Another issue with credit cards and the credit card companies is that they are trying to find attractive ways of packaging the cards to consumers. This comes handy when affiliations to sports group make people choose certain credit cards. People love displaying their utmost feelings, whether they like something or not, they want to show it. There is no way you can have a credit card adorning the face of a rival team and since credit card companies realize how this is important to you, there are sports credit cards specifically for what you support.

 Even in credit cards, people are passionate about their teams, to a point of choosing the kind of cards with logos or other images printed clearly on the card of choice. Every time one uses the card, the support of the teams will be evident. You can find sports credit cards specifically for Major League Baseball, National Hockey League or even individual sports such as Knicks or the New York Yankees.

They are logos on credit cards specifically to make you be at par and in support of your team, offered free. You hardly need to tell people where your sports loyalty belongs. Just remember there is virtually a credit card for any sport there is. You can also earn extra points and wonderful rewards for using the sports credit cards you have decided on.

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Washington Post recently ran some required reading for all credit card users entitled “Five myths about America’s credit card debt.” Don’t be deceived by the somewhat banal title – this piece is actually very illuminating and broaches some topics not usually discussed in the day-to-day blogosphere.

The last myth is perhaps the most interesting and topical. Here it is:

“The CARD Act finally protects consumers against the credit card industry’s most abusive practices.”
The answer to this is a surprising “yes and no.” According to the Post, there is some overdue reigning in of some of the most egregious credit card practices, but some restrictions and protections are left out and some measures were simply too little too late.

This next paragraph is old news to anyone who’s been taken for a ride by the credit card companies in the past few months, but its still satisfying to see the mainstream media confirm it again:

On the negative side, Congress stipulated a nine-month phase-in period for these regulations. For millions of Americans, especially those suffering from employment and income interruptions, this is too late. If you’re in debt today, this bill doesn’t help you. Companies already have jacked up interest rates, sharply reduced lines of credit, increased service fees and diluted the value of loyalty reward programs. These trends have brought consumer credit scores down, triggering higher borrowing costs and greater difficulty finding work.

So, we’ve taken two steps forward when we really need a giant leap in credit reform. The “silver lining” of this relatively disappointing bill, according to Washington Post, is that more consumers are completely disillusioned with credit cards and are “leaving home without it.” But there are still some of us who haven’t quite weaned ourselves off of revolving credit and for us, there is still a considerable gap between federal regulation and lender practices that personal responsibility can’t quite fill. And to believe that the credit card industry will ever stop dreaming up new tricks and traps to maneuver around the new credit card legislation is just plain naive.

American consumers should start demanding a sequel to the Credit CARD Act now. In fact, a trilogy is probably in order (third time’s a charm, right?). The CARD Act was a small victory, but the industry and the lawmakers need to know that we as consumers still aren’t satisfied. We are still plagued by predatory lending practices, violated by debt collectors who call everyday and harass our family members and neighbors, subject to the whimsy of credit card interest rates and fees and treated like second class citizens in favor of profits and corporations.

I read the comments and the blogs everyday and I see a lot of people who are still angry and with good reason. But in order to affect lasting change – and get it right this time – we need to focus our efforts and rage in a way that the powers that be (that’s government and the lenders themselves) hear us. So, if you have been wronged, make sure you formally lodge your complaint through one of the following channels:

1. Submit an FTC Complaint
The FTC is supposed to protect you, but before they can take action, they need to know what needs to be fixed. The best way for them to get this information is for consumers to bring them their complaints. After a certain issue or complaint about a specific company or industry reaches a certain critical mass, the gears start turning. Send them your complaints about credit card companies using the FTC Complaint Assistant.

2. Sign a Petition
The actual civic affect that signing petitions has is hard to measure. But doing so online is so quick and easy that it certainly wouldn’t hurt. Here are a few causes you can rally behind:

3. Write Your Congressman
Many of us are quick to blame the president for unfavorable laws and national policy, but its your congressman who may actually listen to you. Find out who your congressman is and tell them what’s on your mind. Track them on OpenCongress.org and see how they are voting. If anything they do is against the best interests of their constituents, let them know. It’s incredibly easy – it takes about as much time as it would to fill out one of those Facebook surveys.

