A little something for Dollars for Dough Nuts, who predicted this about a year ago.
Remember that in the credit card world good is bad and bad is good. When a credit card company talks about a deadbeat, it means someone who pays off his debt monthly, so the credit card company gets a little basic profit from the transaction. Following the rule of bad is good and good is bad, when the credit card company talks about "riskier customers", they're talking about their risk, not about yours.
But why would a deadbeat really care? If we truly pay off our debts monthly, the only crimp in the whole system is not having the card just in case. Frankly a deadbeat credit card user is so close to using cash exclusively anyway. The deadbeat holds the stronger hand here.
Pass the popcorn, the main feature of the credit crunch is about to start.
February 3rd, 2008 at 02:14 am 1202004891
February 3rd, 2008 at 02:16 am 1202004972
I disagree with you here. We never carry a balance on our CCs, paying the bills in full every month. But we are most certainly not close to using cash exclusively. I would never want to switch to using cash instead of credit. That would mean carrying a bunch of cash all the time, having to go to ATMs to get cash regularly, paying a lot more bills online and/or writing more checks and losing the hundreds of dollars worth of CC rewards that we earn each year. It would also mean losing the consumer protection that comes with using our CCs, like rental car insurance, for example.
So I'd be very upset if my CC was taken away.
February 3rd, 2008 at 02:36 am 1202006192
February 3rd, 2008 at 03:38 am 1202009888
When the credit spigot is turned off, some people will adopt a "sour grapes" attitude and figure out they're only making the companies richer and being played a sucker for the 0% and rewards crowd. The 0% and rewards crowd shouldn't be so shocked when benefits are removed -- we've had our grace periods reduced, have to agree to binding arbitration as a term of use, can't declare interest paid on credit cards on our taxes... why should one expect any favourable treatment from the credit card issuers to continue?
February 3rd, 2008 at 04:36 am 1202013386
February 3rd, 2008 at 04:36 am 1202013395
Here is a telling quote from the Citigroup spokesperson, "We are not getting rid of customers who don't make us money."
It has always been my understanding that credit card lenders DO make money off of customers who pay in full monthly. They don't make the profit from the card holder, but from the retailer, whose fees to the credit company are large enough to make profit even on small transactions. Every time we "deadbeats" swipe our cards, the lender DOES make money. So it is true that in canceling "deadbeats," Citigroup is "not getting rid of customers who don't make us money." They are just getting rid of the customers who don't fulfill the bigger profit they want. The customers who carry a balance and get stuck in eternal interest paying are the really big profit makers for them, obviously.
I have seen businesses that do not want to sell the small profit items or services that they could offer; They want to maximize their returns and get the highest profit margins possible, even if it means walking away from some of the lower profit endeavors or sales. Evidently Citigroup/Egg is adopting that practice.
I'd be disappointed to lose my CCs for the reasons disneysteve mentions, except that I wouldn't find going to get cash to be much of an inconvenience. I only became a heavy CC user in the last few years since I got a couple of rewards cards. Even if I got to keep my cards but the rewards were gone, I would cut back on CC use a lot.
February 3rd, 2008 at 05:25 am 1202016336
February 3rd, 2008 at 02:13 pm 1202048001
Really, when do we actually NEED a credit card? I'm thinking that renting a car or a moving van could be very problematic if I did not have a cc, but other than that I can't think of a situation when I absolutely MUST have one.
Ya know, I have never bought an individual stock, but reading this I suddenly have an itching to go out and buy Deluxe (the check printing company).
February 3rd, 2008 at 03:21 pm 1202052101
Likewise, I would be pretty upset if my credit cards banned me. I would lose $500/year income and would lose all of that convenience. It would be quite upsetting to me. Oh, I would raise a stink!!!!!
Likewise, if the rewards dried up I would have less issue. But being banned from the cards? Seems like they could charge a fee or something. Hell, that would be preferable than not being able to get a card because we don't carry debt.
February 3rd, 2008 at 05:56 pm 1202061380
February 3rd, 2008 at 08:30 pm 1202070652
February 3rd, 2008 at 09:47 pm 1202075267
February 3rd, 2008 at 09:54 pm 1202075670
I really hope that this doesn't come to pass here in the USA, but I'm not holding out high hopes.