Bankers vow revenge. What's next?

It’s not a good time to be a banker these days. Not only do you have to worry about populous anger and increased government regulations, but you also have to turnaround declining profits. 

How do you cope?  Well, you go back to the drawing board, the place where late fees and over-the-limit fees originated. You call up your close friends and consultants—the brilliant numerati—who invented those deceptive, introductory-rate offers?  In short, you create a new animal, a fresh scheme that will allow you to restore record profits and happy shareholders.

As President Obama prepares to sign bold legislation that will restrict credit card practices, bankers are already threatening to milk their best customers for more money. The cry goes something like this: If we can’t penalize the bad guys, we’ll get the good guys.  It reminds me of a superhero gone bad type story.   

Anyway, I’d like to know what you think.  In addition to targeting good customers, what other new tactics will we see over the next few months, especially when pending legislation becomes law?  

Comments

[MONICA ALLMOND]

Hi Kevin,

Just discovered your blog! I would like to commend u for seeking answers in this "web of financial" craziness! It seems as if those of us who pay our bills on time are the ones that are punished! Yet, banks are continually allowed to be "the mafia."

Keep up the good work! Wish u many years of happiness in your marriage! ;)

[instant auto financing]

Most likely, banks and credit institutions will hike their policies.

[Don't play their game]

We give these credit card company, banks, and food industry too much power. They can only do what you allow them to do. Think about it. They treat us this way because they brain wash us into thinking we need them, when in reality they need us. If we didn't play their game, meaning if we didn't apply for these credit cards they couldn't make money off us. I know your saying we need credit to buy things Snd to increase our credit score to buy more stuff. We have the power to change this. We have to tell everyone not to use their cards, if that happens they will have to change how we buy things. If the majority of us don't use Credit cards then they can't hold it over us. They will have to come up with to worthy of purchasing things that that we can't pay for at one time. We take our power back and we set the rules of the came or we don't play. It's all about greed. We have to come together and stop letting them get rich off us, while we get poorer. WE HAVE TO STOP PLAYING THEIR GAME. DON'T BUY WHAT THEY ARE SELLING. WE TAKE OR POWER BACK.

[Frustrated Consumer]

Like talking to a brick wall - they don't want the customer that PAYS on time! They want the customer that is late, over their limit, etc; They only think of the $$ it brings as they, gleefully, continue to raise the interest. Never mind that very customer WILL eventually be forced to file bankruptcy.
We have NEVER been late in 35+ years, paid double/triple over what's due & while we may carry a balance, we do pay off on a regular basis. None of that mattered - ALL of the credit cards we have not used were closed, others cut our limit in half or lowered to what was owed which totally ruined our score. Add having our mortgage sold to one of the absolutely WORST lenders which, I’m sure, was prompted because we live in an area that has more foreclosures than you can count. Never mind, it was the very banks knowingly loaning money to ppl they KNEW could not make the payments. I certainly will not feel bad to walk away from what we thought would be our “nest egg” that has devalued to the point we cannot even recoup what we paid since the greedy banks are giving away houses all around us!
Last, but not least, be prepared to start paying annual fees - we got our first $75 charge to one of our cards which we promptly closed. Granted, it was “cutting our nose to spite our face” as it was one of the only ones that did not cut our limit but they’re not getting more of our money than they already have! Of course, they could care less!
Wasn't the bailout supposed to prevent all this repercussion to us, the consumer?

[anthony]

I had this credit card for years and pay on time but when I brought a new car i get a letter in the mail that they cancel my credit card. I had no advance notice or reason why they just did it so I am paying back the money but i have no credit card.

[Sharon Barlow]

What WOULD be a best practice plan of action for credit card companies? Consider what they need to do to make a profit--what is best for the company, what is best for the country, and what is best for the consumer. Surely, there is common ground among those three entities. At this point it looks like each sees the other at least as an enemy,maybe even a sucker. I can't see how that will be productive in the long haul.

I'm an ordinary citizen, certainly not a business person, so my question may be incredibly naive.

[Kevin D. Johnson]

Great points, Eric. I definitely think that grace periods will either get shorter or will disappear altogether. And, of course, the formulas to calculate interest will change, becoming perhaps more complicated and slick.

[Eric Johnston]

What might be coming:

1. Annual fees for EVERYONE.....
2. A fee for each purchase....
3. Interest charges beginning at the moment of purchase...
4. Fees to access yourr CC account online after exceeding some arbitrary FREE number...
5. Fees to talk to a LIVE person...even though this is to be forbidden in the bill..."talk for FREE?" the CCC's say.....
6. YOUR IDEA HERE>>>>>>>>>>>>>>>>>

In 1980 my banker, who went on to be a special assistant to the governor of the state in which I was then residing, said that in the future banks would make a fortune charging fees for their then free services....BOY..was he right !!

[Kevin D. Johnson]

Well, I am eager to see how things will turn out. I will give it some more thought and see if I can come up with some likely scenarios for you all to check in on. It's not a matter of what, but a matter of when.

[Sharon Barlow]

Their lack of ethics got us into the whole financial mess and I don't think they are any more ethical now then they were a year ago. I'm sure they will come up with something injurious to inflict on their customers. It will take me a while to pay off my credit card debt and when that happens there will be NO MORE.

[SoFlaSteve]

All the bankers are doing is continuing what they began to do back last October when they went nuts and began treating their best customers like crap!

What they seem to be forgetting is that what banks do to make money is to lend money and eventually if they keep this up no one will be borrowing money!

Talk about having their heads up their butts (can I say that here?)

[Teresa Simmons]

I think they may be angry and obviously they have no sense as to the anger they have inspired in consumers. If they want to punish good borrowers , what you can see down the line are class action lawsuits for disparate treatment . Some of those good clients will be attorneys and oops, thats a line those banks will be "angry" enough to cross. They dont ever want a case to get in to court in this country --ever again. They have crossed lines
that are irreparable. They should be lowering rates for consumers and rewarding them . I am going down to be sure I am signed up for jury duty today!!

[Carole May]

I agree with Jason. I've been paying down my credit cards so I can get rid of them. I refuse to be beholden to these banks.

[Jason Allen]

I hate to be Debbie Downer, but I think it is just going to get worse. I can tell by their words that bankers are mad. Like you said, Kev, bankers are going to raise everyone’s rates over the next few months and come up with a new beast. Hmmm. What will the beast look like? I do not know, but I think it will be even worse. Start saving up your cash and start paying by check.