Click here to write your representative.

Click here to write your senator.

4. Tell Your Story
As I mentioned before, I’m witnessing a lot of unrest in the blogosphere, which is great. Blog about credit card deception, leave comments telling your story and share other people’s stories on Twitter and Facebook. Most Americans know that the credit industry is broken, but there are still many who don’t know just how bad it is. Spread the word as far and wide as you can. If you have a local news channel, send them an email. Send a letter to the editor of your local paper. Share your story at ResponsibleLending.org. The world needs to know.

5. Complain to Customer Support
Remember – you, as a cardholder, are a customer. And remember when the customer was always right? Letting companies know you’re dissatisfied isn’t completely a lost cause and if you don’t, they may just assume that everything is hunky dory. Most companies have some type of metric for measuring overall customer satisfaction, and anything you can do to get those numbers as realistic as possible is in the best interests of the company and your fellow cardholders. Send them an email, fill out their contact form or call the number on the back of your card whenever you’re unhappy and let someone know. Who knows, they might even fix your problem.

6. Hit the Streets
If you live in a metropolitan area or near the headquarters of a credit card company, then you might consider organizing a protest. It’s a lot of work – a lot more work than signing a petition – but it has a far greater impact. Read up on how to organize a protest, educate yourself on your rights and get out there and be heard.

Have you had any success lodging complaints with or about credit card companies? Leave us a comment and tell us what worked for you and what wasn’t worth your time.

Image by Paolo Tarantini

Related posts:Top 10 Worst Credit Card PracticesHow to use The Fair Debt Collection Practices Act to your advantageThe Business of Credit Cards – Part II

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Credit cards are far from one size fits all and the big names in lending know it. That’s why they’ve devised each credit card to target a specific demographic and income level. Whether it’s so you can get the most rewards out of the credit card or it’s so the credit card companies can get the most profit from you is debatable. Either way, it’s interesting to see the vast differences between luxury credit cards and plastic for the poor, unemployed and possibly even bankrupt. Check out some of these outliers on either side of the spectrum.



Luxury Credit Cards for Big Wigs and High Rollers
The American Express Centurion (aka the Black AMEX)
Centurion, literally, means an officer in the Roman army. In other words, one of the most powerful individuals amidst one of the most powerful empires in history. And that’s exactly the message that the Black AMEX means to convey. This invite only luxury credit card is the engimatic credit card of the rich and famous with numerous high bars to keep the riffraff out, including a ,500 annual fee. To even get on the radar, you have to spend 0,000 annually on an American Express Platinum Card, another exclusive invite only card that requires you to first rack up a big bill on your American Express Gold or American Express Green card. There are approximately 30,000 to 100,000 people out there who’ve jumped through enough golden hoops to wield this monocle-dropping piece of plastic including Simon Cowell, Beyonce Knowles, Kanye West, Jerry Seinfeld and Lindsay Lohan.

Visa Black Card
Barclay’s Bank came up with this “me too” card in early 2009 and are trying to build a mystique and prestige comparable to the AMEX Black Card by stating that the card is available only to 1% of the U.S. population. However, with an annual fee of 5 and the ability to apply online, the Visa Black Card is clearly the poor man’s luxury credit card. Still, Visa goes to great lengths to make you feel like a sultan even if you’re nothing but a lowly princeling by offering 24/7 “world class concierge” service, meaning they’ll do everything for you from coaching you on business meeting protocol in Japan to booking you a tee time or hunting down a rare, out-of-print book.

Citi Chairman Card
The Citi Chairman Card was designed to pamper C-level executives of global moneymakers at the dizzyingly high standard of luxury that they are accustomed to everywhere else they go. Originally catered towards clients of Smith Barney, the Citi Chairman card offers 24/7 concierge service, sweet deals on private chartered jets and ample insurance for pretty much any little thing that can go wrong at home or abroad, all for a 0 annual fee.

