Banks are scrambling now to react to upcoming legislation and “try to replace more than $50 billion in revenue wiped out by new rules that clamp down on certain business practices.” A recent article in the Wall Street Journal focuses on the impact of new rules on credit card interest rates. New rules go into effect in February and “will limit some interest-rate increases, require more disclosure to customers, and prohibit banks from raising interest rates on current balances unless a customer is at least 60 days behind in a payment”.
As a result of these changes, credit card issuers are trying different approaches to generate revenue including account statement fees, watering down rewards programs, and fees for inactive accounts. The danger in all of these is that you risk losing customers. The challenge is in finding the customers where you can introduce these tactics without increasing risk of attrition. (more…)