More readers speak on credit card abuse

We received more comments from our readers to this columnist’s view on credit card use (“Credit Card Debt Much Worse than Usury,” 29 August 2011). We are giving them space again, and also removing any reference to the concerned banks’ names.

This one is from Bobby Santiago of Bulacan: “I am credit card user since 2008. It helped me a lot with my expenses, particularly when my mother got sick and I had no money that time.

“I could easily go to drugstores and purchase medicines even without money for I know I still have almost a month to save money for the purchases I made using my card.

“I never asked or applied for them. The banks just sent them to me through registered mail. I never liked the idea of using it, but hey, when an emergency came, I used the card ever since. I managed to get my dues paid on time. In fact, now I am using two cards.

Monthly fees

“[Bank A] reverses my monthly fee, but I have to call their office for this process. That’s fine with me since I am using the banks’ phone so I have no extra spending for the calls.

“On the other hand, [Bank B] refused to reverse my annual fee. I found out that my friend also came to the same experience with other bank. She told me that the fees can’t be reversed because I have purchases on installment basis.

“It’s the banks’ and the merchants’ promo to lure customers to purchase using their “plastic money.” Once I have read an article about credit card annual fees (also from The Philippine Star).

“Please enlighten me about it. As far as I can remember, there’s a bill ordering these credit card companies not to charge annual fees to its clients. Am I right with that?

“Also, the price of goods purchased via credit cards must be the same as cash purchase. Am I right?”

Computation

One of our online readers, rktc79, posted the following: “Thank you for writing about some concerns on credit card use.

“I have requested a copy of my finance charges from my credit card issuer when I got charged sometime last year.

“If you or any of the readers of your column would like to see how interest charges are computed, it can be seen at my blog, www.marketbeginner2.wordpress.com.

“Actually if you come to think of it, it turns out that they charge at around almost 7 percent since the interest is charged on your Average Daily Balance (ADB) for around 60 days, the computation of which can be seen in my blog entry.

“If anyone would like to know what the issuing company of the involved credit card is, one can leave a comment and e-mail address, or contact number in my blog so I can give the information to them.

“I am hoping that consumers will be wise in using their credit cards and that the we come up with a law (if there’s none yet) that would require credit card companies to explain in detail to each new (or old) credit card holders how exactly interest and other finance charges are being computed.”

Need for full disclosure

I would like to reply that our readers are correct in saying that total charges including penalties could amount to over 6 percent. The 3.5 percent indicated in my article the previous week is just the interest rate that card companies prominently state in their billing statement.

Let’s hope our legislators will recognize the need for full disclosure of credit card charges to the uninformed credit card users, particularly those who can only pay the highlighted “minimum payment.”

The onerous debt cycle trap of the “minimum payment” scheme deserves a warning notice to card users similar to the warning notice to smokers that cigarettes are dangerous to health. –Rey Gamboa (The Philippine Star)