Today is the “official” kickoff to the Great Credit Card Debate between myself and Madison from My Dollar Plan even though we both fired some opening shots yesterday. Madison tells me she is working on “25 Reasons to Love Credit Cards” and I have to say I am surprised she came up with that many. Then again, she is a self-confessed credit card junkie… with 89 (!!!) credit cards. No, that’s not a typo, but it is a little over 3 credit cards per reason.
So I will start off the debate on this side by listing all my reasons I hate credit cards…well actually credit card companies. The credit cards themselves are just rectangles of plastic with a magnetic strip. It’s the credit card companies that are out to separate you from your money! And here are the ways they do it:
- The “Move the Due Date” Game: I’ve mentioned this one before because American Express tried to catch me with it over the summer. Long story short - they mailed the statement out at the same time every month, but each month moved the due date forward by two days. This shortened the amount of time we had to get the check in the mail (either by writing it out or via billpay) and have it received and processed by them before the cutoff. Another variation of this trips people up when they switch from paper billing to online billing, as Lynnae from BeingFrugal.net posted yesterday. If you read through the comments on her post, a common theme emerges: “That happened to me!” as reader after reader recounts their story and it isn’t just Citibank or American Express who do it.
- Double-Cycle Interest Billing: Here’s another one that American Express so kindly introduced me to! (Can y’all tell I really don’t like them too well?) This is where they go back TWO months on the balance to figure up interest owed…per month! So that means every single month you have a balance, you get charged TWICE for interest on it. It also means that when you go to pay them off, the balance rises up again like a zombie from one of the “Living Dead” movies.
- Rate-Jacking They can jack your interest rate up at any time and for any reason. Really…they can! Read the fine print on your credit card user agreement. It could something as ridiculous as the manager saw a black cat cross his path on the way into work and decided to raise every cardholder’s interest rate. I’ll have to dig for a link, but I believe Capital One did this over the summer, sending out a letter to all cardholders saying interest rates were being raised but they had to call in to opt out of the rate increase.
- Bait-and-Switch My mom was just complaining about this one over the summer. She signed up for a new credit card at 0% interest…and they sent her one with 8.9% interest. Mom was pretty steamed, and said she would call them up and actually give them another chance to change it to 0% and if they didn’t she would close the account without ever using it.
- Universal Default This one is the most insidious…when you sign up for a credit card, you give the credit card company permission to pull your credit report…and if they see ANYTHING on it that they don’t like, they can raise your interest rate up to the maximum! I’ve heard of maximum rates being as high as 32.99% or even 35.99%! And the kicker is: the information on your credit report might be inaccurate, but the interest rate will stick until you can clear it up with all three credit bureaus.
- Making “Mistakes” Madison herself has experience with this. Yes, she got it fixed…but it took time and hassle. Credit card customer “service” representatives are not known for their ability to get things fixed in a quick manner, nor are they known for being effective with these fixes. Ask Lynnae about that one. And I have the word mistakes in quotes because sometimes these oopses just seem too convenient, and if the customer isn’t watching the billing statement like a hawk then they go uncorrected. Don’t you ever wonder how much money these credit card companies make on their “mistakes”?
Most of the reasons Madison lists for loving credit cards, I can acheive with a debit card…and I don’t have to be constantly vigiliant about dealing with the credit card companies. Dave Ramsey compares the credit card companies to snakes, which I think is a little unfair to my innocuous little ball pythons. I instead liken them to “hot” (venomous) snakes: credit card companies are harmful to the consumer by nature, and can be extremely dangerous even to people who know what they are doing! If I can’t convince Madison to give up her credit cards (and I sincerely doubt I will) I can at least inform her (and everyone else) of the financial hazards involved with handling them.
More to follow as the “Great Credit Card Debate” heats up…