Balance could shift for credit cards

WASHINGTON, May 19 (UPI) -- Legislation that limits penalties U.S. credit card companies can charge customers could flip the balance of payments among borrowers, bank analysts said.

Up until now, those who pay their credit card bills on time have often been rewarded, while those who pay late rack up fees that have been extremely profitable for credit card companies, The New York Times reported Tuesday.

As Congress moves to curtail punitive fees, "it will be a different business," Edward Yingling, chief executive officer of the American Bankers Association said.

"Those that manage their credit will in some degree subsidize those that have credit problems," Yingling said.

"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, publisher of the Nilson Report, which monitors the industry.

In response to the legislation, scheduled for a vote in the Senate Tuesday, American Express, Citigroup Inc. and others have contemplated raising interest rates and reinstating annual fees, the Times said.

"They aren't charities. They have shareholders to report to," industry consultant Robert Hammer said.

"Whatever is left in the model to work from, they (credit card companies) will start to maneuver," Hammer said.