The CARD Act has set off an epidemic of hand-wringing, ulcers, and night sweats (PDF download) at big financial institutions. But large credit card banks are unlikely to carry through on threats of cutting grace periods, jacking up rates, or razing reward programs. Why? Credit unions.
While credit unions themselves will also have to worry about the new limits on what they can do with their credit cards, a NY Times op-ed from Harvard’s Ryan Bubb and Alex Kaufman argues that credit union cards – which already largely comply with the new rules – prove that financial institutions can offer competitive cards without all the onerous fees.
The difference, they say, is that credit unions aren’t driven by shareholders to extract outsize profits on their portfolios, so they haven’t. The profits are already in the pudding. Even if large banks wanted to do all the things they’re threatening, competitive pressures are unlikely to allow it.
I know this is small consolation for the credit unions wrestling with scary credit card delinquencies, but it’s nice recognition in an influential corner.
Post a comment