Credit Cards for the Poor
Visa ReliaCard
“Just because someone doesn’t have any money doesn’t mean you can’t make money off of them” was probably the rationale behind U.S. Bank’s ReliaCard, a debit card designed for the unemployed.  For those out of work but still covered by unemployment insurance, you can choose to have your paychecks from Uncle Sam loaded directly onto your Visa debit card so you can use it just like any other piece of plastic. It’s actually kind of a win-win situation, especially for those who don’t have bank accounts: you avoid the exorbitant fees of seedy check cashing joints, the government saves on paper and the card issuer gets interchange fees.

Bank of America Secured Visa
A secured credit card is about the best route you can go when rebuilding your credit card after a bankruptcy or credit rating misstep. But they are becoming harder and harder to come by. That’s because they aren’t hugely profitable for credit card issuers since there is little to no risk of defaulting, overdrawing or incurring a late fee. For example, the Bank of America Secured Visa’s credit line is commensurate with the amount of collateral you put up and it can be as low as 0. The card only has a annual fee and is really more like a credit card with training wheels for people looking to rebuild their credit.

AccountNow from Visa or MasterCard

The Visa AccountNow and Mastercard AccountNow are kind of like a payday loan joint and a prepaid credit card all rolled up into one. You can have your paycheck deposited directly into your AccountNow card and then use it like any other Visa or Mastercard. You can also wire cash to your card through MoneyGram or Western Union (making it great for Nigerian scammers, I guess). But the really whiz bang thing about the AccountNow card is the ability to get a little bitty loan from time to time. You can do so by requesting and advance by phone or online and then the money is put onto  your card. You have to borrow in increments and your charged an upfront advance fee of 12.5%. After that, iAdvance automatically takes a cut of your direct deposit paycheck to pay off your debt.

Of course, you should really, really crunch some numbers before deciding if this card is right for you. In fact, iAdvances own website says: “You should carefully consider the costs of iAdvance. Alternative forms of short-term credit exist that might be less expensive and more advantageous to you as the borrower.”

Know of any outrageous luxury credit cards or credit cards geared towards low income consumers? Tell us about them in the comments.

image by infrogmation

Related posts:Dreaming Big: The Luxury Credit CardsThe Business of Credit Cards – Part IA Primer: Secured Credit Cards

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Nine months later, the Credit CARD Act of 2009 is finally going into full effect. We’ve seen banks slowly react to the new laws by working the loopholes, rather than complying ahead of time, but come Monday February 22, 2010, all the provisions of the CARD Act will be law. Here are a few of the key changes to the law that matter to consumers:

Credit Card Disclosures
Credit card issuers must now give you 45 days notice before making changes to your rates or fees. This includes:

Increased rates will only be applied to new charges. For example, if you have ,000 in debt at 13.99% and the credit card company raises  your interest rate to 17,99%, you’ll still pay 13.99%  on the original ,000. Subsequent balance accrued will be financed at 17.99%.

Cardholders must opt-in for over-the-limit protection. Otherwise, your card will simply be denied if you are maxed out. If you do opt-in for over-the-limit protection, your credit card company can only fee you once per billing cycle for going over-the-limit.

Credit card fees are capped at 25% of the initial credit limit. This only applies to annual feels, application fees, etc. and does not include penalties.

Consumers under 21 must have a co-signer or show proof that they can make payments.


With all that being said, it’s important to note that the CARD Act doesn’t cover everything. Be sure you’re aware of what’s not in the CARD Act. After February 22, credit card companies will still be able to do the following:

What’s Not Covered by the CARD Act
Credit card companies can raise your interest rate after 12 months without cause. All they need to do is notify you, pursuant to the above rules. This will apply to your future purchases.

There is no cap on interest rates. This is something that consumer advocates fought hard for but didn’t get into the bill. Credit card companies can still charge you sky high rates if they want (and if its commercially viable). But of course, you can always close your account if this happens.

New fees are fair game. The CARD Act made the mistake of specifying the fees that it was restricting. The new kids on the block – stuff like dormancy fees, paper statement fees and foreign transaction fees – are still on the table. Read more about new credit card tricks in the post-CARD Act era.

Your credit limit can still be reduced. Issuers can still cut down on your rates or even close your account without the 45 day notice. Be sure to call and ask why if this happens, since it can be hell on your credit rating.

