An Oldie but a Goodie

In 2004, the PBS program Frontline ran an hour-long documentary entitled the "Secret History of the Credit Card" discussing the rise and proliferation of what is now the ubiquitous use of plastic in the United States. An excerpt from the introduction to the program:

The industry's most profitable customers, the ones being sought by creative marketing tactics, are the "revolvers:" the estimated 115 million Americans who carry monthly credit card debt.

Ed Yingling, incoming president of the American Bankers Association, tells FRONTLINE that revolvers are "the sweet spot" of the banking industry. This "sweet spot" continues to grow as the average credit card debt among American households has more than doubled over the past decade. Today, the average family owes roughly $8,000 on their credit cards. This debt has helped generate record profits for the credit card industry -- last year, more than $30 billion before taxes.

To watch the entire program for FREE online and to learn about things like why all those unsolicited credit card offers seem to come from South Dakota, go to Frontline: The Secret History of the Credit Card.

For those of you who want the Cliff Note's version, below are selections from the 8 Things a Credit Card User Should Know on Frontline's website, along with some limited commentary from this honcho:

1. Even if you make your credit card payments on time, the credit card bank can raise your interest rate automatically if you're late on payments elsewhere -- such as on another credit card or on a phone, car, or house payment -- or simply because the bank feels you have taken on too much debt.
   


2. Your credit score -- known as a FICO score -- has become a vital statistic for many Americans and can be widely shared. It is used to determine how much you can borrow, how much you pay for life insurance, if you can rent a home, and ... it can be a factor in determining the interest rate you pay on a credit card.
   

Get free estimates of your FICO score here and here


3. There is no limit on the amount a credit card company can charge a cardholder for being even an hour late with a payment.
   


4. It's important to read the fine print on your credit card agreement.
   

Who are we kidding? Let's just say the Honchos know a lot of lawyers out there, and we can't think of a single one who is willing (certainly not one who's willing to do it for free) to sit down and read through a credit card membership agreement. And, if you do actually manage to sit down and read the fine print drafted by the credit card bank's army of lawyers, good luck trying to negotiate the fine print of your credit card agreement with your bank. We're talking about as close to a contract of adhesion as it gets.


5. Many Americans are inattentive about their credit card accounts.
   

You can add me to that list. Thank goodness Mrs. Honcho is the anal, er attentive, one in this household.


6. There is no federal limit on the interest rate a credit card company can charge.
   


7. Significant credit card debt can put you at a markedly higher risk of bankruptcy.
   

This deserves its own topic, but for the time being, you bookish ones should go here and then to your local public library. For you less bookish ones, try this one out.<