Are You a Deadbeat??: Secret History of the Credit Card on PBS Frontline last night?

[disneysteve]

They get a fee from the merchants when you use the card, so it's not like they're not making anything (or they couldn't afford to offer all the rewards that they do).

I believe about 75% of CC company profits come from interest charges and late fees. If everyone suddenly paid off all their balances and started paying their bills in full every month, all the reward programs would probably disappear. It is all the folks who carry a balance who finance those rewards.

 

[Calliaz]

That's interesting.. If you pay off your balance in full each month you're referred to as a "dead beat".. Don't be surprised if somewhere down the road they start charging you some sort of "fee" for not carrying a balance.. After all, they are in business to make money via the interest..

There are already cards that charge a fee if you don't make a single charge in a month. DH got hit with that on a card we used for a medical bill (0% interest on a balance transfer--we made money using it). It cost him $1.95 not to buy things.

Other than the 1 interest-free balance that will be paid off before the end of the term, we are proud deadbeats. As a family we make at least $300 a year in cashback rewards.

 

[C.Ann]

There are already cards that charge a fee if you don't make a single charge in a month. DH got hit with that on a card we used for a medical bill (0% interest on a balance transfer--we made money using it). It cost him $1.95 not to buy things. .

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I'm not the least bit surprised and I'm sure this trend will continue with higher and higher fees.. Credit card companies are NOT interested in people who pay their balances in full each month.. They want the ones that they can continually jack their interest rates on..

 

[DMRick]

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I'm not the least bit surprised and I'm sure this trend will continue with higher and higher fees.. Credit card companies are NOT interested in people who pay their balances in full each month.. They want the ones that they can continually jack their interest rates on..

They must have some interest in us. Not only have I not paid a single $1 of interest in about 40 years, but they keep rewarding me and offering more cards. They can see my history, they know I'm right there to take advantage of offers and pay no interest. That 3-4% fee they get from the merchants really adds up, over and above what they have to give me in rewards, and the fees/interest they get from people who "mean" to pay off each month is a real plus for them. I've heard others say we better switch to cash now, before something happens..oh for about 20 years. Why on earth would I give up all those great rewards until the CC companies decide not to give them anymore? Rather than them disappearing, I just keep getting more. The awesome rewards that AT&T gave this past summer, to get me back to use their card was wonderful. 5% of all hotel, gas and air, with no limit, made us quite a tidy sum. We used if for everyone in our family that went on vacation. 5% back on our groceries and any drug store purchases from citibank, up to $300 each for hubby and I was a real bonus. I loved getting $600 in checks in a lump sum from them. The regular 1% for everything else wasn't hard to take either. Nope, no cash plans for us!
PS I know you don't use cc's, so you may not realize that when they do make changes, you get a note with your bill. As a consumer, it's up to you to read those changes, so you know they are about to happen. If you read them, you aren't suprised when changes come, and you won't feel it's underhanded.

 

[C.Ann]

PS I know you don't use cc's, so you may not realize that when they do make changes, you get a note with your bill. As a consumer, it's up to you to read those changes, so you know they are about to happen. If you read them, you aren't suprised when changes come, and you won't feel it's underhanded.

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Thank goodness for that! LOL The less junk I have to read, the better I like it..

It's really going to be interesting to see what happens with the credit card industry within the next few years - especially now that people can't declare bankruptcy so easily anymore..

 

[DMRick]

It's really going to be interesting to see what happens with the credit card industry within the next few years - especially now that people can't declare bankruptcy so easily anymore..

That should be good news for the credit card industry.

 

[C.Ann]

That should be good news for the credit card industry.

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Definitely! They'll be making money hand over fist - even more so than they do now.. To me, they're right up there with loan sharks - LOL..

 

[DMRick]

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Definitely! They'll be making money hand over fist - even more so than they do now.. To me, they're right up there with loan sharks - LOL..

