Zero percent interest — till we jack it up the wazoo! No late fees — until you're late! Low, low monthly payments — so you can say in debt forever!
Ah, if only the credit card companies laid it on the line like that. But of course, why would they? They're making fistfulls of dough hiding their fees and penalties deeper than the peanuts in Cracker Jack.
How MUCH dough? In 2003, Americans paid almost $8 billion in credit card fees — quadruple what we paid in 1996. Hey, when being one hour late on your payment costs $34, it adds up fast! And so do the penalties for going over your credit limit.
Oh, you didn't know that when you go over your limit, your card is no longer automatically declined? Now it buys your item AND a $35 penalty AND a penalty rate: 30% from now on. Too bad you didn't read page 13, paragraph 4, section d. The card companies are fleecing Americans so efficiently, even the government is taking notes!
Er, notice.
A report last week by the General Accountability Office — that's Congress' investigative arm — concluded that the info provided by most card companies in fact exhibits "various weaknesses that reduced consumers' ability to use it and understand it."
Which makes the GAO sound like a credit card company itself. So here's how my friend James puts it:
"They are dirty and nasty."
He ought to know. He got socked with a couple of those late fees, making it even harder for him to pay off his balance. "All I was doing was paying the interest!" says the Harlem retiree. "It had to be about 25%."
And, frankly, 25% doesn't even sound that bad anymore, compared to the 30% rates — and higher — being generated by a new practice called "universal default."
Under universal default, already employed by roughly half of all the card companies, if you're late paying ANY bill - even (if it gets outsourced to a collections agency) your LIBRARY BILL — your credit card is allowed to jack up your interest rate as if you had paid ITS bill late.
The GAO report disapproved of this, too — or at least the fact that most consumers have no idea this could happen to them, thanks to the card companies' legalese.
In response, Edward Yingling, president of the American Bankers Association, was quoted as saying, "The disclosure system is not working well. It needs to be fixed."
Not working well? Oh please — the "disclosure system" is working exactly the way the companies want it to. It's perfect! It's so exquisitely misleading that we are now spending $90 billion a year in interest and penalty payments. That's $90 billion of our money with nothing to show for it except credit card company profits!
How hard would it be for a statement to say: "Here's your bill. Pay it PRONTO or we'll soak you dry. Go over your limit, we'll soak you dryer. Pay by phone, there's gonna be a fee. Pay by computer, we just imposed a new fee. Pay any OTHER bill late and..."
You get the idea. So does the GAO. Now let's hope Congress does, too, and forces the credit cards to let us in on their tricks. Or, even better: Stop using them!
But I'm open to a special introductory offer.
