As you get ready to hit the streets to pursue our true national pastime - racking up consumer debt - I offer this little cautionary tale for the holiday shopping season.
Last week, I received a bill from Department Stores National Bank, the people who own my Macy's card.
My payment was a week overdue, and the net result was a bill 50% higher than what I initially owed. 50%? In one week? Las Vegas loan sharks would be jealous.
I know what you are thinking - what kind of an idiot signs up for a department store credit card? And then pays late? Me. A lot of you do, too, lured by special sales and inducements that more stores are offering this year.
And American consumers, after shying away from credit card debt when the recession hit, are loosening up on the plastic. According to credit card industry analysis on CardHub.com, credit card debt soared in the second quarter of 2011 to almost $18.5 billion - 66% higher than the increase from the first to second quarter of 2010, and 368% higher than the increase two years ago.
That's great news for the credit card industry, but not so great for you and me.
To compound the problem, banks and retailers that issue the cards are operating in a very friendly regulatory environment. Usurious rates, confusing and misleading offers, and outrageous fees are facts of life. We have grown so used to thuggish behavior by financial institutions, we take it for granted when they rip us off.
It wasn't always like that. We used to think of retail stores and banks as legitimate businesses. Some Occupy Wall Street types seem to think the big banks should stop acting like mobsters running a numbers racket. They even shamed Bank of America into backing down on charging consumers a $5 fee to use their debit cards. But, for the most part, the banks are sticking to their shady ways.
Case in point: my conversation with Macy's.
Here are the sordid details: On Nov. 11, I owed $61.93. On Nov. 12, Macy's added a late fee of $25 and something called a "minimum interest charge" of $2.
The "minimum interest charge" is what they charge if you have accrued less than $2 in interest. In other words, it's a fee for not owing enough money.
Since the new fees and charges added up to almost half of my original bill, and since I figured I was dealing with Macy's, not the Mafia, I called to try to get my bill reduced. A Macy's customer-service representative explained that she could erase the extra charges if I paid by phone - but she would have to charge me $14 for the phone payment.
How about if I paid online? That would be fine, she said, but then she couldn't remove the extra charges.
Now, does anyone seriously think Department Stores National Bank lacks the technological capacity to process an online payment? Of course not.
But we've all dealt with credit card companies, so we are used to these little games. I asked to have a manager remove the fee. My customer service representative uncovered a clause that would allow me to pay a mere $10 and have those extra charges removed if I paid with an electronic check. I asked her to look into it further.
After some significant time on hold, my customer-service friend came back and told me her manager had said, "The best we can do is $5."
I settled for the $5, just to be done with it. It was an acceptable ransom.
This is how the banks operate. A certain percentage of customers won't call to complain, and those poor schlubs will pay huge finance charges and special interest rates. Some will pay higher rates because the law allows banks to hike rates if you are a day late paying off a completely different card. Some will buy cash cards only to have them whittled away by hidden fees. It's amazing what the credit card industry has come up with.
As Elizabeth Warren, finance industry watchdog and candidate for U.S. Senate in Massachusetts, puts it, "Every single day that goes by I read another news report about...how large financial institutions have figured out ways to lie to people, to squeeze them for money, to make profits by tricking and trapping people rather than by offering a better product."
The least we can do as consumers this holiday season is try not to let them get away with it. Pay cash. Make gifts. Ignore the special inducements.
Join the 99%. It's a movement, not an interest rate.
Ruth Conniff is the political editor of The Progressive.