Unlike our gullible conservative and libertarian friends who got the vapors at the slightest bit of agitprop from the banking and credit card industry, Ron Lieber looked at the threats and has decided much the same thing I did:
For months now, the card companies have been threatening to cut rewards programs sharply to make up for revenue lost because of the new restrictions.
My guess, however, is that this talk is just so much saber-rattling.
Card companies want to make money, and big spenders help them do it, even if those cardholders do not go into debt.***
So will credit card companies kill reward programs or drastically scale most of them back? Of course not.
“If you strip away the reward component of a credit card, it’s essentially a commodity,” said Rick Ferguson, editorial director at the loyalty marketing company LoyaltyOne. “The reward is what gives it its personality. It works from a branding perspective as well as a mechanism to influence customer behavior and consolidate spending on a particular card.”
That last part is crucial. People who spend a ton generate fees galore from merchants, and that money helps the card company stay in business. So you may soon see card companies giving away more goodies or lowering annual fees for people who hit certain spending thresholds each year. American Express already does this on a number of cards.
Credit cards will still be a very profitable business, and the thing you need to remember is this:
Credit card companies have shown they will do anything for a buck, and if they could charge the people who carry no balance an annual fee, THEY WOULD ALREADY BE DOING IT.