Here’s a little reality check as we head into the shopping season….
I recently watched a VERY interesting and timely piece by PBS’ Frontline called “The History of the Credit Card”. In this piece Frontline, explores the rise of American credit card usage and the impact of this phenomenon on our country. The information is powerful and it’s quite frighten how we’ve been lead down the path to debt.
Here’s just a few things I learned:
- that the average American household carries $8,000 in credit card debit
- that other credit cards can raise your interest rates SIGNIFICANTLY for being late on another credit card, even if it’s from a completely different company.
-that your credit cards can raise your interests rate SIGNIFICANTLY for being late on your cell phone bill, mortgage, car note, etc- even if it’s just once.
- that credit card companies not only have date deadlines but hour deadlines as well. For example, your payment due date is not just May 15th, but May 15th at 4pm. So if you’re payment arrives on May 15th at 4:30pm, it may be considered late.
-that credit card companies make a lot of money, in some cases the majority of their money, off of late fees, overdraft fees, etc and there’s no limit to how much they can charge for these fees. Fees are expected to go up to $50 within the next year
- there no legal limit to how much credit card companies can charge for interest rates.
- Apparently, credit card companies divide us into three categories
Deadbeats- the folks who pay off their credit cards in full each month. They HATE this group, hence the name “deadbeats”
Gamers- shift usage between credit cards based upon interest rates.
Revolvers- folks who never pay off their balances and “revolve” it month after month. This is the group they make the dough off of.
As a former revolver, I’m angered at the amount of money I allowed credit card companies to make off of me. I could have bought one or two houses off the interest I’ve paid. I’m also sadden to see how they continue to target college students, using the same tacit that the smoking industry used (still uses) to target teens.
Frontline developed a wonderful site to complement and add to the information presented in the segment (you also watch the segments online). The credit quiz is particularly interesting. Watch the Series Online