Reply #55: Exactly. [View All]

Nobody made the CC companies offer rewards to begin with.

Market forces did as the CC companies competed to gain the best clients.

Despite terms like deadbeats CC companies make a lot of money off people who (like me) CHARGE EVERYTHING.

I put everything for the month on a card then pay the card off. Everything except my utilities, mortgage, and car payments. Even my cable bill & insurance are paid by CC (automatically).

So my guess is between me & my wife about $24,000 per year in charges. 3% of that is $720 in merchant fees. I get about half that back in rewards. So net gain of $360 per person. Find a million people like that it is an easy $360 million in merchant fees.

Plus some % will end up racking up a bill from month to month = even more $$$.

If they:
1) get rid of grace period (i.e. charge interest from day of purchase)
2) get rid of rewards
3) add annual fees

then I will close out the account or maybe just stop using the card. The improved FICO is worth a low annual fee on my oldest and largest CC. Doing that however will make them lose $360 per month in fees.

Some banks will try others wont and people like me will move to the "smart ones". My main reward card is USAA and they were smart enough to stay away from subprime so hopefully they will be smart enough to stay away from this.