Generous Credit Card Offers Won't Last

Looking for a new business credit card? This is your time. As we reported recently, credit card issuers have rediscovered their generous side (somebody put in a call to Hell -- maybe it's frozen over). AmEx, Capital One, and Chase are all issuing more credit cards and offering attractive perks such as 0 percent interest, sign-up bonuses, and 5 percent cash back on purchases.

It's like 2004 all over again. But if you want to take advantage, move fast, because, as they say, these offers won't last.

Banks are already tightening the screws on their debit cards. Wells Fargo is the latest to bring down the curtain on the rewards program attached to its debit card. It once gave customers a point for every $4 spent. It canceled that program for new customers earlier in the year and in August announced it would end it for existing customers as well.

Other banks, including JPMorgan Chase and SunTrust, eliminated all of their debit rewards programs back in March.

Pay to Pay

Wells Fargo and Chase are not only ending their debit card rewards programs, they're now making people pay to use the cards. Wells Fargo recently said it will charge a $3 monthly fee in Georgia, Nevada, New Mexico, Oregon, and Washington to all customers who use their debit cards to make purchases. Since the end of last year JPMorgan Chase has been charging a $3 fee to its northern Wisconsin customers who make purchases with their debit cards. And just last week Bank of America announced it would charge customers a $5 monthly fee for debit-card purchases.

So what's going on here? Why are some banks being generous while others are turning the vise? The difference isn't so much among banks as it is between credit cards and debit cards.

Banks are squeezing their debit card users because the cards are very popular and they're an easy place to make back revenue that banks lost when the Federal Reserve capped the fees banks can charge merchants when customers use their debit cards. "We made this decision due to new regulations that limit the amount of money merchants pay financial institutions for processing debit card transactions," a Wells Fargo spokesperson said.

Banks are being generous with credit cards because in the past few years consumers cut way back on their credit card use, and that dented banks' bottom lines. So recently banks have loosened their approval standards and increased perks to lure back credit card spenders and boost revenue. Credit card issuance in the first half of 2011 was at a three-year high.

Pick a Card (Now)

But banks' beneficence won't last. Their generous offers were crafted when customers held the leverage -- when banks needed new revenue and the economy seemed to be turning up. Both of those factors have since reversed. The economy is going south again. And U.S. consumers are slapping the plastic with abandon. They racked up a massive $18.4 billion in credit card debt in the second quarter of 2011, 66 percent more than in the same quarter a year ago.

This means two forces are acting on credit card issuers to tighten their offers: Their revenue is heading up (so attractive perks aren't necessary anymore) and the economy is heading down (so banks will need to limit risk).

In other words, the chance of banks' generous card offers continuing: 0 percent.

Follow Tim and Tom on Twitter @timntom.