Are credit card companies evil, or just greedy?  I have often mulled this question over in my mind. Credit card company practices have been labeled "abusive" by many lawmakers and regulators. But how did we arrive at a place where issuers can arbitrarily rate your interest rate, charge outrageous penalties for the most minor transgression, and trim your credit limit or even cancel your account at their whim? Are these companies evil, or is it greed driving this behavior?

I imagine deep in the halls of a bank are MBA graduates responsible for marketing a company's products and services. Card issuers are just like any other company in this respect. Consider a consumer product company like Apple, maker of the iPods.  Apple has marketing people that figured out that a small, easy to use electronic music player could sell millions of units, leading to soaring profits for the company. The marketing plan called for iPods of varying shapes and sizes with performance levels differing depending on how much the consumer would be will to pay. Some buyers just want a basic unit, others pride themselves on having the best new toy and would pay more.  Apple exploits these human tendencies to maximize profits.  A bank is no different. They have products, like a credit card, with varying features and costs.  The marketing people are charged with maximizing profits for the company.  The company motivates the marketing people and management, up the chain all the way to the CEO, using stock options and bonuses.  The more profits, the more money these people make.  This is just the way business works.

But do ethics play into the equation when determining the characteristics of credit card products?  I have a feeling that years ago, the card companies actually did consider what would be fair treatment to consumers.  But somehow through the years,  fair treatment was redefined to mean, "anything allowed by regulations".  The drive for bonuses spurred creative product creation.  It was revolutionary to create the 0% interest introductory offer.  Imagine the discussions in the marketing meeting:  How can we make money charging no interest?  Don't worry, our studies have shown that the majority of people will pay a day late sooner or later, then we'll reset rates to 25%.  We should easily average close to 20% interest on our 0% offers.  Plus, we've devised several strategies which should make it more likely that someone pays late.  We'll change the due date each month.  We won't accept payments after 12 noon on the due date.  We'll encourage internet payments, but charge a fee for a same-day payment.

These people have studied human nature and analyzed actual payment behavior, and have devised methods to exploit a large body of consumers to maximize profits.

But are they evil?  I have to fall back on the fact that these people are simply business people doing their jobs, playing within the current set of rules.  It is simple greed as they seek to maximize profits while skirting along the outer boundaries of the rules.  Fortunately, the rules are changing for the better, and new laws are on the way.  Until then, I take the position that dealing with credit card companie is an adversarial relationship.  They want as much money as they can get from me.  And I want to maximize free use of their services.  I've have several cards that I've never used for purchases.  I've only used them for low interest loans.  We both play the game, and as long as I'm diligent, I will come out ahead.