I’m predicting a return to cash transactions

May 20th, 2009 · 1 Comment

I read a story today that really has me wondering what credit card companies are thinking: Credit Card Industry Aims to Profit From Sterling Payers.  Apparently, major credit card issuers are threatening to start charging people, who pay off their bills each month, more fees for using their cards as a bargaining tactic to stave off government legislation.

image: http://www.freeimages.co.uk/

image: http://www.freeimages.co.uk/

I think any move to insist on charging annual fees, much less interest from the date of purchase, for those who pay off their bills each month would be like shooting themselves (the credit card companies) in the foot.   I don’t know about you, but paying with cash wasn’t that much of a hassle for me that I’d be willing to pay *MORE* for everything I buy just so I could use a credit card.   And that’s effectively what would be happening if they started charging interest from the date of transaction.  Further, I’d also lose a lot of incentive to use *ANY* credit card if they didn’t provide benefits like cash back, or miles, or rewards points of some sort.   I suspect alot of you are like me.  The convenience of carrying plastic just isn’t worth those pains.

If these companies go forward with these changes, I’ll have no problem paying with cash.  And then I get the benefit of dropping spare coins in a jar for forced savings, or the fun of hunting through the couch cushions for spare change when I need just a little something from the corner convenience store.

By the way, I was shocked to learn, from the story mentioned above, that credit card companies make around 70% of their revenue off of “penalty” interest rates, late payment fees, and the like.  I don’t understand how they expect to be viable long-term companies if they rely on annoyed customers to make the bulk of their revenue.  Sooner or later those people will stop using credit cards and then where will the profits come from?  Weren’t we taught that the path to long-term business success was a growing pool of satisfied customers?  Not a growing pool of unsatisifed customers?

Tags: Credit Cards

1 response so far ↓

  1. 1 gmanedit // 2009.05.26 at 2:02 pm

    You know who should be fighting this? Amazon.

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

 Subscribe in a reader