After congress said they plan to limit the penalty for borrowers who have a riskier balance statement who have been the main source of income for the industry, makes credit card companies approach sterling credit holders to cover the gap in income.
Banks must charge their interests on the date and time of purchase and pot weeks later which will lead to the interest rate rising.
"It will be a different business. Those that manage their credit well will in some degree subsidize those that have credit problems." CEO of the American Bankers Association, Edward L. Yingling said. Banks have been lobbying against the bill.
"There will be one-size-fits-all pricing, and as a result, you`ll see the industry will be more egalitarian in terms of its revenue base," said David Robertson, who publishes the Nilson Report which is a journal to keep an eye on credit card interest rates.
Citigroup, Bank of America, American Express, along with many other banks in Wall Street have begun increasing their interest rates before the amendments are passed.
People who pay loans on time are enjoying the situation as it hardly affects them they still receive free flier points and do not have to pay the annual fees.
"Despite all the terrible things that have been said, you`re making out like a bandit," Robertson said. "That's a third of credit card customers, 50 million people who have gotten a great deal."
"They aren't charities. They have shareholders to report to. Whatever is left in the model to work from, they will start to maneuver." Robert Hammer a consultant said about credit card companies and banks.
The ABA will "provide credit to the largest number of creditworthy customers possible, while also remaining prudent in our lending practices," said spokesperson Betty Riess. The JPMorgan Chase with ABA plans to raise their fees and these companies make the majority of the Credit Card Industry.
"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."
"The card industry is giving the argument that if you didn't want to be carjacked, why weren't you locking your doors or taking a different road?" Obama's Economic Advisor Austan Goolsbee said.