| Do you know about credit cards and their dirty little | | | | and Delaware eliminated the cap on usury laws which |
| secrets? I make my living knowing about them and I | | | | is what constitutes the maximum allowable interest to |
| was unable to answer all the questions at a great quiz | | | | be charged. Have you ever noticed the return address |
| from the PBS Frontline program Secret History of The | | | | on your credit card statement? Chances are it is |
| Credit Card at Credit Card Quiz. Take the quiz and | | | | Delaware or South Dakota. Gee, I wonder why. |
| see how much you do or don't know about universal | | | | DEADBEATS and REVOLVERS - Deadbeat use to |
| default, and other credit card issues. Then read this | | | | mean someone not taking responsible action. This is |
| article for more dirty little secrets this great PBS | | | | not true in the upside down credit industry. In credit |
| special offered. Here are a few appetizers: | | | | card bill jargon, "Deadbeats" pay their balances off in |
| UNIVERSAL DEFAULT - did you know the credit card | | | | full every month. They are deadbeats because the |
| company can raise your interest rate if you are late on | | | | industry receives very little profit off of these |
| ANY payment? I don't mean late just to the credit | | | | responsible consumers. On the other hand, "Revolvers" |
| card but to ANYBODY! Be late on your phone bill, car, | | | | roll credit card balances over month to month and |
| house... ANYTHING. Or if in the eyes of a creditor you | | | | never pay in full. This is the ideal customer because of |
| simply have to much outstanding credit, all bets are off | | | | the profit generated. Then there are "Rate Surfers" or |
| regardless of whatever interest rate you signed up for. | | | | "Gamers" who shift usage between credit cards |
| The logic is simple. The industry believes it is within its | | | | based upon interest rates. |
| rights to protect its interest in a more risky unsecured | | | | FEES - Again quoting Frontline, "In 1996, the U.S. |
| loan venture. Therefore, it is not unreasonable to raise | | | | Supreme Court in Smiley vs. Citibank lifted the existing |
| rates if it has reason to think risk of being repaid has | | | | restrictions on late penalty fees. This means simply, |
| changed. And as a lender, the creditor has every right | | | | there is no limit on the amount a credit card company |
| to view your credit file any time it wants... all of your file | | | | can charge a cardholder for being even an hour late |
| and not just its own payment history. | | | | with a payment." But this has opened a Pandora's box |
| MINIMUM NOTICE CHANGES - If the above is not | | | | for not only late fees, but over the limit fees and bad |
| bad enough, consider the consumer with on time | | | | check fees as well. A lawyer who worked on the |
| payments every month on everything. No problem, | | | | Smiley case says he believes penalty fees which use |
| right? WRONG! Buried within the contract (that | | | | to be $5 or $10 could rise to $50 in another year. Now |
| contract law attorneys admit they have great difficulty | | | | the consumer not only must contend with a higher rate, |
| interpreting), is a clause that allows the company to | | | | but late fees as well. Additionally what if these fees |
| change your interest rate "at any time, for any reason, | | | | put them over the limit creating still another fee. It is a |
| as long as the holder is given 15 days' notice." That's | | | | never ending spiral towards bankruptcy. |
| right. They can change their mind AFTER you make a | | | | MINIMUM PAYMENT - Consumers use to be required |
| purchase at 6.5% (for example) and any former | | | | to pay 5% of the outstanding balance. But slick credit |
| agreements are null and void. How can a purchase | | | | card marketers suggested implementing a 2% required |
| price be changed after the sale? No other industry can | | | | minimum payment. This was advertised as consumer |
| do this but the credit card company. | | | | friendly with "easy low payments." The truth is, the |
| USURY OR NOT - According to Frontline, "There is no | | | | tactic allowed consumers to increase their debt |
| federal limit on the interest rate a credit card company | | | | because of the lower payment which in turn created |
| can charge." In fact an interest rate of 35% is not | | | | more profit through higher debt over a longer time |
| unheard of. This is because in the 1980s South Dakota | | | | period. |