Some credit card companies squeeze most responsible customers [View All]

[marmar]

from the WaPo, via TampaBay.com:




After the recession forced credit card companies to purge their rosters of the riskiest loans, the industry is facing a new dilemma: customers who are too good.

Card issuers have long found their bread and butter in penalty fees and high interest rates paid by consumers who carry a balance. But that business model has been upended by the legions of consumers who were overwhelmed by debt when the recession hit, forcing the industry to write off billions of dollars of loans. In addition, new federal laws restrict how much card companies can charge risky customers.

Now, frugal-minded consumers are charging less on their credit cards, paying down their balances and steering clear of penalty fees — steps that are financially responsible but have the industry scrambling to find new ways to make money.

"The only true deadbeat customer is someone who has a card and never uses it," said Curtis Arnold, who runs the credit comparison site CardRatings.com. "Just having good credit alone in today's market is not enough for that customer to be profitable."

A new study by the Pew Charitable Trusts found that annual fees and service fees have increased over the past year while penalty charges — which are subject to the new federal regulations — remained largely unchanged.

Meanwhile, some cards are encouraging customers to charge more by offering enhanced rewards, allowing the issuer to capture "swipe fees" paid by merchants. One issuer even allegedly threatened to reject consumers with high credit scores because they didn't boost the bottom line. .............(more)

The complete piece is at: http://www.tampabay.com/news/business/personalfinance/some-credit-card-companies-squeeze-most-responsible-customers/1112232