New Orleans There is a lot of talk about reforming credit card fees and rates, but a lot of this seems just that: talk. The House Financial Services Committee chaired by Barney Frank has talked about capping rates, but also seems powerless in the wake of many companies (including my own Union Privilege Card offered by HSBC to the best of my knowledge!) raising the fees now ahead of any bill passage. That’s clearly wrong.
There’s a lot of this hustle-bustle going on. Floyd Norris made a good point about a month ago in a NY Times column about the poor subsidizing the rich when it comes to credit cards. Not surprisingly that angle caught my eye immediately. His point was that even though the stated price for certain items is the same (and required by law to be the same), whether we use cash or a credit card, the poor or working stiff without a credit card is laying down cash, while some of the better off are using a card, which gives the retailer less, and in some cases gives them mileage or credits back. It’s only gas stations were over my lifetime I’ve seen a real discount for use of cash. Norris reports, undoubtedly correctly, that the card companies, retailers and others are crying like stuck pigs and wallowing in the water to muddy it up sufficiently that it’s hard for any of us to tell what might be the best reform and whether or not the poor Joe Consumer will get a break.