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Thursday, Feb. 3, 2005 01:34 pm

common sense 2-3-05

art1765

Credit-card giants such as Citibank, Chase Manhattan, and MBNA fill our mailboxes with little love letters, wooing us to accept their cards.

But — as in so many love affairs — once you’ve signed up, the companies suddenly show an ugly, grasping, selfish side. They actually seem to enjoy penalizing their customers.

For example, I recently paid a monthly bill of about $1,000 on an MBNA card, but I accidentally wrote a check that was $10 short. The next month, MBNA hit me with a finance charge of $21. That’s interest of more than 200 percent on a $10 debt! Turns out they didn’t just assess the penalty on the amount I was short but on the entire $1,000 I borrowed for the month — even though I had already paid $990 of it. Check the fine print of your agreement they said lovingly.

Perhaps you, like me, try to pay your balance in full each month to avoid usurious interest rates. Most of us assume that our bills are not due until 30 days after we get them in the mail. The banks, however, have oh-so-quietly shrunk this common grace period to 20 days or less. Also, Citibank and MBNA are among those that now include sneaky fine print specifying an hour at which your payment is due — say, 1 p.m. on the 20th. Miss it by a minute, and they can whack you with a late fee of up to $39, plus penalty interest rates as high as 30 percent, even though you think you’ve paid your bill on time and in full.

They stiff their own customers because there’s no real competition or regulation to stop them, and it’s hugely profitable – credit-card banks collected nearly $15 billion in penalty fees last year.

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