The Future for Credit-Card Rates and Fees

BankRate's Greg McBride commented on credit-card and other interest rates in the following WSJ video clip:




I agree with Mr. McBride. For those with excellent credit, credit-card offers have been improving and will very likely continue to get better as 2011 progresses. Zero percent intro APR credit cards -- our favorite type of credit-card offer -- Keep getting more and more generous.

It's a shame that Discover's No Balance Transfer Fee 0% card is no longer with us. It was a special offer which expired at the end of February. Which bank will offer the next great 0% card? Bank of America? American Express? No one can know for sure, but I think it's a safe bet that the American consumer will be able to apply for at least one juicy, new, no balance transfer fee 0% card before the end of the year.

NB: Discover decided to keep their 24 Month Balance Transfer card alive (0% intro APR on transferred balances for a full 2 years!), so anyone can apply for it right now. This card is easily the best 0% credit card in the American market.

And what about the future for credit-card fees? Here's a clip from a great WSJ article titled "Surprise: Banks Ease Card Fees":

"...Some analysts, however, say lenders also are calculating that bad publicity from imposing fees is itself a threat to revenues. Amid persistent unemployment and a still-sluggish economy, credit-card companies want to tamp down on controversy.

'The motivation behind [easing credit-card fees] is to improve the persistent perception that card issuers are simply price-gouging,' says Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods.

That is especially important now, as the new Bureau of Consumer Financial Protection sets its enforcement priorities, say banking industry analysts. 'Banks would like to keep a low profile right now,' says Dennis Moroney, research director at advisory firm Tower Group..."

I'm totally on board with the reasoning and analysis in the above article. The folks at the nascent Consumer Financial Protection Bureau (CFPB) are very busy setting up shop, and setting up policies that are likely to influence how much profit banks can make from credit cards. So, right now, banks are highly motivated to play nice.

Here are some clips from the CFPB site:

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