Punish your best customers

The banks have come up with another brilliant idea to keep the money rolling in. Now that Congress is moving to limit the penalties on riskier borrowers, banks are looking to shoot themselves in the foot and are thinking of "reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks," for customers who "who routinely pay off their credit card balances have been enjoying the equivalent of a free ride."

What a brilliant idea. Kill your business because you're having a temper tantrum. Give me a break. If you're going to bluff, at least make it a believable bluff. The banks make a ton of money from every little credit card purchase, something like 1 - 3% of each purchase. Even cash buyers pay for that in increased prices. They are not going to kill their golden goose by chasing away their good customers.

Do they really want consumers acting like they did in the past and, instead of using a credit card for everything, do what our parents did, and pay cash or write checks for everything with the added bonus of saying bye bye EZPass, online shopping and anything else people use credit cards for (debit card use online is not something I plan to do -- too much risk if something goes wrong)? I don't think so.

The banks and Wall St argue that their moves in bringing more money to the economy over the last few decades helped the US more then it harmed it. That includes loosening consumer credit. And while that may be true don't think they did it for charitable means. They made money hand over fist. They don't really want consumers to spend less and, through reduced consumer spending, bring the economy and their businesses down. They're just trying to scare Congress into letting them to continue to charge usury rates that should embarrass them.

The banks haven't learned their lessons and think the party should continue. They are not content to make a good living, they want to make a fabulous living. Call their bluff and tell them their interest rates on the money they've borrowed from us has just jumped and see what happens. And, if that doesn't work, raise the ante. With the increase in electronic payments credit cards are almost a default currency. Have the Treasury Department announce that they will now be distributing electronic currency cards that anybody can use in lieu of paper money, with the action the merchants give to the credit card companies going to the US Treasury instead. Maybe then the credit card companies will remove the gun they pointed to their heads and start being realistic.

There will always be a need for credit and a dollar to be made by banks. They will just have to lower their standards of what is an acceptable risk and what is a reasonable profit. And part of that will be not expecting money for their luxuries to come from extending credit and charging usary rates on high credit limits to those who can least afford it, settling instead for the hum drum small percentages they make from each merchant sale.