rp_steffanie_rivers2011-hand-chin-med2-150x150.jpg

*A low credit score is indicative of someone who has too much consumer debt, doesn’t pay her bills on time, and doesn’t have enough income to support her lifestyle.

While some companies won’t give her the time of day, she’s the kind of customer credit card companies are searching for. Her bad habits keep credit card companies in business.

In the first three months of this year, credit card companies mailed 992 million applications trying to get consumers on the hook. More than 9 million of them bit. And nearly half of those people who signed up have credit scores below 660.

That doesn’t make credit card companies the good guys for extending credit to people they consider to be risky, sub-prime consumers. Their interest in consumers with low credit scores is like being chosen last in a game of kickball: It’s not about the player, it’s about the game.

Most people know how credit cards work. Banks and other lenders allow consumers to use their money via a credit card. And the consumer agrees to pay a certain fee or interest rate in exchange for that privilege. People with good credit scores get to pay a lower interest rate while those with poor credit scores – those under 660 – must pay a higher interest rate. No surprise there.

But the trick bag that credit card companies were putting everybody in was how much and how often they would raise interest rates. The fine print of a credit card agreement reads like the U.S. Tax code: You don’t know what you don’t know until you break the rules and are fined. Thanks to the Credit Card Accountability Responsibility and Disclosure Act of 2009 it’s harder for credit card companies to raise interest rates on existing balances and commit other bait and switch tactics that generated billions of dollars in revenue. Now companies are forced to make up the difference. And they’re doing it by luring consumers who have high consumer debt, a history of late bill payment and low income. Just like Carrie on prom night; it’s a set-up waiting to happen.

Now those consumers who couldn’t get approved for credit cards this time last year are allowed to play the game at 21% interest. That’s compared to people with credit scores above 700 who pay less than 13% interest for the same credit card. Simple math says the latter is better than the former, but smart consumers know if they can’t get it with cash they probably should go without that purchase.

Sure, those introductory credit card rates can be tempting, but they don’t last forever. That’s why they’re called “introductory.” Just because somebody wants to give you access to a bunch of money doesn’t mean you have to take it. You should ask yourself “why do they like me so much?” And if the answer amounts to more than you can afford to pay, don’t do it.

Steffanie is a freelance journalist living in the Dallas, Texas metroplex. Email her at [email protected] for questions, comments and speaking inquiries.