I admit that I am a computer geek who is used to acronyms.    Allow me to translate.    FUD is an industry term for Fear, Uncertainty, and Doubt.   NYT is of course the New York Times, and CARD is the name that has been given to the credit card holder’s bill of rights, as in the CARD act.

FUD and the New York Times

FUD, is defined by Wikipedia as:

“…a tactic of rhetoric and fallacy used in sales, marketing, public relations, politics and propaganda. FUD is generally a strategic attempt to influence public perception by disseminating negative information designed to undermine the credibility of their beliefs. … FUD is a manifestation of the appeal to fear. (emphasis mine)

Keep this definition in mind as you read today’s article in the New York Times about the supposed future of credit cards.     The article is entirely about how consumers will be hurt by this consumer rights legislation.   Most of the article reads like a transcript of a conversation with bank industry lobbyists.   Like the letter from the banking industry that I deconstructed last week, the banking industry has convinced one New York Times “journalist” that the sky will fall if this bill becomes law.

He brings up the scary speculation that:

“Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.”

We have heard this all before.   No more credit card rewards, huge annual fees, and now immediate interest charges.   Give me a break.    Are we expected to actually believe that the CARD act will be so punitive that banks will no longer make money from merchant fees, late fees, foreign transaction fees and 29% interest, just because they can no longer change interest rates retroactively?     Do you really think most reward card holders, like myself, will keep their card for two seconds after banks charge interest on balances immediately upon purchase?      If anything, banks will place more of a premium on attracting customers who actually pay their bills on time.

There are so many problems with this article, I don’t know where to begin.    Let’s start with the title, “Credit Card Industry Aims to Profit From Sterling Payers”.     So your saying that an industry wants to profit off of it’s best customers who pay their bills on time?  STOP THE PRESSES, this is front page news as no business has ever tried that before.

Next, let’s look at the analysis of reward card holders, like myself, who pay their balance in full every month: “People who routinely pay off their credit card balances have been enjoying the equivalent of a free ride, he said, because many have not had to pay an annual fee even as they collect points for air travel and other perks.”

So I am getting a free ride by paying my bills on time?   Actually, it is the merchants who are subsidizing the free ride with the merchant fees.   Merchant fees that they pay, if not happily, to speed and ensure their payments.    Furthermore, for every ten people with a reward card who intend to pay their balance in full, I am sure at least 2 or 3 somehow fail to do so, and end up paying interest.

Thankfully, the writer does make a token attempt at the end of the article to consult an actual consumer representative:

Consumer advocates say they have little sympathy for credit card issuers, arguing that they have made billions in recent years with unfair and sometimes deceptive practices.

“The business model will change because the business model doesn’t work for the public,” said Gail Hillebrand, a senior lawyer at Consumers Union.

“In order to do business under the new rules, they’ll actually have to tell you how much it’s going to cost,” she said. “

My Conclusions

Any time a banking industry representative tells you that they oppose something out of their interest for consumers, they are lying.      It is disingenuous and patronizing to think for one moment that they, more than the consumer groups, understand or even represent our interests as consumers.      Furthermore, it is repulsive that they are taking the FUD route to express it.    Banks will always try to find new ways to charge you fees and reduce the quantity or value of your reward.    That has always been the case, and it will also be true after the CARD act becomes law.    Now, at least, they will have to play by at least some rules.

Note To The Banking Industry

Construct your arguments against this bill in terms of your own interests, not mine, and you will at least have credibility, if not agreement.     Fear as a political tactic is so over.    It died over the last eight years when our government constantly manipulated us with bogus warnings of WMDs and politically triggered colored alert systems.     The era of Fear is over, and if you didn’t get the memo, most Americans now respond to the message of Hope and Change.     When President Obama signs the CARD act, it will be yet another confirmation of this truth.

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