We hate to go negative here, but we really don’t like credit cards. OK, back up a minute. We love the idea of a credit card as a tool, but there are times where the credit card companies really make it difficult for us to like them. They engage in telling the public half-truths and even downright lies to get them to keep signing up for credit cards that they end up defaulting on. Is that the case for every last cardholder? Not at all. Some people have great credit, always have had incredible credit, and probably always will have great credit. However, that’s probably because they’re taking the time to actually make sure that their credit is good, they’re actually taking the time to be proactive and build strong credit, and they pay most if not all of their bills on time. If you adopted those habits yourself, chances are good that you would have good credit as well.
So what’s the bottom line here? Are we simply going to wander through the credit desert without getting anything done? Are we going to believe all of the things that the credit card companies say? Well, yes and no. Here are some of the things that the credit card companies say and do that you need to watch out for.
Minimum Finance Charge — If there’s one thing that we hate most, it’s the minimum finance charge. It’s designed as a “gotcha” to trap the people that pay in full every month so that even if you don’t carry a balance, you’re going to basically pay something just for the sake of saying that you’re a cardholder at the credit card company of your choice. That’s something that’s gotten more and more prevalent over the years. The credit card companies argue that the fees are necessary, because they have to handle recovery costs for people that don’t pay, and they also have to handle the money that it takes to handle fraud cases. Overhead is no joke with any company, and most companies do indeed pass those fees onto the customer. However, its’ considered dishonest because the people that it targets most are the ones that truly do handle their obligation each and every month. Why should they be punished simply because they do exactly what they say they will do while other people try to get away with paying the bare minimum on their credit cards? We guess the world will never know.
Stupid Foreign Transaction Fees: Even though the calculations they make are child’s play at best and even only moderately difficult at worst, credit card companies love sticking you with foreign transaction fees. If you go from the US to Canada or another country, you can bet that you’re getting socked with those foreign transaction fees. American Express charges 2.7% for you to use your card overseas, which adds up fast. If you book a week’s stay at a hotel that adds up to $1000, you’re paying $27 dollars for the privilege. Now, if someone attached a $27 “handling fee” to your bill at a restaurant or a hotel, you would be pretty hopping mad. However, why are the credit card companies allowed to do this day in and day out? Because we believe that we need them. Yes, it’s true that using a credit card means that you can book things easier but that doesn’t mean that you have no other options when it comes to your travel needs. Pre-paid debit cards are starting to really make a come back for this reason — you don’t have to worry about massive fees, and there’s no interest to pay. If you have the money, you can spend it. If you don’t have the money, you can’t spend it. That’s pretty simple, if you ask us.
The final pet peeve that irritates us about the credit card companies is when they try to appeal to your human side. They let you know that they offer fraud protection, as if it’s something that they are offering out of the goodness of their hearts. Know your rights — this is protection that’s public policy. In other words, you would have these rights under the law no matter which credit card company you choose.
Again, we’re definitely not against the use of credit cards as a tool. However, if you’re going to use a credit card, you need to make sure that you’re not swayed by sexy marketing — reading the fine print on a credit card will definitely open your eyes in a major way!