One of my responses to the financial meltdown was to cancel a bunch of credit cards. How did I acquire all these credit cards in the first place? Well, in several ways, but most of all because they were offered to me by banks at low (or no) interest. They were offered to me as great opportunities, full of flattering language about how my credit history had caused me to be selected as a Particularly Prestigious Customer. In fact, I was getting them because we sold a house, bought a house, paid off a mortgage, acquired a new (relatively modest) primary mortgage, added a small construction loan, and made our payments punctually. In other words, because financial institutions share so much information, it was clear that the Radical family was spending hundreds of thousands of dollars in the space of about sixteen months. And much as I would like to imagine myself as Particularly Prestigious, I wasn't born under a rock. I was actually being offered these cards in hopes that I would overreach: that I would charge up a bunch of stuff, miss a payment (or not), and end up paying as high as 29% on purchases, accumulated interest, late payment penalties and miscellaneous fees. Which leads me to propose that in all the fuss about subprime mortgage lending, it is the extension of these fraudulent practices to the credit card market that has caused the second great weakness in our economy.
I had only one credit card for years -- the L.L. Bean Bank of America credit card that gave me free shipping --which I liked because, being a butch lesbian, I have a great need to be constantly filling out my wardrobe with flannel shirts, duck boots, jeans with flannel linings, wool socks, and whatnot. And then all of those years of commuting between Big City and Zenith also meant that new sail bags were always a fun holiday gift in the Radical household. Those of you who commute know what I mean: you empty the sail bag when you get home, leave it by the door, and start tossing things in the next day. By the time you are ready to return to the other home, you find your keys, your novel, your wallet and -- voila! Out the door.
That credit card got hammered during our big renovation two years ago (although many points were acquired and subsequently exchanged for new cross-country skis and a splendid bike rack), so -- although I tried to pay the card off every month -- at a certain point living expenses and construction expenses became so confused that I found myself with a sizable balance that was running at about 23%. What to do? Well, sensibly I thought, I acquired three other credit cards that offered me 0% financing for the first twelve months (I receive between three and six of these offers a day), split the outstanding balance on card #1 between them, and a year later negotiated with the other companies for a fixed rate of 7% that would last for the duration of the loan. I negotiated by simply threatening to cancel the card and get another one, and they (or their handsome, male, gay-sounding representatives) all quickly agreed to this low rate, particularly when I pointed out that it was well above prime. About a year later, I paid them off too, and then stuck them in a drawer, thinking that perhaps they might be useful in a refugee situation or some other dire fix where access to quick funding would make the difference between comfort and discomfort. "How sage you are, Radical," people would say as we settled into a comfortable hotel suite with our fluffy dog Breezy after a devastating hurricane, while they were breathing formaldehyde in government-issued trailers.
And yet there are two problems with having a lot of extra credit cards. One is that it is easy to lose track of them, because they blend in easily with ordinary household junk. One of my habits when I travel is to stick one of these cards in a Secret Location, so that if my pocket is picked I am not entirely without funds. Once, however, utterly by accident, I discovered that two ladies who had arrived under the auspices of Happy Housewives Homecleaning Services, and who left claiming that they had forgotten their vacuum cleaner (??), had filched one of these cards from an open suitcase. They were able to fill up their SUV and buy many cartons of ciggies at the Pequot reservation before I realized what was going on, canceled the card, and reported them. Not fun, on any level, particularly having to choose between reporting two desperately poor (but ambitious) women who wanted to go into the tobacco business and picking up the bill for their enterprise. Fortunately they were just petty thieves, and didn't find themselves in need of a set of antique nesting tables. But that taught me a lesson: if you are going to keep extra credit cards around, secure them.
The second problem is that before you know it, you have forty or fifty thousand dollars of credit available to you, which is no joke, particularly if you ever need a loan for something serious, like putting a new roof on the house, since all that credit counts against you when the bank is assessing you for a real loan. And for some reason, when the economy was tanking, that made me feel particularly vulnerable, perhaps because it was the one thing on which I could act. So I canceled WaMu (this was shortly before they stopped being WaMu, and I remember thinking at the time that their representative was particularly listless); and I canceled Chase (they resisted a little, but gave way). By the time I got to Citibank Amex, a card I do use every month for recurring household expenses, things were a little more complicated: I had to shift a bunch of bills to monthly payments from my checking account, then paid the remaining balance and called to cancel.
The representative put up vigorous resistance, so vigorous that I thought I would in fact keep this card as my backup. Now, just yesterday, I received a bill in the mail from Citibank for -- 50 cents. That's right. 50 cents. Why? Because that's what they charge you every month if you do not maintain a balance. And I swear to you, in the course of a conversation in which that nice gay man offered me the moon and the stars, he never mentioned that I would be charged just to have the card available. Had he done so, I would have canceled it, not because I can't afford six dollars a year, but on principle. And you know that, should I neglect to pay that 50 cents some month, they would charge me a $35 late payment fee.
If anyone in banking or government is listening out there: this is what is wrong with our financial system. Cheat, cheat, cheat. I believe that there were a great many people out there for whom having stuff they could not afford filled a great, aching hole. But I also believe that if you take a look at people like me, you will see a range of experiences: people being cheated a little bit here and a little bit there, and told in great surprise that the rule they have violated was right there, in .5 point type on page 13 of the agreement that revised their contract with the bank (a document they received last May.) Once I realized that, because I was paying my credit card off every month, I was getting the bill more and more frequently. Upon investigation, I learned that my credit cycle had been shortened to 17 days. I can only believe that the point was to trick me into "missing" a payment, when in fact I had literally just paid the bill.
I rarely take advantage of commercial credit now except for expedience, such as charging up reimbursable professional expenses (warning: when reimbursed, do not go out and buy a TV instead of paying the bill.) Mostly, for internet purchases and low-cash situations, I use my handy debit card (warning: if you pay for monthly expenses on a credit card and have no savings, you need to wean yourself to this system gradually, otherwise you suddenly run out of money in the middle of the month, as you are paying for everything twice in a single thirty-day cycle. And never give a hotel a debit card at the beginning of your stay, as they will put a hold on your checking account for a substantial sum of money that takes weeks to release.) But I also make enough money that I don't have to rely on credit to go on vacation, pay a medical bill or a car repair, the kind of thing that can put an ordinary person (an assistant professor paying student loans, for example) behind the eight ball for several months. As a household, we have a great, fixed-rate mortgage we can afford, and we have enough savings that we can make up a month's budget shortfall from our other resources, even in the midst of this great crash. But my own experiences doing business with (read: getting screwed by) huge interstate commercial banks do give me cause me to believe that the de-regulation of our financial system has made a great many people into permanent debtors by locking them into multiple "agreements" with banks that they cannot possibly understand, "agreements" that are deliberately altered in arcane and unpredictable ways to fool people into violating the terms they have "agreed" to. That I keep receiving such offers every day, and multiple offers over the internet, to consolidate my debt into one low, low payment when I am simultaneously hearing on the news that small businesses cannot get the loans they need to maintain inventory, suggests to me that we are still swimming with the sharks economically; and that as a nation, we are a long way from grappling with the corrupt corporate practices designed to take money from those who can least afford it and siphon it upward.