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Why credit card fees won't go up © Floresco Productions/Corbis

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Why credit card fees won't go up

Do you think the millions of people who pay off their balances every month will go along with card issuers' attempts to raise their fees? Not likely.

By Rick Newman, U.S. News & World Report

The bankers make it sound like a certainty: New rules limiting high credit card interest rates and other usurious practices are going to cut into bank revenues, so they'll have to make up the difference somewhere. That means fees have to rise for everybody else. It's just a truism, see, the way every action in Newtonian physics produces an equal and opposite reaction.

A front-page New York Times article (registration required) recently described some new measures banks are considering to boost sagging revenues: adding back annual fees, charging interest from the moment you make a purchase, curtailing rewards programs and raising late charges and other penalty fees. (See "The world's worst credit cards.") Credit card users who carry a balance are used to such strictures, but now the card companies hope to force them on the 50 million Americans who pay off their balances every month.

I can't wait to watch them try.

Consumers who run up big credit card balances and take a long time to pay them off are at the mercy of their lenders, which leaves them with virtually no leverage. Despite the new rules, banks will probably still find ways to dun customers who run up debt and limit their own options. But consumers who stay out of debt get to call the shots. And they're the ones who will decide whether to pay new credit card fees. Hmm . . . I wonder what they'll choose.

Thirty or 50 years ago, captive consumers largely did what big corporations told them to do. The consumer economy was relatively new, and big companies offering glittering products and convenient services seemed benign. Many of them actually helped make people's lives better.

But that patriarchal setup ended with the advent of the Internet, which has generated intense competition for practically everything and allowed consumers to shop for the lowest price without leaving home.

Exhibit A: Airline fares

Credit card companies that think they can keep their customers while jacking up fees might want to study the airline industry, which has failed for three decades to enact meaningful fare increases -- or even make a profit. Every time one airline tries to raise fares, another carrier tries to grab market share by launching a sale. And new discount airlines pop up all the time, driving prices even lower.

It's true that new fees for meals and checked bags have stuck, but consumers have reacted by bringing their own food and stuffing everything into bulging carry-ons.

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Protect your credit scores © CNBC
Protect your credit scores
The new credit card law could hurt your credit unless you follow certain steps.

Exhibit B: Music downloads

Downloaded any music lately? The music industry fought a mighty battle to prevent you from doing that, because it figured it'd make more money by resisting technology and forcing you into stores to buy whole compact discs.

Apple had a different idea, which actually benefited consumers. We all know who won.

Continued: The mainstream media

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1 - 10 of 85
Friday, June 05, 2009 5:56:42 PM

These points were exactly what I've been thinking ever since reading about how all the banks were going to force their customers into eating new fees. God forbid the customers stepped up and said no... I won't take it anymore. I'd love to see my credit card issuers try to charge me interest or an annual fee, as I am one who pays off my cards every month. The only reason I give them any business whatsoever is they pay me to use their card. Otherwise, I'd be a cash only girl!

Saturday, June 06, 2009 12:16:55 PM

People can save a heck of a lot of money just by transferring the balance of a high interest rate credit card to a low one.  The savings can amount to hundreds, and in some cases, thousands of dollars of interest each month.  People should research low rate cards on sites like LowInterestCreditCard.biz and here on MSN.  It´s a no brainer.   Transfer your balances and don´t accept high rate cards !

Monday, June 08, 2009 5:18:07 AM
Excellent article that "hits the nail on the head". I am one of those that pay their CC bills on time and the "first shots" have been fired by the CC companies in this "war.  I received notice that my "rewards" at Chase would be changing.... dramatically...their words "improving" and that for this "privilege I would be charged a fee of $30 a year. BUT because I was such a good customer it would be waved for the 1st year....What a CROCK! I wonder if Jamie Diamond realizes the opportunity he is providing his competitors? I will be exploring opportunities elsewhere and thanking Mr. Diamond for his services .......as I bid him farewell.
Monday, June 08, 2009 5:33:26 AM
If either of my two credit card carriers try sticking me with an annual fee, or giving me no grace period, I walk. Just that simple. I don't have to put up with that kind of crap, and I don't understand why anyone would.
Monday, June 08, 2009 5:52:26 AM
It's a moot point to me.  I paid off the two I have.  I am keeping them, but watching closely.  I won't be charging unless maybe I'm paying a ransom or something.  You taught me well.  If I can't pay cash, don't buy it.  Sears can go bankrupt as far as I'm concerned.  I have everything I need.  Anyway, cash beats 30% interest plus late fees exorbidant and anything else they can tack on or cheat me with.
Monday, June 08, 2009 5:55:47 AM
I have what....$25 in reward money...whoopie.  Like getting a rebate..cut out box top, fill out form in triplicate, put in cash register receipt, mail and wait 6 months to get a rebate.
Monday, June 08, 2009 6:29:36 AM
I hope this is the beginning of reform in big business.Martini glass The practice of raising rates because your late with a payment made on a weekend because the company doesn't take payments on those days needs to be looked at as well. The cable companies need to be next!!! The charging practices need to be addressed or the industry needs to be deregulated.
Monday, June 08, 2009 6:42:50 AM
Banks are nothing but thieves. I carry a check book and a letter from my bank attesting to my credit worthiness. What  we need is a law making it illegal to refuse cash for any transaction including car rentals. Cash is legal tender in this country. With the electronicsavailable today, it is possible to verify a check within minutes. If you must use a card, usea debit card, never a credit card. It's time to get rid of the stranglehold that banks hold over us. Quit living on credit. Past experience shows that credit card issuers will use any means they can to steal your money. Operate under the premise that if you can't pay cash, you can't afford it. Just use common sense.
Monday, June 08, 2009 7:11:19 AM

We got tagged six months ago with a 44% interest rate charge as we got caught in the weekend snafu of late payment.  That was the first time ever.   We called that now tax supported bank and appealed the charge.  We agreed on the late charge,  reducing the effective  interest rate to 10% and paid off the $44 balance.  The supervisor at the card company then proceeded to lecture us that we do not use the card enough, almost implying they may cut our credit limit or cancel our card.  We calmly said good- bye.  That credit card is now sitting idle in a very safe place, awaiting its expiration date in a few short months.  No plans to activate the new one.  SmileWho needs that card anyway?

Monday, June 08, 2009 7:33:11 AM

People, when we applied for credit card's we had every intention of paying them off..and still do, the problem is they dont want you to pay off your card's, look at the economy what about this recession with so may out of work..come on this is suppose to be the US?

Dont ever blame yourself for something that you were thrown into.

Do what you need to do..dont let credit card's define who you are.

1 - 10 of 85
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