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.