Variable rates still suck. While efforts have been made to protect your fixed rate APR from getting jacked up, variable rate credit cards, by nature, can still go up and up for essentially no reason.

How do you feel about the new changes thanks to the CARD Act? Do you feel safe as a credit consumer? Or do you feel like it’s too little, too late? Sound off in the comments.

Image: SEIU International

Related posts:Watch Your Back: 8 Up and Coming Credit Card Fee-Creep TricksCredit card bill on the way… (We hope!)New Rules for February: College Students Won’t Be Receiving Any Valentines from Credit Card Companies in 2010

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This month’s Wired has a great article entitled The Future of Money: It’s Flexible, Frictionless and (Almost) Free which focuses on how technology is helping cut institutional interlopers out of the equation when moving money around. As we’ve discussed at length here at MYC, venturing through the realm of credit card transactions is a bit like walking through a seedy neighborhood at night – if you’re not careful, someone along the way’s going to steal your money. Whether it’s a wire transfer fee, interchange fee, credit card processing fees or one of  243 different fees that MasterCard charges, there are numerous ways for your money to simply disappear on its journey from your wallet to the merchant. And the more middlemen there are along the way, the more opportunities there are for someone to take a cut. It’s like passing a pack of gum across the classroom to a friend – the more hands it changes through, the more likely someone is going to help themselves to a stick so that by the time the pack gets back to you, there’s barely half a piece of gum left for yourself.

It’s an immensely inefficient and inconvenient system that’s starting to make less and less sense as our abilities to connect directly with one another expand. The aforementioned Wired article focuses on one such gamechanger we are all familiar with: Paypal, which was founded on the libertarian principles of Peter Thiel, who hoped it would help make it “nearly impossible for corrupt governments to steal wealth from their people” by giving citizens more direct control over their currencies. In a sense, cutting out the middleman (or at least some of them).

Of course, as we all know, PayPal hasn’t quite achieved that. Rather, it’s become more like a middleman itself, albeit a much friendlier one to individuals and small vendors and merchants on the web. Instead of being at the mercy of the restrictive (and expensive) terms of Big Plastic (Visa, Mastercard, American Express, Discover), PayPal handles the messy business of  credit card processing for a fee that is considerably less than what most brick-and-mortar merchants charge per swipe. PayPal, thus far, has been less of a replacement for the credit card industry and more like a user-friendly front end.

What’s more promising, however, are the new technologies that are emerging that make it even easier for individuals to pay and merchants to take payments. Wired pulled out five of these “new ways to pay” that may significantly eat into the credit card market share and we thought it’d be interesting to take a closer look. Check it out:

Twitpay
Twitpay is a bit hard to understand until you try it out. It works via Twitter and is powered by PayPal. Essentially, to send someone money, you just reply to them with the word Twitpay in your tweet along with the amount you owe them and an optional memo. For example, you can do:

@jackbusch Twitpay for keeping it realz

That’s it. Twitpay searches for all tweets mentioning Twitpay, so it automatically grabs your payment and puts it on your tab. So, now, when you visit Twitpay.me, it shows that you owe @jackbusch bucks. In order to settle up, you log in to PayPal and complete the transaction like normal.

True, this is essentially a social media friendly front-end for PayPal. But what makes Twitpay useful and unique is that it keeps a running total of what you owe. So, if you sent @jackbusch , but then @jackbusch owed you later on before you settled, you would really only have to transact at the end of the day. In a way, Twitpay has created a digital currency.  And most importantly, it’s free to use.

Twitpay in action

Note: This is all, of course, completely on the honors system. You don’t have to settle up after you’ve promised to pay someone. But since your profile is public (you can see the transaction I just did for this example at twitpay.me/masteryourcard), everyone will know that you’re a deadbeat.

Zong
Zong lets you bill people via cell phone number rather than asking them to enter their credit card information. And in a world where more people are putting their credit cards on ice or simply don’t qualify for a credit card, this might be handy indeed. When customers buy using Zong, the amount they owe goes directly on to their mobile phone bill (kind of like when you text Haiti to 90999 to send to Red Cross). Zong won’t BS you though – the service is expensive, since phone companies typically take a 25% to 50% cut from the merchant. But Zong reportedly converts 10 times more often than websites that accept only credit cards and as models like this gain traction, it’s bound to get better and more competitive.

