If you don't live beyond your means (I know, easier said than done), you don't have to worry about high interest. I never use my credit cards for anything I can't pay off that month, so I've never paid interest and my cards are no fee cards. I just get free airline miles for paying my bills. VISA must hate me.
For gift cards, only buy them for stores you KNOW the people shop at anyway...not Red Lobster. Sometimes you can get a $25 gift card for $20, that's a great deal all around if they use them.

It's a little sad to me that Bill brings up all these issues, but offers no real solutions.

@newtboy -- I used a credit card (Discover) almost exactly as you described while I was going to college. Get a balance to pay for normal stuff, but pay it ALL off at the end of every month.

But I don't think the credit card companies hate people like us for 2 reasons:

1) For every one of us, there's a buttload who pay the minimum rather than the entire balance.

2) In my case, I think that in 4 years of college I forgot to pay off my balance (simply forgot to send in the check) once or possibly twice. I remembered a bit late and called Discover to see what to do, and they would tell me to pay the balance (or the minimum payment, not that I actually did that) plus a late fee.

I can't remember how much the late fee was. Maybe about $20? Anyway, at the kind of monthly balance I was running (not high), I'd wager that $20 was equivalent to maintaining an actual balance and paying the interest for a month or two or three. Which makes Maher's argument that they are "profiting from people's mistakes" reasonably accurate.


...On the other hand, Discover had "cashback bonus" awards of .5 to 1% or so, from which I stocked up and claimed somewhere in the $50-100 range over the 4 years, definitely enough to keep me in the net positive range in spite of a $20 late fee or two. That tells me that the magnitude of my "mistakes" must have been tiny in comparison to average credit card users.

I don't think Discover is an evil company per se for "preying" on people that don't use the card in the same way that you or I would. Paying a $20 late fee was a fully reasonable thing to charge me with. On the other hand, there's many many examples of predatory type fees that really do take advantage of people for "offenses" that are way less egregious, even things that have previously been considered standard use of the product / service in the past (paying WAY more for an extra inch of legroom, checked bags, food, etc. on airplanes comes to mind). Many of those arguably do cross the line into "evil" territory, I think.

@newtboy

The criticism is more of how it's designed. The only reason we get an interest fee period with credit cards is those paying fees / interest are subsidising those who aren't. Otherwise why would you essentially get free borrowed money?

Why would we get "free" loans?
Maybe because they get something like 4% from the vendors?

Credit card company revenue comes from a number of sources but interest / fees are a large component.

My point was more, by definition continuous 30-60 days interest free periods (loans) aren't 'free' and there's cross-subsiding going on.

The business model is built on selling a highly overpriced product to consumer A, so you can sell an underpriced one to consumer B.

This is pretty far from the capitalist ideal of companies competing and continuously innovating to offer consumers the best product.

So basically you're not to blame if you contractually agree to a shitty service and then forget to maintain the conditions? There's a good reason I do my credit business through reputable establishments with reasonable T&C and interest rates rather than Bruce the leg breaker at the local fucking pub... Because Bruce is a cunt and his T&C are ass rape...

I have 55 days interest free on my platinum card and I've not spent a single cent in interest in about 16 years. Mostly cos my wife would kick my ass harder than the bank, but it's a matter of discipline rather than the bank being a pack of pricks. I agreed to the terms, I need to meet them.

There's probably a fair point to be made somewhere in there about usuary rates re: credit cards, but the airline bit is a fucking silly...

Budget airlines offer everything as a pay for after the ticket price service because people want cheap fairs. In some cases, it's actually cheaper to fly today than it was 30 years ago in the 80's... (http://www.smh.com.au/business/aviation/international-air-fares-at-30year-low-20160422-gocr1r.html)

Well, funny that, people don't want to pay for a premium product and they get a shitty one that nickel and dimes them to death to try and keep the margins up (aka "staying in business").

You can look at plenty of markets where cheap, shit products are now the standard because people either won't or can't pay for quality ones. It's the entire reason why many industries outsource to foreign wage slaves and why cheap Chinese shit shows up everywhere as well known and reliable brands go out of business.

Yes, the US certainly has a problem with a lack of oversight on various industries which allows them to get away with a lot, but the customer/end user has to take some responsibility as well.

Guys, it's the vendors. They pay for that "free" loan and a lot of the benefits. And the credit card companies lobbied it in by making it illegal for a business to charge a different price for cash than plastic. That's recently (last 5 years or so) been overturned. If you've ever had the distinct pleasure of navigating the byzantine and maddening world of credit card clearance fees, you would know that not all cards take as big a bite out of your transaction with the consumer. And it just so happens that the juicier benefits cards cost the vendor even more. That's a minimum of 1.8%, usually 2.5% and as high as 4%. That means the bank floats you the $ for 30 days average at 2.5% = 30% APR. It's quite a racket. There's a reason you get 3 very expensive mailers with fake cards and whatnot a week.

Just on a side note, fairly recently credit card companies started charging for refunds. So, if you want to screw around a company, buy something on credit, then take it back a day or so later. They'll get charged the percentage for selling it to you, then they'll be charged the same amount again for returning it. Credit card companies couldn't give a shit whether you pay off your card or not. You're small potatoes. They get their money off the vendors.