SALON

Tuesday, Dec 1, 2009 3:45 PM UTC

The latest insult from the credit card industry

If you're not using your plastic enough, watch out. You may have to pay for that privilege, too

By

Topics: U.S. Economy, How the World Works, Credit Cards,

So let’s say you are a typical American facing a tough recession. You are having trouble making your mortgage payment. You’ve been carrying a lot of debt on your credit cards. Maybe your partner loses his or her job or you get a pay cut. You read the newspapers and figure times will be hard for a while.

So you make some smart decisions. You cut back on expenses. No more expensive dinners out on the town. No more pricey vacations. Most important — you focus on paying down your credit card debt. You become a saver, instead of a conspicuous consumer.

And one day, you look with satisfaction at a zeroed out balance on your plastic. Nice work!

But don’t keep it up too long, because what’s good for you is bad for the credit card companies. And they simply won’t stand still while your plastic stays in your wallet. According to Bloomberg News, the credit card companies have come up with yet another way to gouge some flesh from the newly thrifty — “inactivity” charges: fees for not using your cards.

Credit card issuers, facing the highest level of delinquencies since April, according to Moody’s Investors Service, are reviving inactivity charges and reworking other fees in an effort to stem declining revenue.

Fifth Third, based in Cincinnati, added the fee for the majority of its cards in June, in part to offset increasing servicing costs, said spokeswoman Stephanie Honan. “We want to encourage active use and management of the accounts,” Honan said.

There are ways to fight back. Bloomberg quotes Linda Sherry, the director of national priorities with Consumer Action, with a workaround: “If you’re keeping the card in a drawer because of the safety it provides, use it a few times in a year.” Presumably, if you’re disciplined enough to pay down your debt, or not use your card at all, you will also be disciplined enough to pay for groceries a couple of times a year with your credit card and then pay off the bill immediately.

But it’s the principle here that counts. The credit card companies are better off if you behave against your own interests. It’s a new twist on the paradox of thrift — the idea that our individual decisions to pull back work against our collective interest in a thriving economy. It’s bad enough that rational behavior can suck the life out of an economy — but to be actively penalized for saving your pennies with an inactivity charge? That’s just insulting.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 40 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

vote
Who is "Company Doe"? Corporations accused of wrongdoing win battle to keep identities secret
40 points41 points | 1 comment
vote
"Slave descendants seek equal rights from Cherokee Nation": long, detailed narrative of legal and historical complications in red-white-black relations
31 points32 points | 1 comment
vote
Who is "Company Doe"? Corporations accused of wrongdoing win battle to keep identities secret
6 points7 points | comment
vote
Steven Soderbergh's Liberace biopic shows the famously flamboyant entertainer as a person, not a stereotype
6 points7 points | comment
vote
Experts: Fox News spying scandal a game-changer - I think that crackdown is ideologically driven and I think it’s hard to come to a different conclusion given the vigor with which this justice department has gone after people. So I think it is about a method of control that is badly misplaced.
5 points6 points | 6 comments

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations