Banking, Credit 

Pay An Annual Fee, Help Poor Banks!

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That’s what a credit card advocate said to the Senate Banking Committee… the reason? You’re basically getting an interest free loan from the credit card companies if you are diligent and pay off your loan at the end of the month, then you aren’t making them that much money. If you’re like me, charge a lot of stuff but pay off your entire balance at the end of the month, you’re a “deadbeat” because you’re not making the credit card enough money! No this isn’t a Devil’s Advocate post because I think annual fee credit cards are crap (and I don’t really think I can make much of a case for you to get a card with an annual fee) but I think the reason given by the credit card company advocate is laughable.

When you swipe, the store you’re at pays interchange processing fees, something like 3% or so; but apparently that’s not good enough. It’s not good enough because the credit card companies get approximately 70% of their revenue from interest and penalties, according to the Government Accountability Office, so they obviously want more. The estimated $17.1 billion in penalty fees (not counting interest) the banks are going to get for 2006… that’s not enough. That’s like your latest bonehead highly paid athlete complaining that he needs more money to feed his family. No one has compassion for piggish greed. No one.

If they call someone who just pays their bill a deadbeat, I wonder what they call 0% balance transfer arbitragers (or just folks looking for extra breathing room with 0% balance transfers) and folks who just sign up for credit cards for the bonuses?

{ 6 comments, please add your thoughts now! }

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6 Responses to “Pay An Annual Fee, Help Poor Banks!”

  1. Mission Debt Freedom says:

    I have a real hard time feeling sorry for credit card companies! I used to work for a credit card processor, who provided 3rd party processing and customer services for the big banks. They are a sleazy bunch – but genious marketeers!

  2. nelson says:

    I’m trying to figure out who said that people who pay their balances in full every month should be charged an annual fee to “pay their fair share.” The article you cite attributes this claim to a “consumer advocate” and your post gives it to a “credit card” advocate.

    If the credit card companies said this I can continue funneling my hate towards their shady practices, but I understand what they said because they’re greedy and they need more ways to extract money from everyone. But if a consumer advocate said this….I’m lost. In the long run, how does that idea help consumers?

  3. samerwriter says:

    Surely an annual fee isn’t enough to cover our fair share. It seems to me we should be sending in extra payments as well to help out. Maybe someone could set up a charity to help funnel funds to Capital One and Bank Of America?

    I can just see Sally Struthers now…

    “If each person who pays his credit card bills on time would just send $1000, that’s just one month’s interest payment for a typical American household, Capital One’s CEO could afford to give his son Timmy a McLaren F1 for his birthday.”

  4. Matt says:

    I saw this on CNN earlier today as well, and figured it would upset the PF bloggers. I wonder what percentage of credit card users in this day and age are “deadbeats”…

    I completely agree with your thoughts; why charge the people who make good on repaying their debts to the credit card companies every month? Oh yeah, to “earn” more money.

  5. Master Allan says:

    I read this article earlier in the day and considered mailing it to blueprint for comments. No surprise it ended up here before I had a chance. My first thoughts…Outrageous! Honestly I know the credit card companies are being taken on a ride, by me. 27, Discover Card since 18, never ever a late payment. They have that 1% cash back award and I’ve earned $66 in the last 9 months with the cash payback not to mention the conveinence of a onestop payment method for my bills/purchases.

    But despite what I’m doing, why should I have to pay for the irresponsibilities of others? Should I have to pay a higher income tax because I buy less crap and generate less sales tax revenue than my neighbors the Jones’?

  6. jim says:

    nelson: You’re right, the article above says that a consumer advocate cooked up that idea and presented it to the Committee, my brain must have translated that to credit card advocate because I don’t know how that guy could possible be on the consumer’s side…

    Either way it’s crap. It’s not like these credit card companies are fighting to stay solvent… they’re just printing money over there.

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