Well, I assume you are honest person who would never behave in the way credit cards do. Would you be willing to lend people you own money under the same conditions as credit cards do: no collateral, no interest to those who pay balances in full , average credit card interest to those who obviously don’t have money and are obviously irresponsible (or they wouldn’t carry interest in the first place)? Think about it without emotions. What are the conditions under which you’d be willing to lend your own money? What kind of rewards in your mind would justify the risks?

Keep in mind that people who have money and don’t spend more that they can repay in full at the end of the month are those who are obviously good with money; those who cannot repay they are balances in full are those that a) overspend b) don’t have enough in savings to repay the debt. I.e. it’s high risk. Wouldn’t you want your rewards i.e. profit to justify this risk? Would you be interested to know if the person you are lending money to defaulted somewhere else? If this person suddenly became a riskier customer would you want to have higher rewards?

“I guess my question is, why would you want to do business with a company that is known to be fraudulent and who actively tries to extract money dishonestly from clients?”

You mean a company like your bank? All lending policies for Visa and Master Card branded cards are set by banks, not Visa or Master Card. Visa and Master Card get their profits entirely from merchants whether you use credit or debit. Interest and fees go to banks that issue these cards. The lending policies like the interest rate, universal default, double cycle billing, etc. for all Visa and Master Card branded cards are set by banks. Same banks that you deal with everyday for your deposits. So if you don’t want to do business with “these companies” then you should take your money from the bank and put it under the pillow. After all the banks use your deposits to lend money to others. This is why they can pay you interest. So you are indirectly profitting from loans and credit cards too – you lend your money to banks, banks lend your money to others, then pay you some of the profits back as interest.

“And the comment about using credit cards to invest in the market is the dumbest thing I’ve ever heard. There went all your credibility out the window.”
If this was what the poster above suggeste it would’ve indeed been stupid. However, I’ve not seen anything about investing in the market anywhere in this post. What people who play credit card arbitrage normally do is to put money in high yield FDIC insured saving account. This way they earn interest and have the money handy to repay the full balance at the moment’s notice.

“The online system for the Chase Credit card even has an option to automatically pay the minimum payment each due date. ”
It also has an option to automatically pay the full balance each due date.
I’d love Kevin to explain to me how one can get bitten if one uses this feature to pay the balance in full. Oh, and if credit card issuers are so crooked why they are even offering this option. Also, Kevin, since I have about 120K in liquid savings alone (cash/CDs) which is more than total credit limit on all credit cards combined, I sure am at risk… NOT.

BTW – I’ve used credit cards for over 25 years, have never carried a balance, and now have a paid off mortgage and savings too. Oh yes, I am sleeping with snakes and I am likely to get bitten. Yes, my net worth has fallen from 7 to 6 digits this year, but this has nothing to do with my using or not using credit cards. Oh, and guess what – I grew up in the Soviet Union. If I and especially my parents, who were 40-something when they came to the US with no English and no money, were able to figure out how to use credit cards without “getting bitten”, how come so many Americans who have no English problems can’t?

I also have a AmEx for my Costco purchases, Restaurants, and Gas. (Hey,.. 3-5% cash back isn’t too bad for purchases I’m already going to make). So far they’ve treated me very well. In fact, I totaled a rental car in Europe about 8 years ago that I had put on my AmEx. My insurance only wanted to cover half for some stupid reason, but thankfully AmEx covered the other half. As far as I’m concerned, AmEx is a Godsend.

Capital One reduced their minimum payment from 2% of the outstanding balance to 1%. It seems they were trying to help people who were having a hard time paying, even though this benefits them in the long run with interest charges, it would allow someone to avoid late payment fees if they were in hard financial times.

Citi, who I have 2 cards with (AT&T Universal and a Citi) changed their balance transfer fee’s BACK from 3% with no maximum, to 3% with a maximum of $99. This benefited me on my most recent balance transfer, and is in fact the only reason why I took the deal with that card. I had written to them to complain about this policy change and indicate that I will not use the cards for balance transfers or anything else because of that change.

Aside from the ones Kevin listed (Amex and Bank of America) anyone have credit card companies they avoid?

Sorry to hear about your situation; keep working hard – it pays off.

Unfortunately, this isn’t an article about isolated incidents. It’s pretty much across-the-board behavior. The larger the company (Amex, Bank America, etc.) the worse the behavior it seems.

Just keep a watchful eye and get them paid off as fast as possible!

