The Credit Card Sham

Posted at 5:31 AM, Oct. 10, 2008

I had to share this with everyone.  If you haven't in the past recieved one of this calls from one of your credit card issuers, wait. 

I had the ultimate pleasure of speaking with a representative from Discover Card to let me know what a preferred member I was.  From there, she assured me that this call was not to solicit an immediate response from me, but instead, wanted to send me some information about a new program designed to address the economic concerns with the public.  Namely, how to protect your credit in the event of job loss, etc. 

Now I know this isn't exactly a "new" product, I have received these calls before, just under a different name.  Here is what they promise.  In the event of say job loss, you can have your payments reduced or suspended for a designated period of time without penalty.  All this peace of mind for a mere $.89 for every $100 dollars.  Sounds pretty good right?  Wrong.

Here is what they don't tell you.  If you take for example a balance of $5,000 you will be charged monthly an additional $45 which will cost you $534 extra dollars at the end of the year.  ON TOP OF the interest you are already paying.  So, should you unfortunately need to activate such a plan, your interest AND additional fees will be accrued to your already mounting debt.  In addition, if your card is in a hold pattern, you can't use it.  This isn't a reality scenario for the average person who just lost their job and most likely has little to no savings.  Studies show people lean on their credit cards for such necessities when money is tight.  This is in no way beneficial to the credit card holder.  The banks are looking out on how they can make money off your already growing fears about the economy.  Shame!  Lastly, just by saying "ok" you can send me information to review, you inadvertently agree to be enrolled after 30 days, money back guaranteed of course.

Instead, consider taking that $45 (or more if you have higher debt or more than one card) and put it on auto savings into an account.  Some savings is better than none.  Then tell the credit card companies where they can stick their preferred customer products.