Thursday, October 22, 2009

If you drive up costs, some gets passed on 

I can't give myself a high grade for a prediction I made last summer. When news of credit card legislation came in June I said:
For many young people, this will mean less credit.
I did not expect that the cost would be put onto small, judicious users of credit cards.

I was wrong:
Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.

Citigroup, meanwhile, has started charging annual fees to card holders who don't put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don't use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.
h/t: Don Boudreaux. The suggestion is that if you have good credit you have options. Perhaps, but the legislation is undoubtedly an increase in the cost of credit provision and we should not be surprised that all consumers of credit are asked to pay for this. Thanks, Congress!

No doubt my current leftist infestation in the comments section will tie this to executive compensation for a certain health insurance professional, "left", Tommy?