There is responsibility from those who use them and don't pay them off..the responsibility isn't all the credit card companies, when people use their money and don't pay it back (which is when the credit card people make mney on the high interest). I happen to be very fond of credit cards, and think they can be a great way to manage money. The money they will be "making hand over fist"..isn't that because people used their money and didn't pay it back when the bill came? While I feel bad for those who find themselves in credit card crunch..I assume they knew the money wasn't being given to them for free. Yep, it's too bad the interest rates are so high..but please, no one is twisting arms for people to use the cards and not pay the bill off. It is a loan, as I'm sure you know.

 

[disneysteve]

There is responsibility from those who use them and don't pay them off..the responsibility isn't all the credit card companies, when people use their money and don't pay it back (which is when the credit card people make mney on the high interest). I happen to be very fond of credit cards, and think they can be a great way to manage money. The money they will be "making hand over fist"..isn't that because people used their money and didn't pay it back when the bill came? While I feel bad for those who find themselves in credit card crunch..I assume they knew the money wasn't being given to them for free. Yep, it's too bad the interest rates are so high..but please, no one is twisting arms for people to use the cards and not pay the bill off. It is a loan, as I'm sure you know.

Up until very recently, I would have agreed with you 100%, but I must say that it is now probably a bit lower. If you haven't read "The Two Income Family Trap" I'd highly recommend that you do. It really does an excellent job of detailing how the credit card industry developed and changed over the years and became very much a predatory lending environment. The banking deregulation laws really took a relatively level playing field and tilted it way, way in favor of the CC companies and other lenders. Obviously, personal responsibility is still a huge factor and I'm not debating that point at all, but it is far easier for the non-financially savvy individual to fall victim to predatory lending today because controls and guidelines that used to protect them no longer exist.

 

[DMRick]

Obviously, personal responsibility is still a huge factor and I'm not debating that point at all, but it is far easier for the non-financially savvy individual to fall victim to predatory lending today because controls and guidelines that used to protect them no longer exist.

Actually, it sounds like you are debating it a bit LOL! I still go with personal responsibilty. I really hate to blame it on lack of government controls. Yes, I agree some get themselves into the mess unawares (I'm not talking about someone who had to use a card in an emergency)...but you really can't then say the credit card companies are the bad guys. I know my share of people who are finacially savvy, and still overspent, because they wanted more than they can afford. That is not the credit card company's fault. Credit cards can be a very good thing...and there is money to be made by using them. Heck, I know people who overspend using cash..and then don't have enough for the next bill.

 

[mickeyfan2]

Actually, it sounds like you are debating it a bit LOL! I still go with personal responsibilty. I really hate to blame it on lack of government controls. Yes, I agree some get themselves into the mess unawares (I'm not talking about someone who had to use a card in an emergency)...but you really can't then say the credit card companies are the bad guys. I know my share of people who are finacially savvy, and still overspent, because they wanted more than they can afford. That is not the credit card company's fault. Credit cards can be a very good thing...and there is money to be made by using them. Heck, I know people who overspend using cash..and then don't have enough for the next bill.

ITA. Yes you can overspend and not us a credit card. I still have checks, how can I be out of money?

 

[DMRick]

ITA. Yes you can overspend and not us a credit card. I still have checks, how can I be out of money?

You know when my dad was alive (he outlived my mom, and she obviously handled the money) he was close to that belief. He called the auto number for the bank for his bank balance, the day after I helped him do his bills...guess he didn't believe me when I told him how much money he had left. When he heard his balance, he got a neighbor to take him to the bank to cash a check to cover his "balance". Of course I just wrote his checks the day before, so they hadn't gotten to the places he owed money yet, and of course hadn't cleared. I couldn't let him have extra checks...a credit card would have been so totally out of the question (and cash in his hands wasn't so good either). What a mess that was.

 

[drakethib]

It was very well done!

I consider myself an educated credit card user, but this show was a real inspiration to contact my Senator about some of their policies and the non existant regulations for the industry.

