Credit Cards Are The Tool Of The Devil

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Public radio is a thing you do for love — not money. When I worked at a member station, the starting salary was so teeny that there was no way I could support myself without using my credit cards — to pay for gas, food, and yes, the occasional pair of peep toe heels. It was a constant calculation — pay off my debt, or pay my electric bill. Sometimes I would (and still do, argh) send too much money to the cards, and end up seriously cash poor. Compounding the whole thing is an interest rate that would make a loan shark blanch. Sigh. The responsibilities only grow — now I own a house, and a car, and a whole raft of handbags that I might start selling off — and the problem of debt management only becomes more serious as time goes by. I've discovered some nifty online tools to help (Mint and various debt calculators are my favorites), but there are so many conflicting ideas about how to manage your debt, that the whole thing just makes me want to buy stuff on Ebay just to make myself feel better. Well today, we're going to help you figure it all out — so whatever the size or shape of your debt, let us know, and we'll give you some solid advice about how to get out from under it without selling your handbag collection

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My approach to eliminating my $15000 credit card debt was simple. Work a second job, and put all of that income toward the cards. Resisting the temptation to use this money for more stuff was hard, but seeing the debt go down sure was satisfying.

Sent by Mike Eggers | 2:11 PM | 3-4-2008

I pay my bills, but Chase tried to make me make a late payment by moving my due date up FIVE days sooner. My former date was the same for years.

Sent by Elizabeth Naylor | 2:12 PM | 3-4-2008

If one stops using credit cards or call the companies to cancel them (with a zero balance), does that go against my credit score? No one that I've asked seems to know the answer.
Thank you.

Sent by Mary Lucero | 2:15 PM | 3-4-2008

It seems to me that there's a gigantic disconnect between what the government wants us to do -- borrow and spend, to "boost the economy" -- and what's really good for us as individuals -- manage money sensibly and stay out of debt. When people in the government and the media talk about debt and the economy, why is this never addressed?

Sent by janet | 2:17 PM | 3-4-2008

I was in some pretty bad credit card debt but have dug myself out with a settlement or two. Now my credit score is low and I will soon need to get an auto loan is there a way to raise your credit score quickly?

Sent by Rick | 2:21 PM | 3-4-2008

Talk about a mixed message! Everybody "in the know" says keep spending under control and pay off highest interest loans first. Our "MBA President" is saying "Spend, spend, spend - keep the economy going".

Hmmmmmm....

So what happens to the economy when spenders are spent out? When there is no more to spend?

Keep you seat belts buckled; it's likely to be a VERY rough ride. Thank you Mr. Bush.

Sent by Mike Berke | 2:23 PM | 3-4-2008

It seems silly to me that the way they pressure you to pay your debts is to actually charge you MORE. How is that going to help people who are already in debt be able to pay it off?

Sent by Tasha | 2:30 PM | 3-4-2008

Part of the problem is the lack of regulatory oversight of the financial industries. This applies to credit cards, mortgage loads, insurance industry or even cable TV. It is now a world of "gotchya capitalism", with no protection for the consumer from the government. When you put all the industry lobbyists in charge of oversight, you get a fox in the hen house results. Interest rates of 30% charged without notice, this is not good business it is predatory tactics that are becoming standard operating procedures. We need real oversight that protects the consumer.

Sent by John Granger | 2:33 PM | 3-4-2008

can you offer any advice to probably the worst abuser of credit spending, i. e. the federal government?

Sent by bill | 2:35 PM | 3-4-2008

What happened to the usury laws??

Sent by Harvey Wolfe | 2:35 PM | 3-4-2008

It is too bad that neither Neal or the guest realized that when the previous caller said he was not qualified for federal student aid that he may very well have been right. Not for economic reasons, but for citizenship reasons. He sounded fairly depressed as he was saying goodbye. Too bad he did not get any advice he could actually use.

Sent by AGB | 2:41 PM | 3-4-2008

Glad to say that I elliminated ALL credit cards from my life 10 years ago and have noticed a considerable improvement in my mental & fiscal life! Will never own another one!!!

Sent by A.G.W. | 2:54 PM | 3-4-2008

Here is my philosophy: Every time there is a problem, the real solution is found in the roots of the problem. And, here is my analysis:
The problem: Credit Card Debt.
The Solution: Self-control.
Next time anyone talks about ANY problem, let's talk about the root of the problem because finding a solution to the root of problem eliminates the problem to become a problem in the future. An analogy is injecting a Vaccine(self-control) to prevent a disease(credit card debt).

Sent by Homayoun Samadi | 3:07 PM | 3-4-2008

Why is it legal for the credit card companies to charge up to 30% in fees? What can consumers do to change this?

Sent by Judy | 3:13 PM | 3-4-2008

Currently,I have $8100 in credit card debt. To eliminate the debt this year my husband is working overtime and we add extra money we have to the debt. We initially had about $21000 in credit card debt but we buckled down and have been paying it off. After this year, we will not be in credit card debt again. Almost done with the last 2

Sent by Jessica | 4:35 PM | 3-4-2008

I had a scary thing happen with my Bank of America card recently.

