Chapter 4 Conclusion

Issuing credit cards can be a profitable business for banks and other outfits—that’s why the marketplace is so crowded with brochures screaming about great offers. If you take your time and review these offers, you can find some good deals.

Know, from the start, that almost all issuers—including big, legitimate ones—hide fees and high interest rates in the small print of their disclosure forms and agreements. Take the time to read these.

Frankly, some credit card issuers play sleazy games when it comes to telling consumers about conditions, terms and rates. In 2001, the Office of the Comptroller of the Currency settled case against the First National Bank of Marin (based, oddly, in Las Vegas), involving misleading and deceptive marketing of secured credit cards. The OCC said:

First National Bank of Marin markets to consumers with poor or nonexistent credit histories. Many credit card lenders, as a matter of prudent underwriting, will require such consumers to maintain a savings account large enough to secure the line of credit. Under the bank’s program, the funds for the savings deposit are instead charged against the credit line, reducing the amount of available credit until the charge is paid off.

In one of Marin’s programs, applicants had to pay $79 to apply. The resulting card had a credit limit of $250 to $600—but was secured by a savings deposit of $200. Because that amount was charged against the card, along with another $56 in fees, some cardholders started out over their limits.

That clearly defeats the purpose of having or carrying a credit card.

Next: Chapter 5 - Using a Credit Card Wisely