I have my credit card bill set to pay automatically from my Bank account each month (In full). I recently received a change in terms agreement from Chase, stating that my due date can fluctuate monthly!! After seeing this program, I now understand that this is just another way to create late fees for consumers that rely on autopay transfers.

I had planned on calling them regarding this issue, but to see it on Frontline last night, just made me angry.

I am a deadbeat and proud of it.

We also maxed out on Disney reward points last year and never had a month where the balance was not paid in full.
They keep raising our credit limit, but I ain't playing. Pay off in full each month. !!!!!

 

[drakethib]

I currently have a $5000 balance on 0% interest on bank of america card. This is my last interest free month. I already have another interest free card lined up to transfer to. I have been floating this interest free loan for 12 months. It started at $10,000. Hlaf paid off and my next transfer will give me another 12 months.

I am worse than a deadbeat.

I am a gamer and proud.

I love it!!!!

While I am a deadbeat, I also play this game on occasion.

When we need a piece of furniture, washing machine, etc, we find a store who have the no payment, no intrest CC and we sign up for them. Then one full month before the first payment is due we pay it off in full. No high intrest for you Store !!!

You have to love free money !!!

As a note, always ask what the cash price is, then make them honor the no payment, no intrest credit.


Works like a charm.

 

[drakethib]

That's interesting.. If you pay off your balance in full each month you're referred to as a "dead beat".. Don't be surprised if somewhere down the road they start charging you some sort of "fee" for not carrying a balance.. After all, they are in business to make money via the interest..

I did at one time have a Chevron Credit Card which they canceled due to "lack of activity".

 

[minnie1928]

I did at one time have a Chevron Credit Card which they canceled due to "lack of activity".

Years ago I had a card (can't recall which) that you had to use once/year or they charged you some insane fee. Well, they charged the fee ($35-$40 back in the early 90's). I called and they reversed it. The next month I cancelled the card.

I am also a proud "deadbeat", however I work the reward angle as much as possible! I also love free money, so when we bought into DVC this summer we used the 6 months no interest on $2500 through our Disney Visa. The balance was paid off 2 days prior to the end of the 6 month period. I let the $ sit in my ING account the entire time earning a decent interest rate. I look at it this way...the CC companies are going to make money, but they don't have to make a lot off of me. I'll let them keep their income from my purchases, but I'm not paying interest or fees.

 

[dfuller]

I too recently had a ridiculous experience with my Disney Chase credit card. I was set up for autopay, but they seems they changed the policy on my account, and "sent me a letter" (of which I did not receive) stating if I wanted to continue auto paying, I'd have to sign a letter indicating so. I assumed my payments were being made, and saw a late payment posted to my account (horror!!) in October. My interest rate went from 3.9 to 13.9% overnight. The person on the line was extremely unprofessional and unhelpful - I WILL pay off this card as soon as possible....and have resolved never to let cc companies get control of me this way.

 

[rumrunnergirl]

I am also a deadbeat and proud of it. I cry crocodile tears every month when I order my free $25 gas cards from the CC reward company.

So - which card has the best rewards? Right now I'm getting 1%. Which cards offer 5%?

 

[DMRick]

Citibank has 5% reward on gas, groceries and drugstore purchases and 1% on everything else. It's limited to $300 a year, so hubby and I each have our own card. When I first got it, they offered a special of 7%. With the $300 limit it didn't make much difference..we hit it when we hit it.

GM gives us 5% off a GM card. The newer cards don't allow you to collect as much as in the past, so you would have to read the newer rules.

AT&T had a one time deal this past summer..5% off restaurant, air, motel and car rental. I don't think they usually offer than, and it was only form May - Sept.

 

[disneysteve]

Which cards offer 5%?

Discover has run a series of promotions offering 5% on certain purchases. Over the summer, it was gas, theme parks, zoos and museums. Then it was restaurants and movie theaters. Now it's been all online shopping.