How Credit Card Companies Trap Their Customers
It is one of the most profitable businesses for banking industry: credit cards. The nearly magical convenience of these plastic cards encourages our compulsive behaviors. With more than a billion of credit cards in circulation which account for trillions of dollars of consumer spending, the world economy has obviously gone plastic.
Many families use their general-purpose, personal credit cards such as American Express, Discover, Visa and Mastercard to make ends meet; these cards have become discreet lifelines for people in financial straits. But more prudent consumers use plastic strictly for convenience. While it would seem that they — who charge a small fortune each month on their credit cards — are the ideal customers, actually, they are what some in the banking industry call a “deadbeat.” That is because they pay their balance in full each month. The best customers are those who make a minimum payment each month, as a large percentage of the payment goes toward the interest. (more…)
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Remember where our economy was a year ago? During the fall of 2008, the charts of the Dow and Nasdaq looked like some sort of intense rollercoaster ride; slow climbs and steep drops. As the finance sector collapsed, so did credit card deals. Offers for balance transfers and low interest rates quickly disappeared. Even reward cards were having their rebates chopped down. To make matters worse, our spending limits were being slashed “Freddy Krueger” style. Although we’re not out of the woods yet, we are seeing