When It Comes to Credit Cards, There's No Such Thing as a
By Michelle Singletary
"Are you nutso?"
That was a question one reader posed to me recently. He thought I was wrong to advise a
young woman not to transfer $13,000 of student loan debt to a credit card offering a very
low interest rate.
But I'm not nuts, just realistic. I recommended that the woman with the student loan debt
not do it because those low-interest-rate cards come with too many loopholes that allow a
credit card company to hike the rate if you even sneeze wrong.
"You give folks far too little 'credit' for being able to monitor their situation," the reader
It's not that I don't think people can't handle credit well (many do), it's that folks sign up
for these cards without reading or truly understanding the fine print, which states that
minor missteps in the handling of their accounts can trigger increased rates --
significantly higher than the 8.25 percent fixed rate the woman in question was paying on
her student loan.
You can do everything right and still have your credit card rate increased.
In fact, Minnesota Attorney General Mike Hatch is going after one giant credit card
company for what he says is a deliberate attempt to mislead people into signing up for
what they think are credit cards with permanently fixed rates.
In a lawsuit filed recently against two subsidiaries of Capital One Financial Corp., Hatch
alleges that the company uses false, deceptive and misleading television advertisements,
direct-mail solicitations and customer-service telephone scripts to market credit cards
with allegedly "low" and "fixed" interest rates that, they say, unlike those of its
competitors, would never be increased.
Capital One said in a statement that it has done nothing wrong.
I do believe that much of the advertising for credit cards doesn't emphasize enough that
special low rates can be taken away for any number of infractions -- including making a
single payment late (even by one day) or