Square
Square (as in “square up” and not affiliated with the makers of Final Fantasy) was co-founded by Jack Dorsey, one of the masterminds behind Twitter, and markets a device that turns your iPhone into a credit card reader. Customers can even use the touchscreen to leave their signature and get instant receipts via text or email. Transactions are processed through Square, which saves small vendors (for example, artists at a craft sh0w) from jumping through the hoops and investing in the equipment required to work directly with credit card companies. Square also has marketing potential, as it keeps track of frequent visitors so they can be offered perks and rewards (though this may raise Big Brother issues) and social cred for donating $content.01 of each transaction to the cause or charity of your choosing.

GetGiving
GetGiving takes the iTunes approach to making it worthwhile to receive small payments without getting killed by fees. GetGiving focuses on charities seeking “microdonations” and helps organizations cut down on fees by sending them one monthly lump sum  instead of forcing them to cough up a $content.30 to .00 transaction fee per donation (which, if people are only giving at a time, can be an absolute downer). Like Twitpay, GetGiving is powered by PayPal.

Hub Culture
Hub Culture aims to make collaborating with international vendors, consultants, teams and creatives seamless and cost effective. One of the ways they do this is offering virtual currency called “ven.” Ven can be used to buy, sell and exchange services and goods with other Hub Culture members (of which there are 20,000 and growing). So, if you wanted to pay a web designer in London in ven, he could then take that ven and pay his SEO tech in India, all without worrying about those nasty foreign transaction fees and currency exchange hassles. Ven is now extending beyond the network and is available to anyone with an email address, meaning that, if you wanted to, you could pay for just about anything with ven – whether it’s a limo reservation, a case of vegan beef jerky or a bounty on your arch nemesis’ head.

Implications
The move to virtual currency and alternate modes of payment is certainly interesting. Still, one issue to remember is that the one important reason that these services are so seamless and successful is that they are lightly regulated (if at all). But when you think about the concept – inventing currencies for thousands of end users to exchange internationally – services like these are bound to become the subject of at least some government oversight. For now, it seems unnecessary. These entrepreneurial innovators need little incentive to provide value and accountability to consumers other than the fact that if they don’t deliver, they’ll fail. Fast-forward 50 years, though, when some of these industries may have grown and become as entrenched and sprawling as today’s credit card companies, and that might be a different story.

What do you think? Will virtual currency, social media and micropayments save us all from the usury and nickel-and-diming of the current financial structure? Or is it all hype? Let us know in the comments.

Image from House of Sims

Related posts:Credit Card Debt After DeathCredit Card Subsidies: Three Ways the Minority is Paying for the MajorityRevolutionCard: The Death of the Signature?

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Undue stress because of credit card debts can be quite nerve-racking. Vicious bill collectors, threatening letters, uncouth creditors, and incessant harassment in every possible way make the situation from bad to worse. Individuals facing such dire situations should seek the help of professional debt experts. However, looking for legitimate credit debt relief services can be an overwhelming exercise. Google “debt help” and there will be thousands of search results. So, how to decide which strategy will benefit you the most?  And who should one trust with finances and other financial talks?Have no clue? Call us for debt assistanceConsumers may get perplexed looking at the variety of alternatives they have.  And in such a crowd, a sizeable fraction will be crooks after your money. Hence, prudence is mandatory. However, there are a many reputed, trustworthy debt companies out there that one can approach for assistance. In addition, there are several types of debt relief programs to help you cope with your fiscal issues.1.     Debt management plans:  In this scenario, the debtor is required to make 100 percent repayment of the entire debt amount. What debt companies do is that they provide counseling, and debt organizing strategies. Debtors who have a steady source of income, and are seeking some credit counseling can opt for this plan.2.     Debt negotiation services: Companies offer their services as mediators. They consult with the creditors, and negotiate with them to bring down the loan amount to nearly half the due balance. Credit card debt settlement is the most sought after method of dealing with debts in America. Debt consolidations wherein all debts are pooled into one is quite popular because the creditors get most of their principal amount back, debtors can get rid of iniquitous interests and penalties, and repay the debt with ease.3.     Debt elimination or termination: 100 percent elimination of your debts is impossible, even through Chapter 7 bankruptcy. Most companies making such claims have to be fraudulent. Plain debt management may not be feasible for all. It makes more sense when one faces short-term credit crunch. So, debt settlement programs seem to be the most practical solution to the problems of most debtors. Companies providing debt settlement services also work on a profit basis. What do they do? Once a consumer signs up for their services, they bargain with the client’s creditors, and reduce the outstanding debt substantially. In turn, they charge a percent of the due amount as their fees. The debtor has to make a single bill consolidation amount to the servicer, who distributes it to the multiple creditors. It may blemish your credit a little. In any case, it is better than bankruptcy.Act now! Apply for our debt settlement programs!

