It used to be that if there wasn’t enough money in your account to cover a purchase, your debit card wouldn’t go through. If you happen to be among the millions of Americans who barely make it from paycheck to paycheck, you’re much better off floating a check the day before payday so it won’t get debited until the paycheck gets recorded. But many people have found that they can still use their debit card, then have to pay the bounced check fee anyway.

As described by Chris Plummer in a commentary at Marketwatch, this can add up to usurious fleecing of the consumer. Particularly if you allow the bank to automatically deduct some of your monthly bills, which can leave you short even if you think you should have money enough to cover lunch the day AFTER payday! Plummer does the math and notes that if you end up having to pay the bank a $35 overdraft charge on a $3.50 lunch purchase, the effective interest is 1000%.

Moreover, if somebody else uses your debit card – steals it and manages to find your code in order to use it, or (in many cases) a child or other relative decides to withdraw on a card you lent for a one-time use – YOU are on the hook. If it were a credit card, the lender’s money is at-risk, so fraudulent use has built-in protections that you won’t be stuck with the bill. Since that debit card can only access YOUR money, you have to pay regardless of theft and fraud.

Plummer details the risks very well, so do check out the link and arrange your money management accordingly. Pay your bills on line only after the paycheck has been deposited and immediate purchases are covered, don’t let the bank do it for you. Always get your card back from anyone you’ve given it to for a one-time purchase, to protect yourself against them using it when it will overdraw your account. Keep strict track of your usage and fees, and if they’re costing you a lot you can go back to a regular checking situation. Which may be more trouble and generate more paperwork, but will protect you from the bank’s greed as well as protect your financial privacy. Check fraud IS protected just like credit card fraud in most states, where debit card fraud is not.

If your bank account is like mine, your money flows through and doesn’t sit in the vault earning a lot of interest for you or the bank. The bank is in business to make money, not to make your life convenient. Don’t trust them with the details of your financial struggles or you may find yourself paying them a big chunk of your income every month for nothing.

Despite the ever-worsening economic collapse, the almost complete unavailability of credit, and the oughtta be illegal raising of credit card interest rates to usurious levels, most of us are still getting the usual 3 or 4 Super-Duper Gold-Plus 0% APR credit card offers per week. I’m still getting them, and I don’t even have any credit!

They’ve been building up in the trash portion of my filing system for over a month now, so I thought I’d go through them all at once for one last laugh before using them as fire-starter in the wood stove. Almost immediately I was struck by the clever marketing gimmick of making this credit card or that one sound super-exclusive on the basis of the color of the plastic.

We’re familiar with green cards, gold cards and platinum cards. Now there’s black cards and school color cards and sports team color cards too. There are “pick your own” color cards, so you can match your car or your outfit. There are silver cards and copper cards and a few that call themselves something other than battleship gray, which is what they actually are. Blue cards and red cards and multicolors too. There are red, white and blue flag cards with eagle holograms, there’s baby pink or blue.

Most new business for credit card companies doesn’t come from luring new customers into debt, but from getting people already up to their ears in debt to cancel their old cards and transfer the balances to a new card. Savvy consumers can save a bundle on interest by doing this every year or so if they carry a balance, but most credit card holders aren’t that savvy and don’t bother reading the fine print. They just make their payments and wonder why their balance keeps going up even though they haven’t bought anything since Christmas of 2005.

So marketers, knowing the allure of certain colors for certain people, can entice people to switch by offering them a new card in a prettier color. Strange but true.

It’s the basic psychology of marketing at work, and the marketing of credit cards is one of the hottest markets going. Or was, and probably will be again as soon as banks and companies start lending again. Color is filed under the “Perception” angle. It’s one of those things that can get customers to filter themselves so the marketer doesn’t have to do the hard demographic classification work (colors mean different things in different cultures).

The connotations of the color’s title also works to expand the potential customer base. A ‘Gold’ card appeals to just about everyone’s knowledge of value and precious commodities, even though the color itself is an uninspiring yellow-brown. The ‘Platinum’ card is called platinum instead of silver because plantinum is a more valuable metal than silver – more valuable than gold, even though the color is the same, and it’s an uninspiring light gray. A ‘Green’ card will appeal to a broad demographic and younger customers, and if tied to a kick-back to some greenish cause (Save the Whales, solar power, whatever) will be readily marketable.

Credit cards in other colors appeal to customers primarily for the color and not what it subliminally suggests to them or others. A ‘Carolina Blue’ card – and that color is really more of an aqua – appeals to a broad cross-section of males who live in North or South Carolina because it’s the team color of the Panthers. A bright red card will appeal to the same demographic in states whose teams (baseball, football, basketball) have red for a color. Or cardinal as a state bird. Or red and white as school colors. This take a little targeted marketing, or the issuer can just offer a full color range to each customer and let them choose their own.

So now you know. There is a crafty marketing reason why there are so many colors of credit card out there. Maybe you’ll be strong and resist the ploys tugging on your psychological profile in order to take your money, or perhaps you’ll thing the idea is great and go get a Steelers card today. Either way, it never hurts to understand something about how marketers manipulate people in order to make money. That knowledge gives you more power and greater choice, and can help you avoid the debt traps set for you seemingly around every corner.

Links:

The Seen and Unseen Bears and Gorillas in Marketing
Credit Card Matcher
Credit-card Merchant Account Services: Color Psychology
Consumer Behavior: The Psychology of Marketing
Marketing credit cards: offers you can’t refuse

For those of us on the short end of the recent and ongoing mass looting of the economy by the kind of ant-populist robber barons who make Jesse and Frank James seem like do-gooders The Hardy Boys, there is now a historical record of the Fortune 500 CEO Hall of Shame in what could be printable trading cards outlining the shameful accomplishments of the Worst of the Worst.

