An Answer to Conservative Critics that Call for More Personal Responsibilty for Individual Consumer Debt Increases

Some of this is old news but it is what the congressional committees are investigating at this moment, i.e., Tricks and Traps to squeeze every last dime out of the credit card customer.

There is a term one finds in the real estate industry that, if ignored, can get one sued very quickly. It is, "Operating from a position of superior knowledge". If a professional Realtor takes advantage of a less knowledgeable client by using their superior knowledge to steer or fail to advise a client in order to benefit from a transaction, then they are operating from a position of superior knowledge and are subject to criminal penalities imposed by the legal system.

While I recognize that there are many critics that are upset when there is no mention of "Personal Responsibility" for the users of credit cards while the banking industry is vilified by articles like this one, I also think one can use the same thought process when making a comparison to the cigarette companies. It was personal choice and not the fault of the cigarette manufacturers to choose to succumb to constant marketing, half truths and lies about nicotine addiction and become a smoker; usually at an early age before one was capable of making truly mature choices (Please see credit card application booths on Spring Break beaches).

So, to me the issue is moral accountability. If it is somehow morally reprehensible or morally deficient to purchase any goods or services but then choose not to pay on a credit card at usury rates with exorbitant Tricks and Traps fees, there is also a corporate moral obligation for the credit card companies as there was with the tobacco companies, to show some accountability, restraint and self regulation as well.

The three main reasons for 92% of bankruptcy in America is job lay off, divorce and medical emergency. There is no statistical proof that the percentage of impulse buying has increased in forty years and bank profits have tripled since 1970 even adjusting for inflation after the introduction of credit cards.

So, how about the banks and credit card companies do some self regulating of their own, if they think the consumer should as well, and cease inundating every mail box in America with six billion "pre-approval" offers as they did last year.

The fastest growing segment of the population with credit card debt are seniors and the fastest growing group within this category are seniors seventy five years of age and older. Why? Health care costs. Just what do we expect people of that age group to do when they simply don't have the income to pay for adequate health care? A recent study found that 29% of families caring credit card debt attributed medical expenses as a major contributing factor.

Again, personal responsibility is certainly something that should be addressed in this discussion, but if that is true, and I do believe it is, then there is corporate moral accountability as well. I personally am indignant and angry that the individual, operating from a position of inferior knowledge to the banking, credit card and collections industry is expected to show personal responsibility by choosing inadequate health care or no health care over using their credit card which they are struggling to pay.

If the individual is expected to show personal responsibility for incurring debt to buy groceries for their families if the husband or wife has been laid off or if there is no child support payment in the mail, then we, as a nation, should expect the same corporate accountability and moral compass to govern the actions of the issuers of credit cards rather than the truly indefensible and morally bankrupt tactics used to pad their profits even more from the wallets of those least able to afford it for which the banking industry currently labels as acceptable common business practices.

The following touches on just some of the tactics used by the banking industry, but certainly not all of them and really, not the worst.

Credit Card Tricks and Tactics: What You Should Know

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Credit cards are regarded with high suspicion by many people. However, some of these same people use multiple credit cards! If you can't avoid using credit cards (perhaps due to necessity), it's wise to at least watch out for the shady tactics some credit companies employ.

The bottom line is this: Consumers are not properly informed. Rising credit card fees and interest rates, coupled with barely understandable credit card disclosure statements and agreements, make for customers who are easily lured into the jaws of debt.

Some stats to give you an overview: according to this 2004 article, there are more than 641 million credit cards in circulation, and this "plastic money" accounts for an estimated $1.5 trillion of consumer spending in the USA. Alarmingly, penalty fees (e.g. for late payment) nearly tripled from $13 in 1995 to as much as $34 in 2005, as stated in this Consumer Affairs report.

The List of Dread

Watch out for these tricks and tactics, as falling into one might be enough to ruin your personal finances. Some of these might not apply to your credit card company, but as a rule, the big boys of the credit card industry employ a slew of these.

