We have become a nation dependent on credit and credit cards and our acceptance of this dependency is reinforced on a daily basis in media advertising. I particularly like the commercial that tells us something to the effect that ‘the world demands faster money’ which our brains translate to ‘the world requires us to use credit or debit cards everywhere we go or we will be a cog in the wheel of progress.’ Another successful advertising campaign shows people enjoying life, making credit card purchases for various items or activities and then telling us that the results of these ‘financed’ moments is “priceless.” Again, we are brainwashed into using the fulfillment and pleasure derived from these purchases as justification for charging beyond our means because, after all, we just can’t put a price on happiness!
So now that we have all bought into the necessity and joy of credit card spending, the credit card companies have us hooked. In fact, in 2005, consumers in the U.S. were hooked to the staggering total of $1.8 trillion in credit card spending. This industry can now do pretty much whatever it wants to us- and the truth is – it does! The average credit card late fee has risen 162% since 1995. And if you can even begin to understand all the fine print on your credit card contract, you will find a whole list of fees and penalties they can assess: over-the-limit fees, the universal default clause, cash advance fees, transaction fees for certain types of charges, and “trailing” or “residual” interest charges (where cardholders are charged interest on balances they’ve paid the previous month).…and on…and on. All of this prompted an investigation by The General Accountability Office (GAO), which is the investigative arm of Congress. Their report was released late last year and sited a whole list of concerns regarding the practices of this industry. Michigan Democrat Carl Levin was appalled after reviewing the report and said that consumers need a score card to keep track of all the credit card fees and penalties.
In spite of the findings in the GAO report, little is really happening to stop the consumer abuse by the credit card industry. It is interesting to note that in 2005, after huge pressure from the credit card industry, lawmakers passed legislation to make it more difficult for debtors to file bankruptcy to get out of credit card debt. But then in 2006, the credit card industry turned right around and sent out more than eight billion credit card solicitations - a 30% increase. Consumers need to wake up and realize that they are being fed “financial cocaine” and that no one, not even Congress, will protect them by taking on the big boys. It’s up to each and every consumer to fight back!
There are steps every consumer needs to take:
- Control credit card spending to no more than what you can truly afford to pay off at the end of the month. Carrying a balance month to month will cost you big time! Those “priceless” purchases could end up costing you twice what you originally paid for them in interest, fees, and penalties by the time they are paid off. Debt Consolidation and Refinancing are no longer attractive “quick fixes.” So if you already carry a substantial balance, then work out a plan to get yourself debt free. If you think you may be in serious debt ($10,000 or more), seek help now! Don’t let embarrassment, stigma, or the sense that negotiating your way out is not the moral way to get out of debt. The Credit Card Industry is one of the most profitable industries in the United States with annual earnings around $30 Billion. Citibank alone earns more profit than both Wal-Mart and Microsoft. You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. Also, read my blog dated September 29, 2006.
- Read the fine print of your credit card statement. If there are terms you don’t understand, then contact your credit card issuer and have them explain the terms in plain English. Read my blog dated October 13, 2006 so you understand all the Credit Card Gotcha’s.
- Don’t be afraid to try to negotiate better credit card terms, such as a lower interest rate. If you’re paying your bills on time, there is a better than 50% chance they’ll agree to a lower rate, especially if you can site another bank willing to give you a lower rate, so…
- Shop around for better terms and better rates.
- If you suspect abuses, don’t be afraid to report your bank or card issuer. Contact the Office of the Comptroller of the Currency: http://www.occ.treas.gov/. The credit card industry has more complaints filed against it than any other industry in the U.S.
I recommend you watch the video trailer at “In Debt We Trust.”
