Credit-card firms already trimming rewards

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    Congress passed a bill this week bringing relief to overburdened credit-card users, but the companies are trying to make up the lost revenue with other fees and cuts in reward programs.
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Will Congress's newly passed credit-card reforms – intended to help consumers – really hurt them?

That's the debate online in places like here and here. The reality is that the changes that critics are warning about are already taking place.

Think back over the last few months. Have you gotten one of those gobbledygook notices alerting you to changes in your credit-card agreement? (What? You didn't read it in full?)

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"They don't take out ads, saying: 'We're cutting our rewards program,' " said Bill Hardekopf, CEO of LowCards.com, an online credit-card comparison site. "It's done in a very subtle manner."

Fewer triple points

Take the Chase Freedom card. It used to be that it offered customers three bonus points for every dollar spent on the three categories where they spent the most money. In January, that changed to three bonus points for each dollar spent on gas, groceries, and fast food, Mr. Hardekopf pointed out in a telephone interview. That same month the Discover Miles card switched its new-customer offer from 12,000 bonus miles on their first purchase to 1,000 miles a month (up to 12,000) as long as customers made a purchase each month.

These are small changes. Hardekopf expects more: trims in reward programs, higher fees, and the imposition of annual fees on some cards.

The industry has known for months that, at a minimum, it would lose revenue next year because of new Federal Reserve rules. Congress's newly passed law will increase those losses (for details of what the new legislation does, click here). So like any industry, credit-card companies will try to recoup those revenues.

The power of you

Whether they succeed depends on you. If you and tens of thousands of other users cancel their cards once an annual fee is imposed, guess what? The companies will quit doing that. Ditto for sky-high interest rates and other revenue-generators.

There's no law of economics that says the credit-card industry has to be a certain size or generate a certain amount of revenue. Ultimately, it will offer what brings profit. If that means slimming down and servicing fewer accounts, they'll do it.

Here's a thought for any industry executives toying with imposing $10 annual fees: Quit sending me all those credit-card offers. That would save you far more than $10 a year. Trust me.

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