Credit Card Follies

The economy is scarier than ever, and it is very easy for an underpaid (and unsuspecting) freelancer to fall prey to predatory lending and credit practices. Case in point–when I signed up for an Amazon.com credit card earlier this year, I thought I was doing myself a favor. I use Amazon in a number of ways and when the credit card offer popped up, I filled out the form on a whim. “Cut out the middleman!” I thought…

For some reason I never activated the card when it finally came in the mail. It sat gathering dust until I discovered it again today while cleaning up the home office. I got curious about the card since I couldn’t remember the terms, and I was contemplating doing a balance transfer from another card if the interest rate was right.

When I called activation hotline, I spoke with a customer service rep who told me the interest rate on my credit card was 11% with a credit limit of $10,000. Not bad for a freelance writer, eh? I was very pleased to hear this and decided right there to do a balance transfer. I’ve been trying to pay down a card with a higher rate and every little bit helps, after all…even if it’s only a percentage point or two.

I told the customer service rep I wanted to get a lower rate on my card so I could do a balance transfer. She transferred the call and after a few moments I was on the line with another rep who was VERY eager to get my balance transfer done.

Something didn’t sound quite right to me–this customer service rep was giving me a hard sell that set off my alarm. “How much do you want to transfer?” She sounded like she was trying to stay calm. I gave her a rough estimate, but said I needed to double check the amount to be sure.  She replied, “Why don’t you just do a balance transfer on that round number then take yourself out to dinner tonight?”

That made me do a full stop. Something DEFINITELY didn’t sound right here. I told her I wanted to be accurate and would just call back when I had the exact figure, thanks very much. Then I told her to remind me again, just what exactly was the interest rate for balance transfers?

“Let me see here…oh, here it is. The interest rate for balance transfers is 25%.”

WHAT??? That didn’t sound like ANYTHING I wanted to be a part of. I asked how much the ORDINARY interest rate was. She informed me the card had a 20% rate. A far cry from the original 11% I was quoted at the beginning of the phone call.

I cancelled the card, cut it to ribbons with extreme prejudice and wonder just what happened there. I won’t go so far as to accuse Chase Bank (the credit card company affiliated with Amazon in this case) or Amazon of doing a bait-and-switch, but I WILL say that anyone who doesn’t ask the right questions in situations like these could well end up stuck with a horrific interest rate they couldn’t hope to beat no matter how much extra you pay every month.

Freelancers, it’s important to make sure you know EXACTLY what you’re getting into when you sign up for new instruments of credit. Predatory lending practices are EVERYWHERE and until we get people in office who can fearlessly legislate against these shameful practices, we are ALL at risk every time we open a new line of credit. READ YOUR TERMS CAREFULLY. Do NOT sign anything you don’t understand, and NEVER accept an interest rate anywhere near 20%. It is financial suicide, plain and simple. And I don’t know a single freelancer who can afford to do anything so foolish.

Let the borrower beware!

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