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The dirty little secrets of credit cards

    PBS's Frontline did a fascinating mini-series titled, "The Secret History of the Credit Card." With the average American household carrying a credit card balance of thousands of dollars, it is time for consumers to become more knowledgeable and savvy about credit cards and their usage.  As Adam Brauer, in-house counsel for Debt Settlement USA, has stated, "People are now in a revolving debt cycle that they'll never escape." 

Three secrets of credit card debt

     Universal default clause.  You may be making your credit card payments on a timely basis, but if you are late in other types of payments (say mortgage, car, or personal loans) your credit card could increase your interest rate automatically. This also applies if the credit card lender determines you have taken on too much debt. Credit card lenders can track your expenses through the cards and also keep track of your credit score.

     Your FICO (credit) score determines your life. Okay, this may sound a bit drastic, but this simple little number (basically determined by how much you owe and your payment history in the past) will determine if you can borrow money to buy a house, car, or whatever you want to get financing for and it will also determine at what interest rate you can borrow the money. It can also determine how much you pay for auto insurance, life insurance, and in some cases, whether you will get a job!

    Credit card lenders can charge whatever interest rate they want.  While specific states may have usury laws that cap the interest rate lenders can charge, there are many states like South Dakota, Delaware,  that do not have these laws, meaning lenders can charge you whatever rate they determine. Notice that many of your credit card statements will come with addresses in these states. Citibank, for example, is headquartered in  Sioux Falls, South Dakota.

Be sure to check out Secrets of Credit Cards here: 


  • Guillian Glen 5 years ago

    My God! what a big surprise to find this kind of information about the secrets of the credit cards. I didn't know what was FICO. I really appreciate your help. God bless you.

  • Kira Houser 5 years ago

    Wow! I definitely did not realize why certain states seemed to house many major banks. Now I understand and it makes perfect sense. Thank you for these informative articles that help us in practical financial matters.

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