Paying for credit card reform

Washington's new credit card rules will “reward the irresponsible while punishing the responsible,” said Rob Port in Say Anything. According to The New York Times, the new rules—approved by the Senate Tuesday—could push banks to revive annual fees, slash rewards programs, and otherwise penalize those who pay off their cards on time and in full, all to subsidize the bill’s beneficiaries: “people who don’t pay their bills.” Nice job, liberals.

That’s “nonsense on stilts,” said John Cole in Balloon Juice. Despite all the “pre-emptive fearmongering by the credit card companies,” the new rules really mean that hard-hit cardholders, and businesses—which pay card issuers “exorbitant” transaction and other related fees—will no longer subsidize the “perks and other free stuff for ‘responsible’ people.”

The 2 percent to 3 percent transaction fee is already factored into prices, said Randall Forsyth in Barron’s, so I see the 2 percent to 3 percent “kickbacks” I get for using my card—cash, gifts, gas, and other perks—as a way to get back my money. And if “prudent” cardholders like me get “the short end of the stick” in this law, you’ll find “mainly cash” in my wallet.

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And that, ultimately, is why card companies’ threats are probably “so much saber-rattling,” said Ron Lieber in The New York Times. Big spenders, even those who don’t carry debt, mean big money for card firms—take away the perks and they’ll switch to another credit card. If anything, look for increased rewards for cardholders “who hit certain spending thresholds each year.”