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If you haven’t seen the movie Maxed Out, go watch it now (you can stream it on Netflix). Not to say that there’s anything completely revelatory about it – we all know that the credit card industry is predatory and heartless by nature. But Maxed Out highlights how dire the situation really is. And the issue doesn’t fall squarely on lack of legislation and or poor personal restraint – it’s about the whole package: how credit is marketed, how credit card companies profit, how credit card companies treat their customers and the political attitudes towards the credit industry.

One of the most apt characterizations of the credit-industrial complex was by Harvard Professor Liz Warren (among others) who likened consumer lending institutions to drug dealers. Warren says:

“One of the most popular customers of credit card companies right now [are] people who have been through bankruptcy. The reason, as one of the vice presidents of Mastercard once explained to me, is that they they have two things about them: One, that they can’t file for bankruptcy again and the second is that they have a taste for credit. And I said, ‘What does that mean?’ He said ‘Well, they’re willing to make minimum monthly payments forever. And that’s where we make our money.’”

That’s not customer loyalty. That’s codependency.

As we all know, credit card debt is one of the toughest vices to kick. And according to the movie, the average American household spends ,305 on credit card interest payments every year.  That’s one costly habit.

When did you get hooked on credit?
Maxed Out goes on to discuss how credit cards reel customers in. As we’ve discussed at length here at MYC, one of the oldest tricks in the book is to target young college students who just turned 18, are cash-strapped and relatively financially illiterate.  They setup booths on campus (or, as of February 2010, just a little bit off campus) and offer free T-shirts, free sandwiches or some other throwaway trinket. After that, they start mailing them “convenience checks,” cash advances and other costly incentives that encourage them to spend, spend, spend – whether it’s on books, beer or room and board. In the movie, we meet the mother of one college student who came home with ,000 of debt after the first semester. This is debt that follows students long after they’ve graduated, if they do it all. In fact, Duck9.com found that “financial pressure” was the number one reason for students dropping out of college, trumping both academic disqualification, health problems and poor social fit.

Who are the pushers?
The debt collectors interviewed in Maxed Out don’t hesitate to discuss the mind games they play with debtors. According to one pair of high octane collectors:

“I got you on the phone, I was best friends with you, I found out everyrthing I could about you and that gives me power. Information is power. ”

“You attack pride fear integrity, a person’s honor… I like to make the analogy that you’re like this pirate on this  pirate ship and you got that person and you’re walking them out on the plank and you walk ‘em out as far as you can out on that plank without pushing them off and  then you bring them back to get what you want from them.”

Of course, it’s easy to categorize the payday loan sharks and the debt collectors who harass your family members and neighbors over your debt as a different class of the lending industry, the seedyunderbelly of an otherwise ethical, conscientious industry. But as the film points out, major banks, like Wells Fargo and Bank of America, fund or outright own the largest cash checking companies. That’s because they want to keep you in debt. They want to keep you out on that plank.

How does your credit addiction affect your life?
As with other addictions, such as alcoholism and drug abuse, it’s difficult to distinguish when a pattern of behavior has crossed the line between overexuberence and full-blown addiction. The easiest test is to look at how credit affects your life. Ask yourself these questions:

Has your credit card debt been affecting your personal relationships?

Tension in long-term relationships is often either caused by or manifested in clashes over finances. “Money problems” are often cited as the number one reason for divorce.

