Here at the Weekend Pundit Manse we've managed to kill off our credit card debt, getting rid of a couple of them and dropping both the credit limit and interest rate on our remaining general purpose card (Visa). We'll still be shopping around for a lower rate credit card, something with a less than 12% interest rate (and not an introductory rate). We know they're out there. We've seen them from time to time. We've also kept our Home Depot card. But the others are gone.
But it appears that when it comes to credit card debt that we are the exception rather than the rule. It isn't necessarily because we are thriftier or in better control of our spending than many other Americans. Rather it's because we've been lucky with our choices of which credit cards we had. For many others, credit cards are darn near impossible to get rid of because the lending institutions make it very difficult to get out from under. Why? Because they want you to be in debt to them. That's how they make their money.
ABC News covered some of the less savory practices credit card issuers use to suck you in and keep you as a customer. But relief may be on the way.
In a move that could help consumers, Congress will hold hearings today to discuss the tricky fees and the baffling penalties that credit card companies use to keep their consumers paying off high interest rates and finance charges month after month.
The hearings have banks and credit card companies howling in protest.
Take the example of Derek Lee, who paid off one of his credit cards because he wanted to cancel it. Six months later, he still hasn't been able to because the card company keeps charging him mysterious fees that keep the account open.
Not that lenders/credit card issuers don't have a right to set the terms and conditions, but they should make them public and understandable. The ABC News report illustrated that many lenders don't disclose all of the conditions, fees, and obligations to their customers. Some also make it difficult to cancel a card even after the balance has been paid off.
One thing that my dear wife Deb taught me: when dealing with a credit card company, get all changes – especially closing out your account after paying off the balance – confirmed in writing. Then if there is any argument or unexpected charges you'll have written proof from the credit card company itself that your account is indeed closed and that they can charge no more fees or “penalties”.
As a side note, do any of you out there know what credit card companies call customers that pay off their balances every month? Deadbeats. That's a status to which the Weekend Pundit household aspires.