5 credit card urban legends and why we fall for them
These urban legends prey on our hopes, fears and dreams
 Urban legends -- those oft-repeated stories that sound just
wild enough that they could be true, but really aren't -- prey on our fears,
hopes and dreams. Those involving credit cards are no exception.
These five larger-than-life tales about plastic from urban
legend site Snopes.com provide entertaining insight about the psychology of
money and even a few financial lessons.
Urban legend No. 1: The secret trick for ditching debt
The urban legend: A friend of a friend
has racked up $100,000 in debt by charging dinners in fancy restaurants,
shopping sprees and luxury vacations on her credit card. But she plans to
quickly wipe out her debt -- on the advice of a lawyer friend -- by simply
writing $10 checks to her creditors with the notation "paid in full."
What it reveals: We're all prone to
some wishful thinking about debt. "It's preposterous, but people think, 'Wouldn't it be great to be able to do this?'" says Kathleen Gurney, a
licensed psychologist who specializes in money management issues. "Because every once
in a while you hear about something crazy somebody did that actually worked --
it's like the lottery."
The lesson learned: Settling credit
card debt for pennies on the dollar can be done, but it's never easy -- or free
from repercussions. "The creditor would have to approve it first, and you'd
have to show you're in serious financial distress," says Gail Cunningham, vice
president of public relations for the National Foundation for Credit
Counseling. "Then it would show up on your credit report."
Urban legend No. 2: The story of the creditor from
hell
The urban legend: A man got a new
credit card and soon began receiving statements that showed he owed $0. He kept
throwing them away. The credit card company sent him a letter threatening to
close his account if he didn't pay his $0 balance. When he finally wrote a
check for $0 and sent it, the credit card company notified him it had bounced
and threatened to send the debt to collections.
What it reveals: "People want to think
that creditors are bad and annoying and frustrating, so the fact that this guy
was incessantly hounded is perfect -- it plays right into what they want to
believe," says Belinda Fuchs, CPA and president of OwnYourMoney.com.
The lesson learned: Checking your
statements -- and calling your creditors to talk out any concerns until they're
resolved -- is important and will eventually yield results. "It's a good thing
to stay on top of any issue with your credit," Cunningham says. "Sometimes
you've just got to be dogged and stay after it."
Urban legend No. 3: Battling evil with your credit
card
The urban legend: Someone's
mother-in-law got a letter stating that Osama bin Laden is a "principal owner"
of Citibank. The phone number of Citibank is provided so the reader can
supposedly call to verify. The e-mail states: "For any of you that have a
Citi credit card -- DON'T USE IT! Osama is counting on our money."
What it reveals: We want to control the
big things that scare us, and our purchasing and credit decisions offer a small
way to wield influence in a big world. "You might think, ‘I'll cut this card
up,' then you feel powerful and in control," says Eddie Reece, a
psychotherapist who specializes in financial issues. "People are afraid and
uncertain, so if you sell them certainty, they'll buy it."
The lesson learned: You do have power
through your spending and credit decisions, but shouldn't make knee-jerk
decisions based on untrue rumors. "Some of the information out there is
certainly not credible, and to be a savvy consumer, you need to do your own
research," Cunningham says.
Urban legend No. 4: The sneaky credit card scam
The urban legend: A friend goes to the
gym and leaves his belongings in a locker. After coming back out, he flips
through his wallet to make sure it's in order. A few weeks later, he gets a
credit card bill for a whopping $14,000. Turns out, a thief had broken into his
locker, swiped his credit card and replaced it with a similar-looking expired
card. The victim gets stuck with thousands of dollars in fraudulent charges.
What it reveals: We love to scare
ourselves silly about possible credit card scams -- even unlikely ones. "Credit
cards are very personal," says identity theft expert Robert Siciliano. "The
mere thought of a thief invading your 16 digits and the big bad bank being
uncooperative makes for a great soap opera."
The lesson learned: It's good to be
cautious because scammers are always coming up with new tactics -- many that
are far more believable than the card switcheroo at the gym -- but remember
that credit cards have many protections in place, including 60 days to dispute
charges and a limit of $50 liability for fraudulent charges. "You can't be too
careful with your credit cards and your identity," says Gurney. "But there's
no need to be fearful."
Urban legend No. 5: The magical credit card for
the super rich
The urban legend: American Express has
a super secret "black card" offered by invitation only to extremely wealthy
individuals such as Bill Gates. It can be used to buy literally anything -- from
a luxury car to a jet. It's delivered by a security guard and comes in a
velvet-lined box.
What it reveals: Many of us not only
want to be rich, we believe that one day we will. "I can tell this story like,
‘Oh can you believe these rich people?' or I can tell the story of this awesome
card that secretly I might even one day have," Reece says.
After the urban legend had circulated for years,
American Express tried to capitalize on it by offering the Centurion Card,
which is black in color and has an annual fee of $2,500 and offers many perks
-- but doesn't come close to the magical card of the legend.
The lesson learned: Rich or not, now is
the time to learn how to manage your money. "If you don't get a system down,
you might generate money in the future, but then lose it because you're not
capable of handling that much money," Fuchs says. "If you own your money and
plan your financial future, that's much better than waiting for a velvet box to
arrive at your door."
So, next
time an urban legend about money or credit shows up in your inbox, remember
not to take it too seriously -- and instead use it as a little reminder to
manage your finances wisely.
See related: Debt in collections: Do you settle or pay in full?, 4 keys to credit, debit card zero-liability policies, You've arrived! True tales of the mysterious Black Card
Published: October 11, 2010
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