Poll: What Concerns You the Most When Getting a Credit Card?

Credit card companies’ interest rate policy is the subject of a congressional hearing this week as executives from major credit card issuers went to Capital Hill to defend their actions on rising card member’s interest rates, even when they had good credit history. A USA Today story yesterday portraits a victim, Janet Hard, who paid more than the minimum required every month, but still saw the interest rate of her Discover card went up from 18% to 24.24% after Discover determined that “her other credit card balances and available credit on inactive accounts put the family at a higher risk of defaulting on their payments.” As a result, the Hards’ effort barely made a difference on their credit card balance:

Most stunning, $3,478.39 out of $5,618 in payments had gone to Discover for interest accrued over the previous two years, Hard told the panel. On a monthly level, about $176 out of her $200 payments went to finance charges. In the past year alone, Hard had paid $2,400 but reduced her debt by only about $350.

I am sure this is not a unique experience, otherwise there won’t be hearings and legislations to deal with the matter. In fact, credit card interest rate has been an issue for a long time. However, a card’s interest rate has never been a concern to me when applying for a new card. Since I got my first credit card 10 years ago, it has been my principle to use plastics only when I can pay off the entire balance when it’s due. I never had a credit card balance (except those from 0% balance transfers) and, therefore, I don’t care a lot how much interest the card will charge me if I am late in making payment (and I never late). To me, credit cards are friends rather than foes: I use credit cards to pay almost everything so I can earn some rewards back. So my focus when selecting and applying for a new card is how much I can get back for the charges I put on the card, not interest rate, not customer service.

What’s your top concern when getting a new credit card? Please give your answer with the following poll .

[poll=7]

By the way, in that USA Today story, what really surprises me isn’t that fact the Hards’ debts seem never go away, but this:

To keep the family’s finances in balance, Hard said she paid more than the minimum payment on her Discover card every month, plus an $8.00 Internet fee.

Sorry, no sympathy from me to your situation if you have to pay an Internet fee every month when paying your bill. You got yourself to where you are!

*Photo from NY Times.

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11 Responses to “Poll: What Concerns You the Most When Getting a Credit Card?”

  1. Ernesto |  Dec 05, 2007 at 12:21 pm

    I remember when I was young, I didn’t care much for other people’s issues as well. One of the benefits of being older and a little more worldly is you’ve had some of life’s hard knocks and can feel for other people’s problems.

    Credit card issuers are one of my pet peaves. When the Federal Reserve was taking comments on this issue, I sent them a letter and published a copy on my blog.

    It’s sad that credit card issuers are less honest than loan sharks. I truly hope Congress steps in and passes some good old fashioned usary laws.

  2. MoneyNing |  Dec 05, 2007 at 12:42 pm

    Rewards program/membership fees :) I need to maximize the earnings since I use the credit card quite a bit.

  3. Sun |  Dec 05, 2007 at 12:58 pm

    Ernesto: Don’t get me wrong. I do feel their problem. What I don’t understand is how can people who are already thousands of dollars in debt pay an internet fee every month just to pay the credit card bill. Isn’t that avoidable if they pay their bills one or two days earlier instead of on the deadline day if I understand correctly what that fee is about? For whatever that fee is, I never have to pay any extra fee unless I pay my bill at the last minute. The story says only $350 a year was paid to reduce their debt, yet they paid $96 internet fee. Can that $96, or nearly 30% of their annual $350 debt reduction, be used to pay debt instead? I would say yes. They are already in deep debt and they should watch how every dollar is spent very carefully. If they choose to pay that $8 internet fee, I’d say they got nobody but themselves to blame for their trouble.

  4. Mickey Blue Eyes |  Dec 05, 2007 at 1:47 pm

    Although I chose “membership fees”, “rewards program” is a close second. Membership/annual fees is a litmus test for me. If the membership fee is > $0.00, it is too much. After that, rewards program is the most important. If they don’t pay me to make a short-term loan from them, then they really don’t want my business.

    For me, who PIF every month (and no freakin $8 “internet fee” either), I don’t really care what my interest rate is. The only time I will care is if the company screws up and doesn’t post my payment. Then I’ll raise heck with them.

    I agree — no sympathy for the $8 internet fee every month. That’s plain stupidity and laziness. Then again, stupidity and laziness is probably what got them into financial trouble in the first place.

  5. Rev |  Dec 05, 2007 at 2:01 pm

    I am right with MoneyNing on what I look for, as I follow the pay it off every month mantra.