What was your last fight about with your spouse or significant other? Do you keep any secrets from them? If so, are they about money? In a credit-obsessed country where over half of marriages end in divorce, could there be a connection?

Have you compromised your goals or career for the sake of paying off debt?

We’re all familiar with the depressing notion of a “crack whore.” It’s someone so addicted to crack cocaine that they sell their body, their dignity and their health just to feed their addiction. Maybe that’s an overblown analogy to draw. But maybe it’s not. Ask yourself this:

As pointed out in the Wisebread article I linked above, many people object to the idea that they are shackled by credit card debt. The author of the piece says:

Those making free choices aren’t slaves, they said, even if their poor choices result in a hard life. There’s some truth to that. But there’s also some truth to the notion that our system makes it easy–almost automatic–for people to trap themselves.

It’s undeniable that most roads lead to debt. It’s nearly impossible to get an education, a car and a home without going thousands of dollars into  debt (unless you’re wealthy to begin with). In order to finance these important steps in life, you do have to play with fire to a certain degree. And it’s all too easy to get burned.

How do you get out of debt?

How does one get out of debt? It’s not easy. Hardly anyone can do it by themselves. Debt therapy, financial self help and personal finance advice has become a bona fide industry in itself (Suze Ormann, David Ramsey, the vast universe of personal finance and debt management blogs with millions of readers worldwide). You are constantly hearing terms like debt counseling, debt rehabilitation, debt consolidation. And then, of course, there’s bankruptcy – the government-sponsored halfway house between debt and a supposedly clean slate (though your credit rating will be besmirched for years to come). Debt, like addiction, cannot be broken without intervention.

And then, as sadly illustrated by Maxed Out, there are some that do get pushed all the way off that plank by debt. There are the ones that feel so overwhelmed that they choose to disappear – to abandon their families and drive away, on the run from their own insurmountable debt. More tragically, some choose to end their own lives.

Living in harmony with credit and debt
Like drugs and alcohol, people react differently to credit. Some are naturally averse to it (”I never touch the stuff”), some carry on healthy relationships with credit and others become fatally addicted to it, falling into a vicious cycle of mutual abuse. Every single advertisement for a malt liquor or beer implores you to “enjoy responsibly.” Meanwhile, all credit card companies can talk about is all the “rewards” you’ll receive for overspending.

Something fundamental has to change about the way our society coexists with credit and debt. An arrangement where credit and debt serve to help us, rather than merely profit from us, is hard to imagine. But the first step to overcoming any harmful addiction is admitting that you have a problem. Films like Maxed Out signify that we as a society are reaching a breaking point and we are finally realizing that something has to change. How will that change happen? Will someone or something intervene? Or will we breakdown, fall apart or self-destruct?

Are you addicted to credit card debt? Do you feel victimized by the credit card industry? Or do you feel that it’s just a matter of will power and personal responsibility? Let us know your thoughts in the comments.

Photo remixed from ad-vantage and stopnlook.

Related posts:Lessons learned from the documentary Maxed OutCalling Bulls*t on the Credit IndustryCredit Card Debt After Death

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February 2010 is almost upon us, which means the CARD Act is about to kick in to full effect. Of course, the credit card companies haven’t been resting on their laurels, waiting for the government to take away their moneymakers. They’ve been thinking up creative ways to sneak in extra fees and charges without you knowing. With a little vigilance, you can catch some of these – and even prevent them. Read on to find out how credit card companies are getting more of your money in 2010.

Paper Statements
All “Go Green” sentiments aside, it’s in the credit card companies best interests to forgo paper statements because it costs them in postage and supplies. To recoup their losses on printing statements when you can get them online, some companies are now tacking on “paper statement” surcharges of around a month. Not astronomical, but it can certainly add up – especially when you consider that they used to be free. Watch your statement carefully for any new charges, or check out this list of companies now charging for paper billing compiled by The Consumerist. Or better yet, go paperless now just in case.

