The CR Money Paradox
While parsing through the May 2008 issue of Consumer Reports, I saw an interesting article towards the back on the magazine in their monthly Viewpoint feature titled, "With credit cards, a deal is not always a deal". So kind of them to make it available online. The article contains a mock letter from a bank to a card holder. It is quoted below and we'll discuss on the other side.
You owe us money. We can raise your interest rate just because we feel like it. We can do this even if you have always paid us on time and your credit is still good.
We gave you a zero percent interest rate to entice you to transfer a balance to us. Now that you have, we can raise your rate from zero to our standard rate or even higher, to our default rate, if you pay us late or go over your credit limit just one time.
You may have to get your payment to us 20 days from when we mail you the bill. Mail delays in either direction are your problem. If your payment is late even once, we can boost your interest rate to as high as 29.99 percent.
And you out there on the West Coast: Your electronic payment is late if you set it up after 2 p.m. Pacific time on the date it's due.
Your Bank
Now that letter is fairly sugarcoated, but absolutely true. Quite sobering for those unaware, especially that last statement. One thing that I love about Consumer's Union is that they tell it like it is. There's no bias, no slant, no spin - with the exception of blindly recommending Toyota cars and trucks, which I'll never understand. If a product stinks, then it stinks, and they're going to tell you about it. In many ways, CU has been saying that credit cards stink. So much so, that they are testifying before Congress to advocate an end to their out-of-control business practices. Yet, CR's Money section still advocates using "good" credit cards and responsible usage, going so far as to offer ratings and advice on how to pick the right card for you. How about 'none of the above'? With an entire industry that is so morally corrupt and anti-consumer, CU still seems oddly supportive of these products in general. This is something I struggled with for quite a while (kind of like their car buying advice). How could they play both sides?
Then it hit me. CU really isn't in the business of condemning entire product categories, companies, or industries. They are in the business of helping consumers. They give you information to help make educated decisions about products and services. The inform you about scams and questionable business practices and/or products. And, they work with companies and regulatory bodies to improve products and services from a consumer's standpoint. And that is exactly what they are doing here. The outcome of all of this extra special attention that the credit card industry has been receiving will be interesting. They successfully bought that "bankruptcy abuse reform" legislation a couple of years ago, so I'm not terribly optimistic that a slightly reshuffled group of legislators will rail against the debt-mongering industry.
But if this ends like most Congressional hearings (with little to no action), then CU will still be there, telling you about the pitfalls and perks - letting you make your own decisions - and advocating positive change.
The real take away, is that when Consumers Union speaks, people listen. It's important to understand the context of their message.
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