Are credit card fees and interest rates an increasing, but unknown financial risk for consumers? You wouldn’t normally think of risk in this way, but if credit card industry practices are closely examined we carry a lot more risk around in our wallets than we realize. At least with investing, the rules and regulations are pretty clear and you generally know where you stand when you take on the risk. But with credit cards? It’s a game of roulette that we play according to an indecipherable rule book, and credit card companies that can change the rules almost any time they please. For more and more consumers, those rules are taking a heavy (and unfair) toll on personal finance and indebtedness. Bob Sullivan of MSNBC’s The Red Tape Chronicles has written an excellent article titled Credit Card Companies’ Change of Heart in which he examines how recent Congressional investigation may have prompted several credit card companies to quickly change what many view as unbridled predatory lending policies.  I won’t reiterate some of the egregious examples by credit card companies as described by Mr. Sullivan’s article, but suffice it to say I learned a few things I was not aware of. Some of the really interesting insight was provided by other people commenting on his article. In those comments, people have provided real examples of how they were hit hard by the credit card companies for late payments, universal default and even surprising increases to card rates with little explanation. There were also comments on personal responsibility- reminding others that “we choose to use the cards” and no one forces us to take on that debt. True, however when one uses credit cards or borrows money in this manner, there is a reasonable expectation of being treated fairly without the lender being able to change rates, fees or credit card agreements on a whim. I think these issues will become increasingly visible in the months and years ahead, maybe leading to a welcome overhaul of regulatory practices. Bank and credit card company policies are fiercly driven to extract fees and charges from consumers at every turn. Personally, enough is enough and I’m going to work harder to pay down the debt I do carry, while resolving to use my cards less frequently. I’ve always taken “financial pride” in using my credit cards wisely, maintaining good standing and paying down debt efficiently. Although I have not been treated unfairly with the debt I do carry, the more I read the more I realize my credit card debt is a ticking time bomb awaiting change or modification by credit card fee-creation teams whenever they choose. Even paying down debt involves risk of having your rates increased- when a consumer is worried that paying down a debt too fast will incur an increased credit card rate, then something is wrong! For me, the word risk has taken on new meaning when I consider the potential fees and charges I might be levied with by my credit card companies… these fees are far more excessive than management, administrative and brokerage fees for mutual funds and stocks. Take a look at your own debt profile and the revloving or secured credit cards you carry… read the fine print and you too may see risk beyond mere debt. You know what? I think I will write the word RISK in bright red letters across the top of my credit cards- the next time I pull out the card for a quick purchase I’ll think twice, and maybe use cash instead.
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