Get out of debt, stay out of it, and never carry a balance.

That way, even if they charge 50% interest, you aren’t affected.

You know competition is lacking when every credit card contract contains identical provisions.

Actually, this indicates the presence of competition, not the lack thereof. Here’s an oversimplified example:

Suppose Company A offers a credit card. Also suppose this is the only credit card available to consumers. Company A can pretty much put whatever onerous demands and restrictions it wants on the users. Although tightening restrictions and raising fees will cause some people to drop Card A, the result would still be a larger user base than with competition.

Now Company B comes along and offers a card similar to Card A, but with slightly lower fees or less restrictions. Some (probably large) number of users would drop Card A and switch to Card B, as well as some new users would directly join Card B.

Company A would have to loosen restrictions and/or lower fees to match B, if they wanted to maintain membership and reduce churn. If they wished to grow their membership, for example to make up for the customers they lost to Card B, then they would also have to continue down this path. Or they could take it even further, loosen things more, and try to lure some people back from B while also adding new customers.

When companies C through F join the fray, several rounds of adjustments would occur amongst all the companies. Towards the end, all would be offering similar terms and conditions, if not exactly the same t&c.

(Remember, the companies still have to be profitable. That’s why it’s not a race all the way to the bottom of reducing or eliminating all fees and conditions. Below a certain level, the companies will decide it’s not profitable or worth it.)

Of course, the market is dynamic, and not static. Situations change for consumers and companies, and continual adjustments will be made.

Look at what Bank of America is doing. If these new annual fees don’t cause “too many” customers to drop their card, expect other banks to start adding these fees as well. If customers flee en-masse, then expect BofA to drop the fees.