“I’m sorry sir, the card is declined”, said the middle aged Arab looking man with a twinkle in his eye I didn’t quite appreciate. I was at Thanasi’s, my former favorite liquor store, trying to put a $20 bottle of vodka on my credit card. I knew it wasn’t overdrawn because I’d happened to check the balance that morning. “There should be plenty on that card….”, I said. He ran the card again. “Still declined. We have an ATM right there”, he said, pointing to a machine that will mug me for $2.50, in addition to the $2 Bank of America will charge me. He was still staring at me with that damn twinkle in his eye and a barely contained smile. It was a standoff. I assumed he was one of the owners and just didn’t want to pay the credit card fees. That or he was just fucking with me, which was unlikely. “I would, but I don’t have the cash. Sorry”, I said, and walked out.
On the sidewalk outside I called Citibank. They had no record of the card being declined, or run for that matter. Fuck! You!
Not long ago this incident would’ve surprised me. But lately, strapped for cash, I’ve been trying to put everything on my credit card. And it’s amazing how much attitude I’ve gotten over it. The zombies at Walgreens don’t care. But at the small independent stores I frequent here in the Mission (the ones really feeling the pinch of the escalating credit card fees), hand them a credit card and they act like you’re plopping a steaming pile of dung on the counter.
Credit is blocked at every turn. A surprising number of places simply don’t take credit cards (like ALL the good dive bars). And the ones that do all have minimum fees that seem to go up every day ($20 at bars, $10 at convenience stores, $5 at coffee shops). The rule, it seems, is that the limit be just more than I want to spend. Order a two dollar coffee and I have to sit there trying to figure out which pastry to buy even if I don’t want one. Consume more!
In a way, I find it sickly fascinating. If only because it’s the first time in my life a story in the business section has directly touched my life; the credit crisis. Yesterday it touched me quite inappropriately.
I was trying to buy a pizza (I do consume things other than pizza and vodka, btw), and my card was declined. There was no twinkle in the clerk’s eye this time though, and I’d had no problem with the card since the liquor store incident. I began to get worried. Had someone spent the nearly $1,000 I still had left on the card? I rushed home with my pizza (thanks Discover!), and looked at my account online. It took me a while to figure it out. There were no unauthorized transactions. Citibank had simply lowered my limit by $1,000. The credit card company had cut me off.
Confused as to why they’d do that (I always pay on time!), I started doing a little research. The results were sobering. Apparently the banks writing down billions from the subprime mortgage crisis are also some of the biggest owners of credit card debt. This is potentially very bad. As home prices continue to plummet, and food and gas prices continue to rise, people are turning to their already stretched credit cards. This is spawning speculation of another debt crisis, this time in the consumer credit market. Citibank, it appears, it especially fucked. In April it posted a net quarterly loss of $5.1 billion, and was recently ranked by Standard and Poor as #2 in exposure to risky credit card debt. Analysts predict it could write down another $17 billion in the next quarter.
Fortunately for Citibank, it has the ability (as do all credit card companies) to change your contract at will. They can lower your limit, increase your APR (as they did to me a couple months back), or recalculate your minimum payment. It doesn’t matter how much you’ve forked over in on-time payments.
For a good, detailed look at the credit card game check out this Frontline documentary you can watch online for free.
I have to say though, my recent anger at credit card companies has been short lived. Because honestly, I’m glad they cut me off. Credit cards are just. So. Evil….. Deceptive, predatory, Evil. They enable us live beyond our means, which of course most of us do—Americans are drowning in credit card debt. And before we know it, they’ve got us. We resign ourselves to a life of debt and spend the rest of our lives working off interest. And it’s the worse deal you’ll ever have. Buy a $12 pizza and in the long run it ends up costing $112. Oh, and if the credit card company happens to sell a bundle of predatory mortgages to people with no understanding of how they work and no means to pay, triggering a worldwide financial crisis, it’s on you buddy. Up with the interest rates and nothing you can do about it.
I’m choosing to view my credit card situation as a good thing. Just like it took a quadrupling of gas prices for people to start giving a shit about the environment, maybe cutting off people’s credit is the only way they (me included) will start living within their means.