@Kevin – Thanks for opening my eyes to something I was not aware of before although it would have been nice to know which cards had employed these tactics AND what original source you were quoting there in the green? Maybe suggesting a ban of the known offenders would do some good. The tactics the card companies used when business was booming to make it so easy to get in over your head are just as despicable as the ones you cite here as they try to recoup their losses. To use your financial planner analogy, you wouldn’t stop going to any financial planner ever just because one steered you into a bad investment once? This is more of a buyer beware post… except without enough detail to be truly useful.

Unfortunately for me I DO fall under the playing with snakes category right now so I will be watching out for these behaviors in my credit card issuers.

I am working towards being debt free and make use of the many 0% balance transfer offers we get from existing cards to help our payments go farther to reduce our debt. Currently we have only 3 cards with balances. They each have offers that expire in March, May and August of next year and only 1 of them will not be paid off before the deal expires. If they change the terms then we will change our strategy.

I don’t think anyone that pays off their card each month is in bondage to anyone. They could just as easily live without a credit card if the issuer made the terms undesirable.

If you look back, you’ll see that you are putting words in my mouth. I never said you were a moron.

It was you that originally attacked my article saying that it was “Full of sound and fury, signifying nothing”. And you based that opinion on the fact that it doesn’t apply to you because you’re an expert credit card user.

That’s great if the article doesn’t apply to you, but don’t say that my content signifies nothing when I know for a fact that it has the potential to help a lot of people who aren’t expert credit card users.

The CC companies might not find a way to screw you over, but that doesn’t mean they aren’t trying. I guess my question is, why would you want to do business with a company that is known to be fraudulent and who actively tries to extract money dishonestly from clients?

Again, my article wasn’t attacking you. You read it, it didn’t apply to you, and you still chose to leave a comment attacking the article. That’s why I took offense. If it doesn’t apply to you, it doesn’t mean it’s irrelevant to others, so just move along.

Kevin, what you actually said was, “don’t start whining when something goes wrong.” When, not if. (Also, it’s card, not cards.) That is, you seem to think it’s inevitable that I *will* get in trouble, that my credit card company *will* find a way to screw me over even though I don’t carry a balance, never have, and never plan to. And yet, you haven’t even tried to explain how they might do that. You just resort to insults.

Look, I agree with you that it’s a raw deal for consumers that CC companies can change your interest rate whenever they want, and retroactively apply it to the whole balance. You are absolutely right that carrying a balance that you cannot pay off immediately leaves you very vulnerable to this sort of thing. The correct conclusion to draw, then, is “Don’t carry a balance, and if you cannot trust yourself not to carry a balance, don’t have a credit card.” Not “Credit cards are EEEEEEEEEEEEVIL and if you disagree with me you’re a moron.”

I apologize. I don’t appreciate it when the Johanna types try to tell people that my content isn’t worth anything because it doesn’t apply to them. She’s one of those people that “have it all figured out”. I didn’t tell her that the sky was falling, I told her not to whine if she ever gets in trouble with her credit cards.

Credit card companies have proven that they want to exist to take advantage of people. So when you use their cards, you are directly putting yourself at risk. If they were honest, that wouldn’t be the case, but they aren’t honest.

That’s like saying your financial planner has been arrested for fraud but using his services wisely will prevent you from getting in trouble. I’ve not just been bit, I’ve been bit by the fraudulent side of the credit industry, meaning that I did not do anything wrong. I was one of the victims of “universal default” policies where my card went from 14.99% to 32.99% overnight for no good reason. And then because that one card raised your rate, all the others follow suit. So you have debt that was financed at 14% originally jump to 32.99% overnight. Have you ever tried to pay off a 32.99% credit card? I’ve also had them claim to not receive a payment and I’ve fallen victim to their rotating due date game where they try to bill you on different days of the month to get you off guard and hope to be able to charge a late fee.

So yes, I like to warn people. And when the Johanna types come along and pretend like what I’m saying is meaningless because they’re doing just great it really frustrates me. Look at the statistics, credit card use isn’t helping a lot of people “do great” – in fact, it’s doing the opposite. It’s destroying lives and destroying families. I wouldn’t even associate myself with a credit card company for that reason alone (their lack of integrity).

So I apologize, Rob. I’ll let my content speak for itself. If people want to listen to Johanna and RISK getting themselves in trouble, that’s fine. The sky isn’t falling, but neither is national consumer debt. How long until the credit industry implodes and they all need bailouts? Credit Card use has impact beyond individual finances; it’s a global risk.