Site (and TV segment) I Like: Frontline’s Secret History of the Credit Card

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.

Target.com

– 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

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Comments

  1. laura says

    thank you for posting this! i’m a new college student and have been thinking of applying for a credit card. this is really helpful!

  2. TBF says

    No prob Laura-
    I can tell you that having credit cards as a college student is how I got into big trouble. On the other hand, you do need a credit card to start to build a credit history- which is VERY important. My advice is to head frontline’s site and read and watch everything on their credit card series BEFORE applying for one. Also create a list of what you can use the credit card for (not Kate Spade bags but for plane tickets homes or emergencies, etc.) and wrap it around your credit card or put a sticker across it with a saying- so every time you’re tempted to used it, you’re forced to read the post it.

  3. Suzie says

    Thank You! Thank You! This needs to be talked about. As a college student in serious debt, This info has strenghthened my resolve to get things started on becoming a deadbeat:)

  4. TBF says

    Hey Julie-

    Unfortunately, I wouldn’t consider travelling an emergency expense to put on your credit cards. I’m not saying to not live life and travel, but it all comes back to you eventually. I used my cards for traveling (as well as clothes, lots of clothes)- I went to Europe (several times), Africa (three times), India, and the carribean all before the age of 24. While I have fond memories, the hell of trying to pay that all back has not been fun at all.

    You need a credit card to travel- but the best way to do it, is to save up your dough, so you can pay it off when you get home. I can tell you from being on both sides, that it’s nothing like coming back from a vacation and NOT having a big credit card bill.

    If you want to travel but don’t have to money- I would suggest either cutting out things (hello cable?), taking out a small loan from your bank- which usually has a fixed interest rate of below 10%, do what I do and start a money market fund that takes out a set amount of money each month and puts it into our travel fund. We’ve saved enough to go to Brazil or Costa Rica in Mar.

    Now as a student, there’s lots of study abroad programs and grants that will pay you to travel and learn about the world. Sometimes, you can use your student loans to go on this programs- which is a lot “cheaper” money than a credit card. The best way to travel is on someone elses dimes- especially now that the dollar is in tubes.

  5. Julie says

    I used to be a deadbeat but now I’m a revolver. I got my first credit card in college too but only used it once a month to charge gum on (just to make my cards look like their in use) I promised myself to never go into credit card debt. Fast-forward 6 years. I’ve rethought things and decided that if I am going to be in debt its going to be for something worthwhile. And whats more worthwhile than… TRAVELING! I am thousands in debt now but its worth it. I can consider myself a well travelled person.

  6. TBF says

    My advice
    1. Take a deep breath
    2. Cut up all your credit cards AND debit cards
    3. Stop spending.
    4. Ask for help. If you can, call a family member, friend, etc to ask for help- even if it’s just letting you live with them for a while
    5. start looking for a higher paying job or a side gig. Now is the perfect time cause many stores are hiring for the holiday season
    6. Call your credit card companies, explain the situation (you might have to go to a manager) and get on a special payment plan (they all have them). DO NO TAKE NO FOR AN ANSWER
    7. Sell the stuff you bought. Everything that you can sell, sell. I had like 2 St. John knit suits, but I didn’t have enough for rent. I sold them on ebay and made enough money for 2 MONTHS rent.
    8. Pay all your bills electronically- that way they’re out of your bank account before you can spend it. I found this to be particularly effective in reducing expenditures.
    9.Create a special spending account (shopping, etc) and have a set amount, even if it’s $20 a paycheck taken out of your main account and transfered to your spending account. This is what you can spend. Have a debit card ONLY for this account and cut up the one from you main account.
    10. Get rid of the stupid stuff- cable, internet (use the library), gas, car (if you can) eating out, expensive travel, etc.  For some reason we’ve bought into this idea that these things are necessary for us to live. You don’t NEED cable. You don’t NEED internet access and if your work requires it ask them if they will pay for it.

  7. D says

    I got my first credit card when I first started college.  I got many more after that.  Now, I’m in HUGE debt.  It’s so bad that creditors would call often, I’m not able to make my payments on time, and ALL of my cards are maxed out!  It’s really stressful!  Any advice or words of wisdom?

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