What if...? 1 month national CC payment boycott

[chimpyisstillsatan]

Let's say every customer of a large bank (Say...Discover or Chase) refuses to pay one CC bill for one month...holds on to the cash, makes up the payment after 31 days, but refuses to pay one billing cycle in, say, March 2010.

30 days late isn't too bad a hit on your FICO score. One month of no cash flow from ALL of a bank's customers, OTOH, could cause real problems for them.

Let's exclude those on the ropes who would see an immediate hike in their rates, or those who would seriously suffer. Supposedly "the majority" of CC holders "borrow responsibly" (according to the banking lobbyinst on Frontline last week). Would a credible threat of this type have any effect on the banks, or could they just shrug it off? Would consumers be cutting off their own noses (through financial collapse, for example) should they follow through?

Any microeconomics geeks out there?

[ET Awful]

1. If you have completely clean credit, a 30-day delinquency can drop your score significantly.

I've seen drops of close to 100 points for a 30-day delinquency on an otherwise clean report.

If, by some miracle, you could get every customer to do such a thing (which is about as likely to happen as Reagan coming back from the dead and voting Democratic in the next election), a bank would simply do an across the board rate increase for all customers, and change their underwriting criteria so the lowest tier of customers no longer met the requirements. They would then close accounts for the lowest tier of borrows (especially those with existing balances). This would result in an even larger hit to credit scores because it would throw off the use ratio of available credit to utilized credit (which accounts for approximately 30% of your FICO score).

[Godhumor]

2. Considering how much the companies make in

late fees and the fact that a late payment generally instantly ends promotional interest rates or moves consumers into a higher risk tier (Both of these abilities will still be present to some extent after credit card reform), I would say this would hurt the consumer a lot more than the credit card company.

[Lasher]

3. Hell, that's just what the CC companies want.

One day late on a $5 payment and they hit you with a $15 fee. Not a bad profit for them. If you want to hurt them, pay your credit card off in full on time every time you use it. If you have a balance you can't pay off in one month, pay it off as soon as you can and then get rid of the card.

[chimpyisstillsatan]

4. I understand that,

but if paying off cards were possible, people would do it.

As to the one late payment, that could be an opportunity and a first step towards making their business more expensive to run.
Lawsuits to contest the fees, clogging the customer service lines, contesting everything possible on the basis of their failure to respond...

I know I can extraact more than $15-40 dollars worth of productivity from them pretty easily. Hell, if we all mailed monthly extra monthly checks for a dollar, the processing fees alone would be huge.

My point is that a consumer revolt, including a spending freeze, paying down debts, and any other legal tricks at our disposal may be somewhat effective. No successful protest comes without costs, but are we as a people willing to accept those costs, or are we going to keep dying deaths of a thousand fees?

[Freddie Stubbs]

5. Sounds like billions of $$$ in late fees for the banks

[villager]

6. It's a great idea -- but a "free people" buffaloed & bullied by the mere thought

...of their credit score will never assert their rights over their financial leaders...