December 10,2008
News: Free Rides Going Bye, Fee Rides Due in Soon.
The battered credit card industry is still searching out ways to salvage quarterly earnings. After the beatings they got over hiking interest and reducing spending limits, they are trying, yet another, avenue to appease both their customers and Wall Street at the same time (good luck). The next plan is to bring back annual fees for open or maintain credit card accounts. They are certain to shed off a high percentage of open accounts from people who maintain several credit card at the same time. Undoubtedly, the public would gravitate into consolidation mode.
It's too early yet to scope the outcry and the mass reduction of open accounts could turn out to be a double-edged sword in the stock market. It may come down to the better of higher yields with fewer fields or safety in numbers. We expect feedback soon from both camps. But Annual credit card Fee announcements have already been delivered in monthly statements. This little tidbit is found in the fine print and may not come to the cardholder's attention until the fee has already been charged to the card-holder's credit card account. From that point, the card holder will have two options:
1) Pay the amount of charges as normal which will include the new credit card annual fee.
2) Notify the issuing bank of opting out and agree to close the account before the next billing cycle (or within 30 days). The fee will be refunded, but the account will be closed.
Reports indicate that the 0% interest promotions may be the next item on the chopping block. Inactive accounts are already on the conveyer belt and being steadily lopped off the books every day. Credit card lenders must scramble for ways to become profitable amidst this extreme downturn. It doesn't matter that everyone else is falling short and hardly anyone else is doing well either. Wall Street is Wall Street and all must fall together.