. Every time you put new restrictions on any big business, out of necessity, they will think of ways to make up for the new guidelines, and in the end, the customer may suffer (although not as much), so we’ll see what happens.