Plastic? No Thanks

Social misfit that I am, I've always been anti-credit card. It probably comes from reading too much science fiction -- something about the idea of cash disappearing in favor of a centralized exchange system that's completely surveillable never sat right with me.

As a teenager, I refused to get a Social Security number as long as possible, too. (This was back when parents could claim dependents on their income taxes without having to provide each child's Social Security number.) Reluctantly, I got a number right before my first job, the summer after I graduated from high school.

I've never had a credit card, and one thing that made me happy about moving to Minnesota in the mid-1980s was that businesses still took checks here. (Still did, until recently, but that's another blog post.)

Today, listening to All Things Considered on the way home, I was reminded of why I can't stand credit cards and refuse to have one. Robert Siegel and Michele Norris were talking with Joan Goldwasser from Kiplinger's, and they were playing questions collected from NPR listeners.

The first caller wanted to know why his card company had doubled his rate, despite the fact that he always paid on time with more than the minimum required. Goldwasser's answer: They can do anything they want as long as they give you 15 days' notice. It could be because you were late paying some other company (from your mortgage to your utilities to another card company) or it could be because you live in a neighborhood with a high default rate, even if you yourself pay all your debts on time. The obvious implication was that it could actually be for no reason whatsoever.

The second caller wanted to know if it was a good idea to cancel a credit card or not. Goldwasser's answer: probably not, since it will decrease your total amount of available credit, and could, therefore, give you a bad ratio of debt to amount of credit available. Card companies can also suddenly decrease your credit line for no reason, which has the same effect, even though you actually don't owe any more than you did before.

The idea that people make decisions about what to do in their financial life based on how it will affect their credit rating makes my blood boil. (You should have heard me talking to the radio on the way home today!)

Let's say you've realized that credit cards are bad for your spending habits and you want to get rid of all your cards. That's a bad idea, according to the people who know about credit scores. It'll wreak havoc with your credit rating.

Is that a racket or what? It's like saying a heroin addict can't get off the drug because it'll look bad to the dealer.

And when you do have a credit card with a company, it seems to me that the only thing the company should be allowed to use when setting your rate is your history with that company -- not what you did or didn't do with some other company, or, most absurdly, what people who live near you are doing.

Goldwasser said that the Federal Reserve is initiating new rules in 2010: Consumers will have longer to pay between when a bill is sent and when it's due. Interest rates will be more clearly stated on the bills and the initial contract, and they can't be changed for a year after you first sign up. Forty-five days' notice will be required instead of the present 15.

That's a start on reining in these uncontrolled, avaricious corporations.

Better yet, everyone should get rid of their cards.