Ask the Dollar Diva By Dorothy Rosen • Bankrate.com

Credit card company tactics

Dear Dollar Diva,
Please comment on the practice of credit card "A" upping the interest rate because you are late paying credit card "B" from another bank.

-- Don

It's legal and it sucks. But you've got to marvel at the ingenuity of these credit card folks. How do they come up with these pocket-picking schemes? And how do they get away with it? The Diva urges you to contact your congressman to protest this anti-consumer behavior.

Here are some other nasty practices that the Diva would like to see halted:

• $29 fees. The cardholder gets slapped with a $29 fee for paying his credit card bill a day late, and if that pushes him over his credit limit, bang, another $29 hits his account. That's $58, and he didn't buy a damn thing.

• Surcharges for overseas purchases. The Diva is not complaining about the currency-exchange commission of about 1 percent; but why slap a surcharge of 2 percent to 5 percent for charging a pair of Bruno Magli loafers in Rome instead of Los Angeles? And why sock the cardholder with another 2 percent to 5 percent if he returns them?
• 2 percent minimum payments. Assume a cardholder has a $3,000 credit card balance, and his APR is 20 percent. By making 2 percent minimum payments, he will be married to the debt for almost 54 years. That giant gurgling sound you hear is $13,000 in interest being flushed down the toilet. Interested in knowing where you stand? Plug your numbers into our calculator "The true cost of paying the minimum," and be prepared for an unpleasant surprise.
• Other fees and penalties. How about being charged for not using your card enough, paying off your balance or accepting an increase in your credit limit? Oink, oink.
• Meaningless contracts. The credit card company can change the terms of its agreement any time it feels like it; all it has to do is give 15 days' notice via a "bill-stuffer." So, a "fixed rate" is only "fixed" until the credit card company changes it. Orwellian.
• Interest rates that would make a don smack his lips. In "Getting pushed around by plastic," the Diva responds to a reader whose APR was jacked up to 28 percent. With a single-digit prime rate, someone might confuse interest like that with juice.

The best offense is a strong defense; pay off those credit cards, and don't ever let yourself get sucked in by easy credit again.

DOROTHY ROSEN has a master's degree in finance, with a specialization in accounting, from the Kellogg Graduate School at Northwestern University in Evanston, Ill. Rosen has more than 15 years of experience in the financial arena, serving in Illinois and Florida as a certified public accountant, financial consultant, expert witness and educator. She is owner of Dorothy Rosen, CPA, a public accounting firm that serves individuals and small businesses.