Credit Card Debt in the U.S.: An Ill-Fated Love Affair

By Brian Wolfman

Today's Washington Post contains a major article by Kathleen Day, entitled "A Highly Charged Relationship," about Americans' love for credit cards, but their vehement dislike for some of the credit card companies' practices -- practices hidden in the fine print until they spring into action.  As Day puts it, "Call it a love affair with a dark side."  Consumer complaints to federal banking regulators are about credit card companies more often than anything else.  The third paragraph of the article gives you a sense of what the article is about:

The avalanche of gripes generally boils down to objections about a half-dozen practices, according to congressional staff and consumer groups. The complaints mostly center on what consumers see as unfairly high interest rates and penalty fees; confusing policies that constantly change, almost always in the lender's favor; and near-insurmountable hurdles to getting help when a consumer falls into trouble or when a company makes a billing mistake.

After the main article, the Post includes a series of vignettes -- under the title "Mad About Credit Card Companies" -- featuring real consumers who felt victimized by various credit card practices.  Read about "over limit" fees and penalties; interest charges on the whole debt even when part of it has been paid; flat-out company billing errors (in the case discussed, Capital One harassed a dad mourning the death of a son who had left a debt of $217 -- Capital One erroneously insisted that the debt was more than 6 times greater); refusal to work with credit counselors who are trying to help the card holder; "workout plans" that don't reduce the consumer's debt; and "due dates" on days when it is literally or effectively impossible to make payment (here, the consumer paid in person at the bank on Saturday, in advance of the Sunday due date -- a date on which it was impossible to pay -- but since Saturday payments are not credited until the next business day, the consumer got hit with a late charge).

Comments

[Steve "The Debt Reduction Man" B]

One thing you forgot to mention is the dreaded Universal Default Clause this will allow your creditors to raise your rate even if you were never late with them. But if you were late on another credit card or open line of credit. It is the most unscrupulous practice that gets people just swamped.

[Brian]

Excellent point, Steve.

[JayJ]

My name is Joe and I can"t tell how many people get screwed over daily by the credit card companys.I have been working with this company who has helped 1000's of people to gain control of there debt.Credit card companys will always tell you that they will not work with debt settlers because they want you to pay all of the intrest, over limit, and late fee's. I am almost out of debt thanks to Mr. Sellers. If anyone needs help just check them out for yourself at uscaonline.com

[John Gliha]

Settlement is just another bank creditor scheme to steal more money from unsuspecting consumers. They charge an outrageous 15% of your total debt. They don't tell you that a growing number of creditors such as Citibank and Discover won't even accept a settlement offer. They also don't tell you that the unpaid balances become taxable as imputed income. Then IF you complete the settlement program, you have no cash left, no credit, suffer through thousands of collection calls and in the end, your net worth is worse than when you began.

j.gliha
www.johngliha.com
Blowing the Whistle on Credit Card Debt

[tv bracket]

Government need to strictly regulate this credit card companies. Their good performance and also naughty tricks can hurt the consumers might affect the economy. I heard senators have started observing them. Let's hope they could come up with a better law to guard these companies as it is difficult for me not to love using credit cards.

[Jennie]

The credit card companies only look out for one thing, themselves. IF it is not in their best interest they are not interested. What we as consumers need to learn is to think the same way. If it is not in our best interest then do not accept or agree to it. Debt settlement is one of the many ways to help yourself get out of debt in a shorter amount of time for less then what you owed. Yes it affects your credit, but if you are looking at debt settlement, most likely your credit score is not excellent anyway. All creditors want is to get paid and if you are behind on the account or accounts they usually are pretty willing to work with you or a company you have hired. I am in the industry and have seen it work first hand for thousands of our clients. If debt settlement is not for you their are other options, like debt roll down, and validation and even CCCS. Like I always say if you do the research you will find the right program for you.

[Debt Collection Review]

Consumers need to know that they have rights and that the Fair Debt Collection Practices Act has teeth that helps consumers who are being harassed.

[Debt Collection Review]

Consumers need to know that they have rights and that the Fair Debt Collection Practices Act has teeth that helps consumers who are being harassed.

[Sofia Kim]

Credit card debt is on its all time high with today's economy. Hopefully people can obtain the help they need to get out of debt.

[julie]

I really appreciate this topic. It is very useful to me. I gained more information to this topic.

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julie

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[Holly]

I just found out that home depot signed me up for a service on my credit card taht i never approved. Since 2004 they have been charging me one a month 25-50 dollers. Let do the math on how much they have prety much taken advantage of me as a consumer. Read the fine print people. I have no clue in ths circumstance what my rights are. They mailed me a paper claimng it was a copy of my signature requesting the service. Problem was it wasnt my signature and my name was spelled wrong. What a scam!!

[Credit Help]

I think this is an amazing blog with great advice and information . Thank you so much.

[arizona auto insurance]

Credit card companies are now cutting the amount of credit they had previously approved people for. In a recent article, one lady had $14k in credit lowered to $6k without any warning. It's high time american's drop the boom on credit card companies and limit their use. They do more harm than good.

[arizona auto insurance company]

Credit card companies charge exorbitant interest rates but change the rules as they go. At some point people need to halt the use of credit cards, other than for major purchases.

[Debt Negotiation Settlement]

Try to convince an american to give up on their credit card. Impossible.