About 3 years ago, they gave me a card with a $3,500 limit. This was at a time that I was trying to re-establish good credit after some tough times. I paid that card and my others always on time and more than the minimum, often putting much larger chunks down when I could. My credit score is actually significantly higher than when they issued the card to me.

Very recently I paid down all my cards (including this one) to below 30%. About a week after this payment, I happened to check my info online and was surprised to say the least when I saw my available credit at $70!! They had dropped my credit limit from $3500 to about $70 above my balance at the time. This was on a Sunday and the proper department wasn't open to give me an answer as to why my limit was decreased when I had such an excellent payment record.

When I finally got through to the right person the next day, I was informed that the "system" had automatically reduced it for "risk detection." Apparently the computer system they use saw an old $80 utility collection on my credit report that had been paid some time ago but would remain the rest of the 7 year period. This same ding was there when they issued the card... and unpaid (wasn't aware of it) at the time.

Anyway, the live person asked for my salary again and said she would reinstate my $3,500 limit, and that if a "Senior" credit rep at B of A had looked at it they would have ignored it. So I was thankful, but perplexed, and really glad I wasn't out of town planning on using that card to pay a hotel bill, etc.

Nobody I've talked to has ever heard of this practice. I know a lot of people who use credit cards responsibly, and only for a "cushion." If this is starting to happen automatically to good customers, I wonder what is next?

The times they are changing.

Sent by Kendall | 9:25 PM | 3-4-2008

When one receives the "Notice of Change of Terms in Agreement" inserts with the monthly statements and is told rate can be raised at any time unless one calls to refuse, what happens if there is a balance on the card? Is it cancelled and the borrower pays it off at the pre-cancellation interest rate or are there ways to negotiate this and keep the account open?

Sent by Tanya | 12:12 PM | 3-5-2008

I am a single male professional, and as much as i don't make that much i am able to make considerable contributions to my card dept/student loan. I usually set a goal of something expensive i want, and scrimp to pay off my depth. Then i reward myself by buying that goal. Recently that was getting my car registred/repaired in the DC area (1600.00). I am able to pay off 81% of my card's depth this pay period, and i plan on my next goal to bring my savings back to a recent water mark (7k to 10k). I see card depth as a financial morality towards my personal bottom line. Is this a plausable way of going about card depth? Does paying off a thousand dollars to get a zero balance a good thing for my credit score?

Sent by Zoltan Wilson | 12:40 PM | 3-5-2008

I have one card and the interest rate is almost 30% and I owe $4000. I want to get rid of this card because the interest keeps going up. Should I sign up for credit counseling to help pay this card off.

Sent by Donna | 2:01 PM | 3-5-2008

What is the name of the group that facilitates selling your debt to individuals at a lower rate? It was a topic yesterday on the show..

Sent by paulj | 5:39 PM | 3-5-2008

Step 1: Order copies of your credit reports. For free from all three credit bureaus once a year by visiting www.annualcreditreport.com or calling toll free 877-322-8228. This way you can see what is on your report and what your credit score is, and then you can take steps to improve it. Anyone who is in this situation should do this TODAY to begin the process.

Step 2: Make sure everything on your report is legitimate, if you don't agree with something on your report, send a letter to the credit bureaus disputing the item and explaining why and ask that it be attached to your credit report until the item is removed. Credit bureaus are required to do this and when someone pulls your report they are obligated by law to disregard that item. If you ask, the consumer reporting company must send notices to anyone who received your report within the last 6 months AND you can have a corrected copy of your report sent to anyone who received a copy during the last 2 years for employment purposes.

Step 3: Cancel any credit accounts still listed as open accounts on your report, this will show the account was cancelled by the consumer.

Step 4: When you call your credit card companies to cancel the cards, tell them you are trying to pay off your balance and ask if they can waive any late fees or over the limit charges, this will lower your bill as soon as the credit is issued. Many credit card companies will do this, but you must cancel the card.

Step 5: Make all payments on time, even if it is just a minimum payment, do this for 3 months and you will see your credit rating start improving, the longer you do this, the better your rating becomes. Pay off higher balances with higher interest rates first or smaller balances that you can pay off in 1 or 2 payments to bring to a zero balance quickly.

Step 6: If your situation is serious, contact a legitimate non-profit credit counseling service, avoid any company that promises you a quick reversal of your credit problems, they are a scam and you will be wasting your money.

Sent by Michelle Dunn | 1:22 AM | 3-6-2008

There should be more regulations for credit card companies. Granted, the fine print probably says that they have the right to hike interest rates up or change due dates at their discretion, and it is the consumer's responsibility to read that fine print. However, I think credit card companies know that most people will not read or fully understand what the fine print says and that is why they make these changes. They are taking advantage of what is ultimately consumer irresponsibility, but it is with malicious intention. If I know someone is not going to look both ways when they cross the street, that doesn't make it okay for me to run them over because I know they won't see me coming.

Furthermore, I believe that more regulations will give people more money which may boost our economy. Are credit card companies afraid that if people have more money, they won't use their credit cards as often? Maybe they should focus on improving their rewards programs.

Sent by Rachel Abegg | 3:18 PM | 3-6-2008