If you’re uncomfortable with leaving your financial details in the cloud, you might want to save a digital copy locally or print it off on your own. Personally, I use CutePDF to “print” off virtual copies and save them on my hard drive. Of course, this poses a greater security risk – especially if you have a laptop, since any punk in a coffee shop can nab it and have full access to your financial details. But saving some record locally – whether you keep it on an external hard drive that stays at home or in an encrypted volume – is necessary, since you may lose access to your online statements after you close your account.

Annual Fees
Annual fees are becoming the norm and it seems like just a matter of time before the free credit card is a thing of the past. This tactic is sometimes selectively imposed by credit card companies. Some consumers suspect that only cardholders who continually pay off their balance and never pay any interest are targeted for annual fees, though this hasn’t been confirmed yet. Other credit card issuers are applying annual fees to all of their customers.

Watch your mailbox for any nondescript mailings from your credit card company as these will often contain your new credit card terms.  Also be on the lookout for any emails notifying you that you have new messages that can only be viewed when you login to your account (a pain, I know, but that’s the idea).

Inactivity Fees
Another way that credit card companies are making money from customers who don’t fall into the vicious cycle of paying off finance charges and late fees is by imposing an “inactivity fee.” Bloomberg reported on this a few months ago, This may have already existed in your contract but hasn’t applied since you set a card aside due to changing terms. Pull up your contract and sort through it to make sure that you aren’t liable to pay a fee after 12 months or so of inactivity. Or, just to be safe, order a pizza or a CD with your credit card, pay it off immediately, and then put it back in the drawer for a spell.

Secondary Cards, Replacement Cards
Credit card companies have also started charging for second cards (i.e. authorized users) and replacement cards. This isn’t really avoidable – when you need a new card, you need a new card. But if you’re shopping around for a new credit card, you may want to look for one that allows free secondary cards for family members.

Temporarily Waived Fees
Another way that fees and subscription charges can sneak up on you is when they are “waived” when you sign up but kick in after 12 months. For example, many credit card contracts have you agree to annual fees when you first sign up but you won’t notice because it’s waived for the first year. You’ll see these advertised as “$content annual fee*” with “for the first year” in tiny print. Other cards come with a baked-in annual fee that gets waived after you pass a certain spending threshold or if you apply a certain amount of reward points. If your spending behavior has changed, you may find yourself blindsided by dormant fees.

Cap Removals, Upped Balance Transfer Fees and Rates
Balance transfers are notoriously tricky to navigate. On the one hand, they really can help you save hundreds of dollars in the long run. But on the other hand, they can sometimes hide big fees. Typically, balance transfer fees are calculated from a percentage of the balance you are transferring. To make these more consumer friendly, many credit card companies had a cap, so for example, you wouldn’t pay any more than 0. But some credit card companies are doing away with those caps, which means you can potentially pay much, much more, which might even negate the benefit of transferring your balance.

Raised Minimum Finance Charge
You’ve probably already heard the horror stories about consumers having their minimum finance charge raised. Oftentimes, these people are already on the ropes and could only afford to pay the bare minimum (a problem in itself). For some, when that minimum payment gets raised, it can force people to miss their payments, incurring late fees.

“Pick a Rate” Variable Rates
With the new legislation putting the kibosh on arbitrarily fiddling with fixed rates, many of us saw our cards being switched to variable rates. The formula they disclose for calculating your interest rate has a sheen of accountability – it’s usually pegged to the prime rate (i.e. + 13.99% of prime rate). But many credit card companies add a devious little caveat to that which says that the rate can depend on the “highest prime rate within 90 days.” Credit card companies can then pick and choose which prime rate to base their calculation off of. So, if there’s a spike in April, you’ll be paying that high rate until July. And if on July 2nd, there’s another spike, you’re back up at the top again. With a three month span of prime rate figures to choose from, there’s plenty of leeway for credit card companies to give you a high rate.

There’s  no real hedge against this tactic except to always assume the worst when signing on the dotted line. Remember that we’re just coming off a recession – so the interest rates are bound to go up from here. Keep that in mind when you apply for a variable rate credit card.

Witnessed a sneaky credit card fee tactic? Let us know about it in the comments.

Image adapted from Marxchivist

Related posts:8 Sneaky Credit Card Company Tricks20 Common Credit Card Fees to Watch Out For!Watch out for the traps

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