    I do feel though that it is a bit unfair that if you are late on one credit card that cards from other companies can sue that to jack up your rate. As long as you are current with a card they shouldn’t be able to, only the ones you are late on should be allow to adjust up.

    Also that 8 dollar fee is a pretty lame thing to fall subject too. If it is the same day payment fee then they need to work something out to stop dealing with it.

  6. Credit Help |  Dec 05, 2007 at 6:10 pm

    I think the problematic thing is people really don’t know what they want because most don’t understand how credit cards work. If you ask the average person, they probably don’t know much about how a balance transfer works, or how to secure a lower APR. So education is really the key here.

  7. Tim |  Dec 06, 2007 at 5:00 am

    i don’t think about interest rate, b/c i pay in full every month. definitely would not get a card with an annual fee. do think about rewards program. i haven’t found customer service to be any different across the board.

    what was idiotic was the creditor’s comment during the hearings where she said people have the right to choose not to accept the new interest rate increases. Yeah, if you want to close the account you don’t have to accept the rate increase. while I disagree with this, i do feel having been there in debt, that you are well aware (especially with all the publicity out there) of the policies of credit card companies. If you choose to take on debt and no pay off each month, then you do have personal responsibility for knowing the terms and policies. i also think it is idiotic that cc companies charge to pay bills. however, knowing this, you can avoid it by billpay through your bank or by writing a check. Knowingly and willingly paying discovercard $8 to pay a bill is simply ludicrous and if the person is that dumb to continue paying it, then they do deserve their situation.

    the real issue is NOT the increase in interest rate, although it sells nicely during election time, but the fact that Hard got herself into debt spending more than she could afford from the start. if she had an 18% rate to begin with, indicates she didn’t have very good credit to begin with, too. what is missing from the article is that it seems she took on more debt along the way through applying for more credit, resulting in a credit score hit. “Victim”, I think not.

  8. Alessandro Machi |  Dec 07, 2007 at 4:46 am

    the family was paying 24 dollars towards principal and 176 dollars towards interest and some of you want to harp on an 8 dollar internet fee.

    Do you realize this family is paying a 733% monthly interest fee and you want to discuss an 8 dollar internet fee.

    I’ve started two protest websites about credit cards that outline the problem and then show a solution. http://www.credit-card-cap.com and http://www.credit-protector.com

  9. Tim |  Dec 08, 2007 at 12:59 pm

    Alessandro, what you omit in both websites is personal responsibility. We can argue all day long about credit card companies high interest rates (BTW, they are capped by state and federal laws, which you also neglected to include in your websites), but the fact is the people got themselves into debt by taking on debt they couldn’t afford. Credit card companies didn’t force Miss Hard to get credit cards.

    I’m not sure how you are getting 733% monthly interest when her credit card had been 18% and went up to 24.24% annual interest rate. The article does not break down the finance charges, which is too bad and serves the purpose of being biased in the article, but I’m guessing that there were other fees, probably like late fees, over limit fees, etc. This is not including the $8 fee she was paying to pay the bill.

    If you read your terms and conditions, as you should as a responsible borrower, you would see that credit card companies can change rates and terms. It is in black and white when you get your credit card. And you in fact can refuse the new terms by closing the account and paying it off at the old terms.

    It’s too bad Discover reduced Hard’s rate back to 18%, because she will never learn her lesson of taking on more debt than she can afford. There was nothing about her overall credit worthiness or history in the article. Again, with her rates, chances are they were below average. There was also nothing in the article about whether she continued to use her credit cards while she was paying them off.

  10. Tim |  Dec 09, 2007 at 1:29 pm

    Alessandro,
    The rules of math don’t go astray…if a credit card has an annual percentage rate of 18%, which Hard’s did, then you cannot pay more than that, unless of course you have other associated fees. Like I said before, the article was biased and omitted many things that an informed person would question. Banks don’t charge more interest than what you have agreed to pay by continuing to use the card, as well as applying for the card. The figures in the article do not tell the whole story. Moreover, you do not tell the whole story in your two websites.

    I did read your websites, and they omit many things. Foremost is personal responsibility. I don’t care if a bank charges 1,000,000% interest, you don’t need to take the debt. You go into debt knowing full well the ramifications. People simply ignore those ramifications and continue to be late in payments, continue to have a running balance, continue to apply for more credit (lying in most cases), etc.

    Your website, as I said before, also omits the fact that there are federal and state laws capping interest rates banks can charge. You make it sound as if this weren’t true.

    You can NOT be robbed if you don’t take on more debt that you can afford. You can NOT be robbed if you pay your bills in full every month before interest accrues.