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

[one...two...tree 2,762]

By Andrew Leonard

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 paycut. You read the newspapers and figure times will be hard for awhile.

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.

http://www.salon.com/tech/htww/2009/12/01/...;aim=/tech/htww

[Peikko 1,575]

No point in having a credit card if you do not use it. Cancel it or use it properly. A credit card was never designed to be a substitute for taking out a loan so I don't understand the 'put it in the drawer for emergencies' notion at all.

[*JG* 2]

I don't know....I kind of think it's #######. I have a friend who pays off his card every month. For that, they raised the interest from 9% to 19.8%

I'm glad I don't use them anymore.

[Peikko 1,575]

I don't know....I kind of think it's #######. I have a friend who pays off his card every month. For that, they raised the interest from 9% to 19.8%

I'm glad I don't use them anymore.

Doesn't matter what the interest is if he pays it off before any is accrued. He can also change CC companies if it bothers him.

[BishopMnA 0]

I don't know....I kind of think it's #######. I have a friend who pays off his card every month. For that, they raised the interest from 9% to 19.8%

I'm glad I don't use them anymore.

This happened to us as well. My wife charges everything for the month on the credit card and then we pay it in full at the end of each month and never carry a balance. This has worked out well for us and has also enabled her to build credit in the USA. Yet, even though we were never late and never carried a balance, we were still rewared with a 7% increase in her interest rate...because of the tough credit/economy.

Its odd times...Sigh...

[Mr. Big Dog 10,747]

I don't know....I kind of think it's #######. I have a friend who pays off his card every month. For that, they raised the interest from 9% to 19.8%

Doesn't matter what the interest is if he pays it off before any is accrued. He can also change CC companies if it bothers him.

Bingo. I really don't care if my interest rate is going up on the plastic. I never carry a balance. I charge, I get the bill, I pay it in full on due date. Interest accrued: zero no matter the rate.

My credit card company just sent me a 0.99% for 6 months offer. That's 9% below my regular APR on a card I had for the last 10 years and that I have not ever carried a penny worth a balance on. Am I going to make use of that offer? Nope. I will continue to use my card and pay it off in full by the due date.

[rebeccajo 14]

I had a different scenario with an infrequently used card. Meaning a card I'd had for maybe 15 years with a $15K limit. Really I just stopped using it because after Wes got here, my local bank was more agreeable to adding Wes to a new card with them.

Anywho - after a couple of years of carrying a zero balance (I would occasionally use the card and pay it off), the bank decided to lower the credit limit to $3K.

[Usui Takumi 1,562]

I think the average person can still use a Credit Card and pay the balance off each month if careful. Credit Cards are superior to other forms of payment when "risk" is involved. IE its much better to deal with a stolen credit card or unauthorized purchases on a Credit Card then if your dealing with a debt card or cash.

[HAL 9000 96]

So I guess this kind of... 'fee' wasn't looked at in the Consumer Protection Act. Or was it?