by Joseph Kenny | 05/27/09

The recent Credit Card Bill of Rights has seen many commentators speculate on the impact of the availability in consumers. The credit card companies argument was that these restrictions will lead to credit card issuers having to make credit less available. The mainstream press then started to speculate if the days of no annual fee credit cards will disappear.

My argument is that with or without the bill, rewards and offers have got worse over the last two years.

Even without the new bill of rights may result in less credit availability. Well, it is a known fact that credit card companies have been increasing consumers interest rate, reducing credit lines and even asking customers to close their accounts.

Many pundits have speculated that one of the unintended consequences of this bill is that there will be less credit cards with no annual fee. The rationale is that since people who pay their bills on time are not really profitable as those who carry a balance. Since it is becoming difficult to simply charge some late fee or over-the-limit fee, the brunt of this bill will fall on those who pay on time. But these folks aren't as profitable as those who carry a balance, are occasionally late or sometimes go over their limit! Well, this has not really happened yet but credit card rewards weren't what they used to be just a couple of years ago.

Cash Back Credit Cards Have Less Rewards - Even before this bill, credit card issuers have been scaling back on their rewards. One only has to look at the cash back credit card sector to see that benefits have been declining.

About three years ago, Citibanks' Dividend Card was probably the best cash back card around back in those days. They paid 5% cash back on gasoline, supermarket and drugstore purchases and 1% on everything else. They did limit you to earning $300 a year in rebates but Citi allowed you to get a second card! The Chase followed up with a card called Cash Plus Rewards. It has essentially identical features as the Dividend Card.

The reality started to hit credit card issuers. Chase stopped issuing the cash plus rewards card and issued the Chase Freedom Card. But instead of 5%, the rebates were cut back to 3% for gasoline, supermarket and drugstore. Citi Dividend then cut their rebates to 2%!

The Chase Freedom Card then went through another round of changes. They became essentially just an ordinary 1% cash back card that paid just 1% on every dollar you spend on the card. Recently, they have established an online shopping mall where if you shopped at partner online stores from their website, you will get more than 1% cash rebates.

So as you can see here, even before the legislation, benefits in the cash back sector have been going down.

Gas Credit Cards - The same phenomenon happened in the gas credit cards. As mentioned earlier, the Citi Dividend and the Chase Cash Plus Rewards used to be the best cards for gas because you earn rebates at any station. The Discover Gas Card used to allow cardholders to earn 5% rebates on gasoline.

Then gas prices shot through the roof in 2007 and 2008. Card issuers began scaling back their rebates. The Discover Gas Card now caps the 5% rebate up to $100 in monthly gasoline spending (which many will exceed!). Other gasoline cards started to pay rebates on a per gallon basis!

Balance Transfer Deals - Another are where we have seen a dramatic decline in great deals is the 0% balance transfer credit card offers. Just two years ago, every issuer was offering 0% for 12 months. But since everybody was offering 0% for 12 months, it was not enough, so they started to put a cap on the balance transfer fee. But the competitive cycle continued. Everybody was doing that so one by one, there all offered 0% deals with no balance transfer fees.

But consumers got smart as well. They figured that since banks were willing to throw money at everyone, they might as well take up the deal and deposit the money at a high yielding online savings bank (back then, they paid 5% interest!). So borrow at 0%, invest at 5% became the talk of the town in the personal finance world!

The credit card issuers soon caught up with this. They started imposing balance transfer fees again, but still capped them. But they started raising the limits from $50 to $75 and even to $99. Then, sometime last year, they started to remove the caps altogether. I would not be surprised if very soon, 12 months 0% offers became a thing of the past.

Conclusions - The bottom line is that even before the credit card bill of rights, credit card rewards and offers have been declining. But I attribute that more to the fact that it was never profitable for the credit card companies because consumers took advantage of them. If for some reason we have to go back to the era of paying an annual fee for a credit card, then so be it. My opinion is that a long term relationship cannot be sustainable if someone is always benefiting at the expense of another.

This is a guest post written by Mr Credit Card from www.askmrcreditcard.com. His site reviews credit cards and if you are looking for the best credit card offers, then you may want to head over their.