Good credit card customers targeted for higher rates

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As Congress considers measures to stop credit card companies from charging excessive fees and arbitrarily hiking rates, credit card companies are expected to respond by targeting the people the industry calls "deadbeats," the customers who pay their bills every month.

On "Here and Now," Gail Marks Jarvis, personal finance columnist for the "Chicago Tribune," explains.

Credit card companies say the fees and charges they get from bad customers subsidize good customers — Marks Jarvis outlines what these good customers should expect: "The good customers are already hurting. They’re calling me, they’re very upset … this is what they’ve talked about: You might start to see more annual fees … you might see higher interest on your credit card. Basically what you’re going to see is just higher fees than what you’re used to as a stable credit card user."

There’s even consideration of credit cards charging interest immediately at the point of purchase: "This would be horrible because there would basically be no rewards for being a good customer. Your only outlet as someone who has hated to pay interest would be to use your card, and then go to your computer that day, that night, and pay it off completely — which is not the way we typically use credit cards. If that happens to the good customers, life would definitely change."

Good customers have also had their line of credit yanked through no fault of their own: "And the reason the credit card companies are doing that is, say if you have a $10,000 line of credit or a $20,000 line of credit, they have to set up more reserves if they’re allowing you $20,000 versus $10,000. So they’re cutting good people who aren’t using their $20,000 … on the face of it, you wouldn’t think that would matter because that’s not credit that you use anyway; but it does matter because the total line of credit you’re allowed affects your credit score …"

Marks Jarvis says people should use their credit cards, but to pay any balances off as soon as they can in order to not accrue interest: "They should be using their credit cards only for purchases they need, not for anything extra, and then they should pay it off every month, and my advice, don’t even wait for the bill to come because if you wait for the bill to come, you might miss it. Instead, pay it off as soon as you can."

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