I have been waiting for just such an excuse to stop using a credit card. Why should a bank take a % of every purchase, anyway? Retailers and consumers are struggling too. Credit card fees are pure waste.

We don’t need credit cards. Remember cash? And where cash will not work, there is always a check or a debit card.

It is already known that your credit score will be LOWER if you have no debt then if you have a small amount (they want someone who borrows).

What’s next… Armageddon?

I’m advocating a special consumer debt paydown program for those who want to pay down their credit card debt. I believe the credit card companies should waive ALL future interest rate charges on EXISTING DEBT for anybody who can pay down their credit card debt.

This would create an instant stimulus in local economies all over the country and is we follwed the path this newly freed money would take, we’d see that it would simply go through a few hands locally before it ended up at the banks anyways.

The difference is more people locally would touch the money and this would result in more people being able to pay their bills.

I would like to point out that this is not like you’re taking $15 from the bank that they deserve. It begs the question: What is a fair rate to charge a person who pays their balance in full each month? We need to consider the risk of default (as it is never 0%). We also need to consider the loss the bank would suffer because they can’t loan the money to a more profitable person for that time. And then, to complicate it more, we need to include the profit the bank makes from the fees charged to the business when you use the card.

With a person who pays in full every month, the risk of default is very low. I don’t think a 19.99% rate is fair. I don’t even think a {prime} 8.99% is fair. I do not know what a fair rate would be for such a low risk loan. I feel like a 2-5% rate would be profitable for the bank (very profitable considering the risk). That would be less than $5 a month for a 30 day loan of $1,000. Less money charged and for shorter periods of time would mean you’re “taking” even less of the money the bank “deserves.” They set their rate at whatever it is but that doesn’t really mean what they are asking is fair or that you’re depriving them of their just returns.

I am looking for a compromise, the merchant fees get lowered and in exchange for that, merchants offer incentives to their customers to spend a certain amount in their stores and in exchange they will pay the credit card fee for one year, assuming the fee is a modest 20-25 bucks.

@Alessandro: You are correct. I suspect merchants will be paying for the interest you used to charge on cards – in the form of increased merchant processing fees. Credit cards make a small percentage (2-4%) on each charge run through the card’s network. To make up for those who don’t pay fees and interest, the issuers will likely increase their merchant fees.

In other words, someone is going to pay for the loss of revenues…us, the merchants, or both.

According to Kevin, borrowing a thousand dollars at 19.99 percent for one month, and then paying it ALL OFF every month, means you would save 15 dollars in interest rate charges for that month. So you can get the use of money from the credit card company for free, if you want to. And people who pay off their credit card bill every month in full can create a nice amount of savings over a years time. Maybe not 15 dollars every month since that would mean spending 12,000 dollars a year with a credit card, but maybe over the course of a year they get 50 bucks in free money because they pay it off every month in full.

I think the real solution is going to present itself when all kinds of retail stores and restaurants offer to pay your one year’s worth of credit card fee if you spend x amount in their store. And it probably will be reasonable amount to spend.

if Credit Card Companies were smart, they in turn would credit back a certain amount to any business that pays off a yearly credit card fee for a customer.

This is more a response to all the comments about leaving 1c on the card. And it has nothing to do with double cycle billing (which is going to be illegal under the new laws anyway). You pay interest on the AVERAGE daily balance and not the balance you have at the end of the month.

For example, say you charge $1,000 on the first day of the month and don’t use the card for the rest of the month. And then you pay $999.99 on the last day of the billing cycle. For this example, we will assume it’s a 30 day cycle. For 29 days you would have a balance of $1,000 and for one day you would have a balance of $0.01… $29,000.01 / 30 = $966.67 a day. So you would pay interest on that amount. That means you’ll end up paying over $15 (if your card has a 19.99% APR) for carrying that 1c balance.

Obviously this example is simplified as most people use their cards several times over the month and may or may not have $1,000 charged over the course of the month. But the facts remain the same. You’re not going to win by doing this and you will be charged interest on the average balance and not the 1c.

I use a reward card for every purchase and I pay off the balance every month, but if I start getting hit with fees, I’m dropping the card like a stone.

Of course, I’m fortunate that I don’t carry a balance and don’t really *need* a credit card. I think this is yet another motivator to pay down debts to be able to have this kind of freedom.