I'm a deadbeat. At least, that's how my credit card holders see me. And while being a deadbeat sounds like a bad thing, it's actually something millions of Americans hope, wish and even pray they were.
A deadbeat, in credit card company lingo, is a person who fully pays off their credit card debt every month...thus making no or very little money for the credit card company. But there are frighteningly very few of us deadbeats, which is why the credit card industry is raking in record profits every year.
Some 115 million Americans, using 641 million credit cards, are in plastic purgatory. As The Consumers Union reports on its website, Americans are ringing up an average of $1.8 trillion of goods on their credit cards per year. Nearly 60 percent of them carry a constant balance on their bills...which averages out to about a $9,000 balance per card carrying family.
And if you still don't think Americans are in hock up to their eyeballs in credit card debt - sit down for this startling statistic: credit card holders in this country are currently carrying $2.4 trillion (with a "T") of nonmortgage debt.
It's obvious that millions of us use plastic money without a second thought. But very few of us, including me, know how the credit card industry works. It turns out that probably what you suspect is true - there's a lot of smoke, mirrors and tricks which many believe border on criminal. That's why, after a series of recent hearings on Capitol Hill, Congress is on the verge of of enacting new reforms and oversights on the credit card industry.
During those hearings in March, which you can hear about in this NPR All Things Considered, Congress heard some frightening facts and stories not only from people being crushed by credit card debt - but also from experts and industry watchdogs who revealed some of the tricks the credit card industry has been using to hide fees and manipulate other charges.
To anyone out there who has a credit card, it's no secret that fees have been increasing. A recent report by The Government Accounting Office (GAO) found that "annual finance charges" have tripled over the past ten years. But that's not how these companies are raking in the dough. They do it in a much more underhanded way.
I learned the dirty details by listening to this Talk of the Nation interview on NPR with one of the people who testified before Congress, Harvard Professor Elizabeth Warren. Warren tells how credit card companies bury consumer information in such legal mumbo-jumbo small print, that even her graduating class of lawyers can't figure it out. Which means average card holders like you and me don't stand a chance when questioning a bill or confirming the interest rate we've been promised.
Which is another way they've got you. Have you ever tried to question, change or get a refund from a credit card company? Good luck - because the voice mail systems most credit card companies use are actually designed to be soooo frustrating that you'll give up - leaving some undeserved money in the pockets of those credit card companies.
Also - have you ever really checked to see where exactly you are sending your payment in those pre-addressed envelopes? Some credit card companies make sure your payment goes to a post office box in a small town located waaaaaay across the country from you - so that your payment is guaranteed to be late by the time it actually reaches the credit card comptroller's office. Cha-Ching! You're paying a late fee.
However, "even consumers who always pay on time cannot avoid the price abuses," Michael Donovan, an attorney at the National Consumer Law Center told USA Today. This is because of a common credit card industry practice called universal default, which allows them to raise your card's interest rate automatically, if you're late on payments elsewhere like on another credit card - or a phone, car or house payment.
It's possible that when Congress acts on credit card industry oversight, universal default will disappear. But while all this focus on the industry has raised some awareness among credit card holders that things aren't always as they seem - it ultimately is up to us to educate ourselves and be more vigilant about our use of plastic.
There are loads of great places on the web to get caught up. One way is to watch - on line - this award winning PBS Frontline program called "the Secret History of the Credit Card." In this report by Lowell Bergman, the producer who helped blow the whistle on the tobacco industry, you'll learn "the techniques used by the industry to earn record profits and get consumers to take on more debt."
You can listen to tips on navigating the plastic maze by listening to Curtis Arnold, the founder of CardRatings.com, on this All Things Considered interview. And you can always go to any number of consumer websites and search for information on credit cards.
My suggestion? Get a pair of scissors and a handful of your credit cards and start cutting. It's easier to track, slow or even stop plastic money from flying out of your account if you're just using fewer cards.
Or you can pray - which according to this Sunday's NYTimes, an increasing number of people coping with crushing credit card debt are doing.
But I wouldn't count on any miracles. I think the "higher-up's" have their hands full with other issues right now.
now you been maxing out my card
give me bad credit,buying gifts with my own ends
haven't paid the first bill
but you steady heading to the mall
going on shopping sprees
peprpetrating to your friends that you be ballin' 'bout
you can pay my bills, bills, bills
can you pay my telephone bills
can you pay my automo'bills
then maybe we can chill
I don't think you do
so you and me are through
Do you have a credit card nightmare story to tell...or a tip on dealing with card companies? Click below on "Comments" and join the conversation.