New credit card restrictions put an end to subsidies funded by the less fortunate
Credit card users who crow that they seldom are charged interest because they pay their bills on time may not be able to crow much longer. On Friday, President Obama signed into law new restrictions on the industry that lenders say may lead to the return of widespread use of annual fees. Perhaps that's how it should be.
Wait, hold your ire! Hear me out.
I know many of you feel entitled to use a credit card without any cost because you pay off the bill before the due date. But did you ever think what that is?
You probably never considered that the credit pushers made your access to "free" money possible by gouging the less fortunate with penalties and double-digit interest. Effectively, the most vulnerable consumers have subsidized the low interest rates and rewards programs that the more financially secure enjoy.
I know what some of you may be thinking. "Good for me, too bad for them. That's how capitalism works."
Right you are. That is how capitalism works. And at times it's a selfish system.
The recent push in Congress to halt some of the industry's most egregious practices was aimed at giving some relief to consumers buried under credit card debt. Certainly many people irresponsibly racked up unnecessary charges, but others resorted to credit to pay for medical expenses because they lacked insurance. They were using credit to buy groceries or make car repairs so they could get to work.
Demos, a nonpartisan public policy research group, took a look at which credit card users were the worst hit by credit card practices. In a report called "The Winners and Losers of Credit Card Deregulation," Demos pointed out that low-income and lower-middle-income cardholders were about five times more likely than the wealthiest cardholders to pay more than 20 percent interest.
The Demos report separated credit users into four categories: Nonusers, who carry credit cards but do not use them; convenience users, who pay balances in full without incurring fees; revolvers, who accumulate balances without paying them in full and incur interest charges; late payers, who miss deadlines or skip payments and incur high interest charges and late fees.
The revolvers and late payers are the industry's most lucrative customers.
Now that Obama has signed the bill into law, it won't be long before the industry responds with ways to make up for lost revenue.
Already the language from the lenders is pitting so-called good credit card users against riskier ones.
This change won't be easy for some, as evident from a comment I received from a reader. The person wrote: "I am concerned that, with the new legislation, my American Express annual fees will go up and I will get asked to pay annual fees on the MasterCard and Visa, both of which are now free."
No, those cards were never free.
Michelle Singletary is a columnist for The Washington Post. She can be reached at singletarym@washpost.com. 
