What Bank Mergers Mean for Credit Cards

I’ve wondered about this myself. I took an antitrust class last year in law school. All of these recent acquisitions, with no antitrust scrutiny whatsoever, will ultimately come at a price. Less competition is never good for the consumer. Fewer competitors will result in inferior products and higher prices. So, with so many banks merging recently, what’s going to happen with interest rates and fees that are tied to the credit cards these banks issue? The Center For American Progress has a good piece on the subject. From the story:Credit cards have become essential to our modern economy. Almost all families have replaced checks and cash with plastic for transactions at the supermarket, gas station, and pharmacy. Moreover, credit cards will be a critical source of credit as other forms of credit have become more costly and less available.But as numerous congressional hearings have documented at length, the costs of borrowing on a credit card are high relative to other types of credit, due to an overabundance of fees, high penalty rates, and fine print that obscures, rather than clarifies, the terms of borrowing on a credit card. On Thursday, in fact, the Federal Reserve Board will issue a reform rule to limit some of the worst credit card practices. It’s currently unclear how strong its rule will be, but regardless of the outcome a smaller number of credit card issuers puts more pressure on worst practices—a trend that still deserves scrutiny.In the end, families who use credit cards—already saddled with record-high credit card debt—could see increasing kinds and amounts of penalty fees by credit card issuers. This is happening already. As the economy sputters and banks’ mortgage-related losses increase, banks are stepping up fees and rates to increase their income. Consumers are taking this on the nose—and with prices for every day necessities still high and wages for workers stagnant, they may be forced to take on more debt or default on their current debt.