THE BLOG
03/18/2010 05:12 am ET Updated May 25, 2011

Giving Credit Where Credit Will Do: How the Banks Have Changed the Rules Halfway Through the Game


Who knows this one?

Here's my story, it's sad but true. It's about the banks that we all knew. They took our money and then skipped town. Now, when we need help, there's none to be found.

That just about sums up how the credit card companies are working these days. The way it stands, you might be better off dealing with loan sharks. At least they'll warn you before breaking your legs. The banks sneak up behind you and do it.

I used to believe in using credit - not to buy stuff I didn't need, but to get the things I needed to survive. I'd go as far to say that I have no sympathy for anyone who runs up too much debt by being frivolous. But it is no longer the reckless and the irresponsible who are paying the price of using a credit card. It's the average Joe and Jane who use credit in a prudent manner. It's the ones who run up more debt than they can afford to pay who seem to get the free pass.

In its original intent, credit was actually a pretty good system. Aside from the convenience of not carrying cash and ordering purchases via mail and online, people can borrow money they need in the short run for things that will make money in the long run, after which, a fee is paid for the advance. That's fair. Everyone wins. But it no longer works like that.

For years I used credit cards to stay ahead of the game. As an artist, I've never been a high finance guy. I live pretty much hand to mouth, I always hustled for work (being self-employed I can't even collect unemployment insurance), I don't play the stock market (with what?) and to be honest, I never concerned myself much with elaborate fiscal manipulations other than to transfer the credit card accounts to the lowest interest rates. Over time, I always paid them off. My credit rating was excellent. They made just enough money off of me to give me a high limit and my payments were always on time, making me a good risk. But as of last year, it got a little out of control. I still paid on time but the payments were often the minimum. I just couldn't get ahead. Then, one day I realized why. Overnight, my interest rate went from 4% to 27%! They knew I was having a hard time so instead of cutting some slack, they lowered the boom. I was falling behind and it looked like there was no hope in sight. Sound familiar?

With a few strategic moves and a bit of luck, I eventually managed to generate enough money to pay it all off. I kept just a Visa and one MasterCard and have paid in full every month. So what did I get for my efforts? They kept the 27% interest and lowered my credit limit from $10,000 to $1,000! And, just to add insult to more insult, they pulled a few more underhanded tricks. Like enrolling me in programs (that had an annual fee) without my consent. And double charging me on purchases - to which they gave a very sincere apology but asked me to contact all the vendors in order to straighten it out. (This was after hours of being shuffled from one representative to another.) They justify arbitrary alterations by saying the entire process was explained in that nine-page document with six-point font they sent last month. (Am I supposed to read that myself or is that when I'm required to hire a lawyer, investment analyst and a team of accountants? Because I have no idea what they're talking about.)

You can never get anyone on the phone who can actually do anything. You can't pay over the phone either. That costs extra. Computers are always down. Administrators are always away from their desks. Apparently, money can be extracted from one's bank account based on what seems like little more than a reluctance to check their own records. I could have gotten a comparable deal if I just declared bankruptcy and paid only a portion of the fees. Thanks, guys. Anything else you need?

What is probably most egregious in this entire debacle is the fact that credit card companies lose billions of dollars each year in fraud. When a card is lost or stolen, anyone can run up charges and they have to eat the loss. Wouldn't it make sense to have to use a pin number when charging, just as we do with debit accounts? That would make sense. But why should they bother when they can just keep slamming the people who play by the rules?

The latest word is that in just the past few weeks, rates across the boards have been jacked up as high as 30% in anticipation of the impending crackdown by Congress that will restrict how much the creditors will be able to extort, um, I mean charge.

It looks as if they may try to bilk their "valued customers" for every cent they can while they can get away with it. Congress needs to move a little quicker on this, though expecting them to act with urgency is like expecting a three legged mule to win the Kentucky Derby.

I've gotten to the point where my grandfather was. He didn't trust banks and kept all his money in a small safe in his bedroom closet. I used to laugh at his lack of sophistication. Now I realize he was pretty damn brilliant. He always knew how much he had and even though he was the sole earner in a family of four, he always had enough.

I'm thinking of doing the same thing with my liquid assets. The only difference is, instead of a safe in the closet, I'm pretty sure it'll all fit in an envelope in the dresser drawer.