• Incomprehensible, unreadable fine print -- Even lawyers have a tough time deciphering credit cardholder agreements, because companies have spent huge bucks on making sure they're hard to understand. The true risks and fees are all there alright, but covered up in alien text, they're effectively hidden from you.
• Encouraging you to pay late -- This includes mailing your statement as close to the due date as possible, suddenly changing the due date (e.g. from the 25th of each month to the 23rd), setting the due date on a Sunday or holiday, setting a specific time of day when your payment must arrive (and a minute later, you're already considered late!), and even not mailing out statements at all.
• $29 late fees -- Is this a little bit high or what?
• Balance transfer fees -- You might be enticed to transfer debt from an existing card to one with a low interest rate. Beware, as there's usually a high transaction fee (for example, 5%).
• Over-limit fees -- With every month that you're over the credit limit, companies will charge you as much as $39 in over-limit fees. Ah, what happened to the time when they'll just deny any card transaction that puts you over the limit?
• Jacking up your interest rate -- Some companies do this when you carry a big balance (under the guise that you're a "high risk") or when you pay your statements late.
• Low introductory rates that quickly shoot up the stars -- Many people fall for this, but don't realize that once the shortintroductory period is over, they'll suffer rates as high as 24%.
• Not-using-your-card-enough charge -- If you won't use their card for several months (and thus deprive them of earnings), they'll still earn from your account, no matter what, through an inactivity fee.
• 15 days' notice to change the contract -- The terms and conditions of your agreement with the credit card company can be changed at any time, for any reason with 15 days' notice. Who changes the terms? The company, of course. Is this legal? Unfortunately, yes. What can they change? Your interest rate, above all things.
• Minimum payments -- This one might sound good, but when you're only required to pay 2% of your total balance each month, your run the risk of paying off for a long, long time, even passing off your debt to your kids and grandkids.
• Monitoring your credit report -- Yes, some companies check your overall credit history. If they see you've got huge debts and/or late payments with other credit companies, they can slap you an interest rate hike.
• Preying on young consumers -- College students have long been fodder for credit card solicitations, but now companies are reaching out to high school students, who are not only financially dependent most of the time, but are also psychologically and logically unprepared.
• Preying on poor consumers -- Companies do this because know they'll be able to reap all sorts of fees and penalties from these "sweet spots". And if these poor chaps have just emerged from bankruptcy, companies know these customers won't be able to declare bankruptcy for another six years.
• Closure fees -- Because they if you're parting with the credit companies, they'll at least want to milk your wallet one last time.
• Issuing multiple low-limit cards instead of increasing your limit -- This raises the odds of you going over your credit limit, and thus paying more penalties. This article describes one such awful, real life case.
• Anti-customer 'customer service' -- We're guessing that the sooner you give up on the frustrating customer service call, the companies' chances of getting away with their elaborate traps and tricks are better.

What Can You Do?

By reading this article, you've taken an important action to protect yourself and your finances. At least by now, you're aware of these nasty credit card pitfalls. Here are a few more pieces of advice:

• Read the fine print -- The credit card's terms and conditions might look convoluted (not to mention miniscule), but this is the first and most important step. Know what you're getting into. If your brain can't handle the stress of reading such hieroglyphical fine print, ask a close relative/friend of yours to read it for you.
• Opt out from junk mail and telemarketing calls -- Save yourself the temptation of pre-approved credit card offers and other too-good-to-be-true things.
• Check your credit report and score often -- As mentioned earlier, some companies check on your credit report, looking for an excuse to charge you more. What they know, you should also know, right?
• Read up on the latest news and federal policies relating to credit cards
• Check your monthly statements -- It won't do any good for your debt if improper charges and penalties make it to your bill, and you actually pay for them in ignorance.
• Avoid 'debt elimination' scams -- Case in point can be found here. Always remember that there are no magic quick fixes to credit card debt. It takes time and discipline, among other things.
• Don't max out your credit cards -- A simple tip that isn't observed by a lot of cardholders.
• If you have been wronged, report it to the proper authorities
• Don't accept new credit cards, especially from the same company -- Instead, ask for a higher credit limit on the card you already have.
• Call up your company and ask for lower rates -- Sounds difficult? Surprisingly not. You are the customer, after all, and they want/need your money. Be polite but firm when talking to the representative (or supervisor, if you work your way up the chain). Tell them of great offers from other creditors (and be sure to know these offers well, don't lie, don't just bluff!), and if they aren't budging, tell them you'll take your money elsewhere.
• Know your consumer rights -- A good place to start would be the Federal Trade Commission website.

Of course, the best tip we can give you is to use your credit cards sparingly!

This was found at Article Interest:
http://www.interest.org/article/interest-basic-information/credit-card-tricks-and-tactics-what-you-should-know.html