Free Lunch

Since that fateful day a few weeks ago when I awoke to a brand new world of cash and carry I’ve raised my fist to the heavens and cried “foul” at the mean and nasty banking conglomerate. How dare they raise my interest rates, charge me fees and lower my credit limit! But the truth of the matter is there’s no such thing as a free lunch or a free credit card for that matter.

As Michelle Singletary points out in her Washington Post article low interest, no annual fee, “free” credit cards have been subsidized for years by unsavory practices, exorbitant or hidden fees and double digit interest rates that usually effect lower to middle income borrowers. These same borrowers often fall behind on payments not because of frivolous spending but because they’re more likely to use cards for basic necessities or health expenditures. When I think of it like that it makes me more amenable to paying an annual fee or higher interest rate. After all, I am using someone else’s money.

So I’ve decided not to fight the matter with American Express. I did call and speak with a supervisor to demand they refund the annual fee they charged me two weeks before closing the account. She complied but advised me that I would need to call again to request the refund by check because it wouldn’t happen automatically unlike late fees and over the limit charges. I’m considering requesting that Citibank reopen my account based on the fact that they just sent me an offer in the mail touting a lower interest rate than the one they quoted me when I closed. I’m also writing a letter to the credit information company, Experian, to make sure they don’t lower my score based on American Express’ decision.

While the changes in the Truth in Lending Act will end the credit subsidy cycle and with it, the predatory lending and gouging practices banks have relied on for billions in profit, it won’t happen tomorrow. In fact, banks have nine months of “get out of jail free card” to keep working the system. But you, the borrower, have rights as well and here are a few good ideas about how to use them.

In the meantime, I’m going to reevaluate my credit and spending habits. The less time I spend with the snarky little banker, the better.

FYI: When Bank of America recently began charging me a monthly fee for my checking account I switched all my checking and saving accounts to Wachovia. They offered me free checking, and a nifty \”Way 2 Save\”savings account that automatically rounds up my card expenditures and deposits the spare change into the account at a whopping %5 interest. Wachovia then matches 5% of whatever you have in the account at the end of the year from when you started it. The catch is you have to make an automatic monthly deposit and it can’t be more than $100 a month but hey, where can you get 5% interest plus an end-of-the-year match? Maybe there’s a free lunch after all.

Advertisement