Credit card companies make debt impossible to escape
By Bankrate.com

By concealing important agreements in tiny print, raising rates on a whim and charging big fees you'd think credit card companies were making enough money. Apparently, they disagree.

Check out what Bankrate reporter, Lucy Lazarony uncovered this year.

Just how crummy are some of today's credit card offers? Check out this Visa card offer from Plains Commerce Bank. You pay $79 just to apply for the card. Once approved, you'll have to shell out an acceptance fee of $225, an annual fee of $50 and a monthly participation fee of $6, for a total of $281. The card's initial credit limit is $300. So when you receive your card the available credit will be just $19. When you add up all the fees, you've paid $360 for a credit line of less than $20. It's hard to imagine a more expensive credit card.

But at least the terms of the Plains Commerce Bank Visa are easy to understand. Its ghastly fees are spelled out in black-and-white. Getting a handle on the AmeriOne MasterCard from First National Bank of Central Texas is a lot tougher. This card comes with a membership fee of $39.95, a set up fee of $50 and a monthly maintenance fee of $9.95. So the initial cost of the card is $99.90. Here's the strange part.

Your credit limit is determined by how much additional money you send in. So first you make a payment and then you're free to spend with the card. Send in $30 and you're free to spend $30. It's a pay-before-you-spend card. The minimum monthly deposit you can make to the card is $15. Toss in the monthly maintenance fee of $9.95, you end up paying $24.95 for the privilege of making a $15 purchase with the card.

It turns out the AmeriOne MasterCard isn't a credit card at all. It's a super-spooky and super-expensive debit card.

Even supposedly premium card deals may have consumer-unfriendly terms, such as eye-popping $35 late fees. Citibank, MBNA America, and Discover will charge a $35 fee to any credit card customer with a balance of $1,000 or more who misses a payment deadline. Fleet Bank charges $35 for any late fee, regardless of balance. Yikes.

The horrors don't end there. Bankrate readers flooded our office with tales of intentional sabotage.

The great shuffle
My credit card company offered me a good fixed rate several years ago so I transferred two balances from higher-interest cards. About eight months later, a company representative called me to offer me an increase in my line of credit, based upon my payment history and asked if I like to transfer some more balances? Sure! Good news, I thought, and happily transferred some other high-rate debt. Then, about six months after that, they informed me that they were raising my rate to 20.9 percent.

I'd never missed a payment or paid late and always sent more than the minimum payment each month. Their decision was based upon my FICO score, which was the same as it was when they offered me the credit-line increase.

When I protested and asked to go back to the original deal, I was transferred from person to person with each one suggesting I send a letter to plead my case. And, it was next to impossible to extract the correct address for which to send my appeal. Every person I spoke with was quick to repeat the company line to appeal in writing. If this isn't predatory lending, it doesn't exist.

Beware of balance transfers
A credit card company sent me a mailing offering a new card at an attractive rate. They said I could be eligible for up to $28,000 in credit and offered a good rate for balance transfers. I applied for the card, and since it was part of the application, I applied to transfer about $18,000 in balances. Apparently, the company decided they couldn't give me the full $28,000 worth of credit but only gave me $14,000. They then transferred $14,000 worth of balances, instead of the $18,000 I'd requested. Since that transfer put me at my credit limit, the first time I used the card for a charge, they hit me with a charge for exceeding my credit limit. All of this in the first month I had the card!

New addresses reap profits for credit card companies
For the past several years, my credit card payment was automatically sent out the first of each month through my online bill paying service at my bank. I enjoyed the lowest rate, 4.75 percent, all that time.

This past August the payment did not clear my bank until the 20th of the month even though it went out at the regularly scheduled day of Aug. 1. I discovered this when I was charged a late fee on my credit card bill. It turns out that there was a new address for payments and since I use the online bill pay, I didn't notice it. So, it went to the old address. And, it was not processed timely.

I changed the address in my banking system and the credit card company even agreed to waive the $29 late fee since it was a processing error. However, the next month, they increased my interest rate to 19.99 percent because I had made a late payment!

After arguing with the company, the best they could do for me was to reduce it to 9.99 percent -- still unacceptable. Imagine how many customers they do this to by changing their mailing address periodically. I am going to close my account and pay the balance with my line of credit. This is the thanks they show me after eight years of business.

-- Posted: Oct. 25, 2002