Credit Cards are Even More Risky Today

Credit Cards are Even More Risky Today

Dear Bob

You have warned about credit card deals in the past.  What are some examples of what to look out for?

Consumers sign up for credit cards not knowing how bad of a contract that was just signed. They read the terms and conditions and think the details are reasonable. What most consumers don’t know is that the real details of the agreement aren’t found in the terms and conditions. They are found in the card member agreement which credit card companies send out way after the fact.

The credit card companies lure you in using free interest, plane tickets, reward programs, etc.  I think the most deceptive program is found with the Citi-Simplicity Card.

No more late fees and no more annual fees. Who wouldn’t like a no more fee benefit? Probably the person who tends to be late.

So, if you signed up for this card you saw some advantages to that benefit. Now let’s look at the card member agreement for that card.

Default. We may require immediate payment of your total Account balance, to the extent allowed by law, if any of the following occurs: (there was a list – however, just look at #1)

  1. You don’t pay at least the Minimum Payment Due by the due date.

We may close or suspend your Account if any of the events listed above occur, or for any reason, or for no reason. We may do this at any time, without notifying you, as allowed by law. 

If we close or suspend your Account, or if you close your Account, you must pay us all amounts you owe on the Account, even if they post to your Account after it’s closed or suspended.

So, you take advantage of the no late fee benefit, you don’t get a late payment. Yet, you could be considered in default, they close the account, they demand the balance get paid, and the best part…. they put you in collections and make you pay all the legal fees. Yes, that is in the agreement as well. Will it happen? They would probably allow a few late payments to slide. However, at some point you look like a risk. Just know, they have full control over you through that contract.

The politicians passed the Card Act back in May 2009 to curb credit card abuse. Apparently credit card companies have found a way around the law. I studied that law and those consumer contracts for my book Deceptive Money. I can assure you that today’s credit card agreements are no different than the agreements prior to 2009 that the politicians are trying to protect you from.

So back to the question…. What do you look for?  To my knowledge even the most credit friendly credit unions have the same language. Thus, abuse consumer contracts are just part of borrowing money from the credit card industry. There is nothing to look for. They all appear to be horrible and abusive contracts.

Photo Credit: Cafe Credit via Flickr, under the Creative Commons License

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