Hidden and Excesive Credit Card Fees

I get a lot of offers for new credit cards and one came in the mail the other day that looked interesting. Zero percent interest on purchases and balance transfers for one year and then a low rate currently at 9.99%. For someone like me who doesn't carry a balance (yes I pay off my credit card each month and if you can't afford to do the same then you're taking on too much debt in my opinion), this offer might actually be a good idea. But do I really need another card? No. Do I need the zero percent interest? No since I don't pay interest anyway. So I decided not to get the card but there was something very disturbing about the offer.

Sure the interest rate was low but if you missed a payment that rate jumps to (are you ready for this) 29.99%. That's robbery. In addition to that, the cash advance fee, the normal every day cash advance fee is 19.99%. Why would you ever take out a cash advance on a credit card? But people do it all the time and this, among other reasons, is why people find it hard to get ahead or make ends meet. There is no other way to say it than this is a stupid thing to do.

Ok fine I'm all for personal responsibility and if you miss a payment there should be a price to pay but what if you miss a payment on something else like your utility bill, should your credit card interest rate increase? Well some cards will do that to you, it's called universal default and a proposed bill in congress will end that form of thievery.

Now I'm not saying that it's ok to miss payments or that you should be given a free ride but accidents happen and one company shouldn't punish you for a mistake with another especially if that was a one time event.

An article at Marketwatch.com gives details of three bills designed to protect the consumer (you and me) from predatory lending as well as exorbitant or hidden fees. It's a good article in the sense that it should open your eyes to just how you might be losing out on things you could avoid.

For instance many people think that overdraft protection is a good idea and would be if it wasn't just another way for banks to make money on your carelessness. The law would require banks to tell you when you're about to overdraw your account at an ATM for example. This way if you still decide to take the money, and pay the overdraft fee, that was your decision no matter how dumb it was.

On a political note these two paragraphs stuck me:

"Consumers no doubt like the idea of fewer credit-card rate hikes, but will any of these bills make it into law? After all, Frank and other Democratic lawmakers introduced these bills to the Republican-controlled House Financial Services Committee.

"Some say the committee's history of bipartisanship means these bills have a chance. 'The committee is one of the few actual bipartisan committees. We work with majority staff an awful lot,' said Steve Adamske, spokesman for the committee's Democratic staff."

Imagine that lawmakers actually working together. This isn't a tug of war. This is a group of people elected to represent us. If they can't work together than something is wrong.