Credit Cards And The Advertising Scam

15 Nov Credit Cards And The Advertising Scam

Many of us have airline sponsored credit cards we use to buy things. Why not? We earn airline miles and don’t have to buy anything more than we would have bought with cash, debit card or check. All we need to do is pay the balance in full on the credit card each month. If the balance is paid in full, with most cards, the holder never has to pay any interest. Even banks offering private student loans are advertising airline miles.

Unfortunately, not everyone takes care in the way they use credit cards. After nearly 30 years as a bankruptcy lawyer, I have a healthy respect for all forms of credit and use it mindfully and carefully. However, this was not always the way I handled credit.Back in my student days, when money was tight, I remember using my credit cards (yes I had several of them) less carefully and without paying attention to the cost of the credit. I know that I bought things I would have passed up if I didn’t have easy access to money with my credit card. Many of those impulse purchases would have been avoided if I had been required to wait until I could pay cash for the goods I bought. At one point I owed more than my average annual income in credit card debt.

Back in the early 1970s, when I was financially “underwater” with my credit cards, the interest rate was 6% or maybe as much as 9%. I had one card, if I remember correctly it was with Citibank, that I carried a high balance on. When they sent me notice the interest rate had increased to 10%, I reacted with outrage and anger. I stopped using the card and decided to pay it off. I paid the minimum payment for a time then realized I was doing them a favor by paying the interest. From that point on, I worked diligently to pay off the balance by making the largest payments I could afford.

This experience was enough for me. I saw how long it would have taken me to pay the balance if I only paid the minimum due. I could calculate the amount of interest I would pay them and I was bound and determined not to do so. It took me several years to pay the debt even though I was making double and triple payments each month. The interest rate was only 10% on that card. Now, credit card interest can be as high as 39% or more. If the account holder exceeds the card limit or misses a payment, the fees and charges can drive this amount much higher.

Times have changed since the early 1970s. The credit card companies now advertise on primetime television, encouraging us to spend money on our cards for those “priceless” things that money can not really buy. They use the best advertising minds in the world to try and convince us that a happy family, a bonding moment with a child or a love affair can be purchased with a credit card. These are things that can only be bought with your own time, personal attention, love and thoughtfulness.

The reason for the advertising campaigns is obvious. The credit card banks make a lot of money from those of us, like me when I was a young student, who can not pay the full balance on the card and must pay the usurious and truly unholy interest rates these companies charge.

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I was admitted to practice in 1978. I am certified as a Consumer Bankruptcy Specialist by the American Board of Certification. I regularly speak on tax and bankruptcy issues at state, regional and national conferences. Years of experience in practice before the Internal Revenue Service and Oregon Department of Revenue have given me the background to resolve a large variety of consumer tax issues.
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