With Congress about to pass restrictions on some of the ways that credit card companies make life miserable for unwary users, the credit card companies are claiming that they're going to have to raise fees, curtail reward programs, and eliminate grace periods on those who pay off their cards every month.
This is obviously BS. If the credit card companies were losing money on people who pay off their cards every month, they wouldn't be giving them credit. They're making money now, even with the grace period and reward programs, because they charge merchants a cut every time someone uses their credit card. And if they could make more money by eliminating the reward programs, etc., they would have done so already. If they start charging fees, they'll just drive their customers away.
The NYTimes has an interesting discussion on the subject going, with lots of people saying that if credit card companies started charging annual fees, and/or eliminating the grace period, they'd just stop using credit cards. I'm in this category -- I use my credit card for convenience, and could switch to a debit card without too much hassle. I'd need to keep more of my money in the checking account to ensure against overdrawing, but could presumably find an interest-bearing checking account to use.
That said, there will be losers (other than the credit card industry) as a result of this bill. There will be fewer card offers with low teaser rates, and the people who successfully juggled different accounts to always keep the interest low will be worse off.
The credit card industry may also try to squeeze more out of merchant fees. I'm not quite clear on how the system of merchant fees isn't a violation of anti-trust law, but they've got a pretty good monopoly going on. And merchants are afraid they'll lose huge chunks of their customer base, or that customers will spend less, if they don't take plastic. I noticed last summer when gas prices were really high that some stations were offering discounts for cash -- I hadn't seen that in a while. (Visa and Mastercard don't allow stores to charge a transaction fee for using them, but they do allow discounts for cash.) I'd assume that if they increase the fees enough, more stores will start offering discounts for cash.
Could you live without your credit card? And how much of a discount for cash would it take to get you to switch over?