Banks consider fees targeting responsible consumers

Bryant Fong

Think you are safe with good credit? Think again.

The banks are at it again. First National Bank, which sets up credit cards with many local banks, and Bank of America are experimenting with a new fee targeting people who have good credit ratings.

This is a response to the new federal credit card regulations that will take effect Feb. 22 next year. The house recently passed this legislation.

The new federal regulations on credit cards will take a significant hit on their revenue. Companies will not be allowed to adjust the interests of outstanding balances or default customers, as they currently do. Credit card default is where customers do not pay their cards for a while, causing higher interest, hassle and a lower credit score.

As reported by  Jeannine Aversa in the Associated Press, a quarterly Federal survey has revealed that in response to the legislation, banks expect to reduce credit limits, increase  rates and raise annual fees for those with sound credit history and those with a dismal credit history.

According to Steve Jordan in the Omaha World Herald, Bank of America is currently testing the new fee with half a percent of its customers. This is part of a larger scheme to maximize revenues before the new regulations kick in.

But after testing, what is to stop them from implementing the plan to affect all their customers?

Some people might say “so what?”: there are already fees for credit cards, known as annual fees. These type of cards give you airline frequent flier miles, cash back and other perks.

But there are also cards by local banks and credit unions that do not charge fees. Customers need an option to use credit cards without fees. Where is the sense in charging people to spend money?

If companies start charging customers to spend money, customers will start using cash and checks to avoid the fees, making financial transactions more  inconvenient. Internet transactions could be a nightmare, and people would have to bring a wad of cash to the  supermarket or risk losing a checkbook.

Credit card businesses will lose customers, as society would shift more towards the use of cash. Both involved parties lose out here. Companies lose business, and customers lose  convenience.

The new fee would trap customers: they would either need to cancel their credit cards and lower their credit rating or pay the fees. All financial transactions, including loans, and getting new credit cards, become harder with a lower credit score.

Either credit score reporting needs reforming, or the new fee needs to be stopped before it becomes a reality rather than just a test. Banks are looking for just another source of revenue, and one small fee can turn into an avalanche of many other charges.

In order to make more money, banks instead could start a surcharge on each individual transaction, a commission on the amount purchased to the customer. However, according to Sound Money Tips, if two-thirds of their income comes from interest charged on late payments, perhaps credit cards will be obsolete.

The consumer should always be in control. Let us use power in numbers to stop this new credit card fee before businesses even have the chance to implement it.