America has a love/hate relationship with the credit card industry. On the one hand, statistics would indicate Americans love credit cards. After all, they charged $1.5 trillion on them last year, up three-fold from a decade earlier. There are 650 million general-purpose cards in circulation that can be used everywhere from McDonald's to supermarkets to the fanciest hotel.
  On the other hand, a string of recent developments-you can find details in our cover story on page 30-would indicate more than a few people hate credit cards. Card companies get blamed when account data are stolen from merchants and used to commit fraud, subprime issuers attract attention for allegedly shady practices that hurt the poor or gullible, and mainstream credit card pricing practices draw fire from consumer groups.
  It's my sense that penalty fees and annual percentage rates are getting more heat now than at any time I can remember in over a decade of covering this industry. Thirty-nine dollar late fees that kick in when a payment arrives an hour late, penalty interest rates 12 or more percentage points higher than the normal APR, and overlimit policies designed to produce fee income make the industry an easy target. Issuers compound their PR problems every time they say that all the fees are disclosed in those legalistic cardholder agreements they send out. Such documents pass muster with regulators, but few consumers read them. Card executives must have cringed when they read that lovely report about their revenue-enhancing practices on the front page of The Wall Street Journal in early July.
  Of course, any time you've got a bunch of stone throwers, you've got to pause and ask who all is guilty. While few outside the banking industry will defend the high penalty fees so common nowadays, card execs argue with some merit that your average cardholder refuses to pay annual fees except on select rewards cards. As the annual fee declined in the 1990s, penalty fees rushed in to fill the margin void.
  On that point, however, I will argue that the card industry, for all its millions of dollars in advertising, has done a lousy job of educating consumers about the true value of credit cards, financial instruments easily worth an annual fee of $10 or more. Think of it-by merely presenting a piece of plastic in and of itself worth only about 25 cents, along with a valid driver's license, a cardholder can rent a car worth $30,000. Or fly first class to London. Or pay the plumber $200 to fix a broken pipe two days before the next payday and the checkbook is a bit low. Is that value, or what?
  Issuers wouldn't have such a scruffy image today if they had held the line on upfront annual fees instead of becoming so reliant on dinging their customers every time they disobeyed the increasingly strict rules.
  A note on my returned-mail "mini-investigation": Last month I promised to check how common it is for consumers to return card solicitations unsigned as a way of getting back at issuers for what many perceive as junk mail. Well, I've called some big card mailers and some marketing experts. Issuers seem to be avoiding me, and so far the gurus haven't heard much about it. But I'll keep checking and give you a report before the year's out.
 

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