Tuesday, August 14, 2007

Legal Con Man Game? Credit Card Rigging

--to Card Holders' Disadvantage
--How the credit card Industry has changed and what this means for you. Evolution to revolution?

Magalia, California--In 1982 2-cycle billing was virtually unknown in the credit card business. "Today it's rampant," says author of 55 business books, Jack Payne. There's more. Much more.

Twenty five years ago fees for cash advances and balance transfers were 2% or less, with a maximum fee of $10. Today fees are 4% and up, with no maximum whatsoever.

In 1982 late fees were seldom over $5. Today they average $35. And, postmarks are now meaningless. The card holder is charged a late fee for as little as 10-minute late arrival at the credit card office. The aim of the credit card companies to build up the "late fee" segment of their business is focused. Last year this segment brought in $1.5 billion, and was their third largest revenue stream.

In 1982 the customer was not crowded on his / her first cycle billing payment. A 25-day grace period was commonplace. Now 20 days seems to be standard. And, this includes travel time,from the statement date to the customer's date of receipt. The card holder is being ever-pushed, it appears, closer and closer to the late payment fee "edge."

In 1982 over-limit charges were unheard of. Why? Simply because card credit limits were enforced. Excessive draw, no pay. No way. That was policy. Now card companies will permit the customer to overdraw. One catch.. in exchange for this "convenience" the card holder is charged another small fee. (If this "convenience" is offered, why even have a card limit? one might ask.)

Payne, author of the legal thriller, Six Hours Past Thursday, has a "take" on the present-day credit card market:

"With more than half its customer-base on life support--that huge market the 'Bad Credit' people are always appealing to-- the credit card industry should be wary indeed," Payne says. "They are walking on thin ice. Too many 'consolidate your bills' people are out there right now, to complicate the problems of the card issuers and processors--the very problems that the card vendors, themselves, created. Thus,, in this evolutionary climate there are a couple of things you must remember: Stay away from multiple credit cards and rollover debt usage. If you seek credit card diagnosis and help, like the health patient, you want a doctor with a stethoscope, not one with a catheter. And, in the meantime, It is only prudent to stay away from all of the tricks the credit card issuers use to 'endear' you to them.

"Evolution in the credit card market is in full swing," Payne adds, "Will this lead to revolution? If so, don't let yourself get sucked up in it.."


Rezbi said...

It's all about control, isn't it?

The debt industry is designed to control people, not only make them money.

They do it to us with loans and credit cards. They also keep tight reigns on third world countries in the same way.

As long as we owe them, we belong to them.


Tyson said...

Credit cards today seem to be less favorable. May be because they are given to about anybody. Somehow banks need to lessen the risks. There has been a lot of talking about credit card disadvantages .You have to be really smart to be able to see all the hidden pitfalls. And I guess, most Americans are not...