Check out the card for Lehman Brothers’ Richard Fuld, whose stats list a total loss of $29 billion, while his personal take for the efforts comes in at a cool $71.9 million. Look at that punum… does he look suspiciously like a lizard? Then there’s Countrywide’s Angelo Mozilo, with a face only a mother (or a Sicilian Don) could love. Stats: in the loss column, a total of $22 billion. It’s the personal take that’s truly impressive – $225.7 million. This guy was good at being bad!

So if you’re overdue for an out-loud chuckle in the midst of economic meltdown designed to do the most amount of serious harm to the most number of honest, hard-working citizens, don’t miss this offering by BusinessPundit. It’s well worth the waste of card stock and color toner.

And while you’re busy surfing for news, giggles and brain-novocaine, go on over to CNNMoney to get the previews of the upcoming Super Bowl Ads, if for no other reason than to have them pre-listed and ready for votes at your Super Bowl Party this year. To be honest, that E*Trade talking baby gets me every time, even if it sometimes seems a little creepy what they make him say. Is this the CEO’s kid, or just some baby from central casting whose stage mom doesn’t mind his gratuitous sexualization?

Oh… and if you want a good conversation-starter for game night when both the game and the commercials get boring, check out GameJabs’ post about The 15 Most Controversial Superbowl Ads of All Time. Some of these aired and some of them didn’t, see how many of your football watching buddies remember the worst of ‘em.

Finally, if you’ve still got a job, at least one credit card, and are serious this time about getting your financial life in order, you may learn some useful strategies from Credit Card Matcher’s Plan for Paying Off Holiday Credit Card Debt. This site also offers reviews for the best card offerings for things like travel rewards and gas rewards to make traveling for fun and business a little cheaper.

Finally (last but certainly not least), if you or someone you know is planning to take the lemons of a tanking economy to make lemonade by starting a new business, you’ll definitely want to check out Brainz’s article offering 33 Ways to Fund Your Startup Business. Some of the traditional sources are drying up, but even as that’s happening some non-traditional, more creative methods of raising money are increasingly viable.

Links:

Fortune 500 CEO Hall of Shame
Super Bowl Ads: From Clydesdales to koalas
Travel Rewards Cards
Gas Rewards Cards
33 Ways to Fund Your Startup Business

For those of us out there who still have work and a regular paycheck, and who managed to put some store-bought presents under the tree on Christmas, some shock and awe may be hitting home right about now when the credit card bills are received. Seems the credit card companies have exercised the clauses in the light gray 6pt type nobody ever reads to raise their interest rates and fees through the roof and cutting off available credit altogether no matter how good your credit score may be or how promptly you pay your bill. Some card companies have been creative about shuffling due dates at will, confusing customers and hamstringing small business, and some are refusing to even try to explain to customers what’s going on or what their options may be.

As Kathleen Ryan O’Connor explained in a recent CNN article, Credit cards gone wild: Shocking rate hikes, “Faced with the same economic pressures as other companies affected by the ongoing recession and credit crunch, credit card companies are racing to protect themselves from the costs of more defaults by hiking interest rates and slashing credit limits, even for cardholders with excellent credit histories.” Banking analyst Meredith Whitney predicts that $2 trillion in credit lines will be wiped out over the next year and a half.

As if to add a note of irony to the pain and suffering of consumers and businesses being screwed by their credit card companies, those new card offers are still coming in at the undiminished rate of one a day. One wonders if the marketing department ever even communicates with the front office!

There are ways to cancel your cards and pay out the principle at the old interest rate, but the companies are loathe to actually inform cardholders about this or answer pointed questions. Congress is expected to rein in this current ridiculous situation with emergency legislation early in the ’09 session, and may even re-implace usury laws stricken years ago so that interest rates could rise as high as loan sharks disguised as credit card companies wished. Similar legislation was passed by the House in 2008, but failed to make it through the Senate, so the Fed, the Office of Thrift Supervision and the National Credit Union Administration imposed some new rules in December that companies are scrambling to get around by the current shenanigans.

Bill Shrink offers an overview of the 8 new rules, as well as Credit Card Bill of Rights: Which cards are complying? – a list of which card companies are obeying the new rules. If you’re disgusted with your company for pulling a fast one, Credit Card Guide has templates and instructions for exactly how to cancel your card in a way the company can’t simply ignore (as they too often do).

Once you’ve got your balance frozen at the lower rate and are paying it down, you may want to consider a new card or two that will allow you the convenience without making you feel as if you owed gambling debts to Mafioso thugs in Vegas. Go ahead and check for compliance on the BillShrink site linked above, then go on over to Credit Card Matcher to check out the Cash Rewards Credit Cards offers. Matcher also lists Gas Rewards Credit Cards offers, a good idea for both commuters and any small business that relies upon deliveries as part of its services. Don’t forget to balance the slightly higher initial rates with zero annual fees, thus making your overall expense quite reasonable. Then the rewards can be factored against that cost, and you the consumer can come out way ahead.

Finally, no matter whose cards you hold, open and read those incoming letters even if they look a lot like junk mail. Companies are using these to inform customers of sudden rate hikes, increased fees and limit freezes, and way too many customers are missing that notification. We can all hope the 111th Congress will step up to the plate and put a real lid on this outrageous usury, but none of us should be holding our breath. The recession (or, depression for many of us) is projected to last through 2011 at least, and some estimates don’t see the economy pulling out until 2017. We’ve got to control our spending habits, manage our indebtedness, and work especially hard to keep our small businesses going in a slow situation.

Happy New Year to all, and here’s hoping that 2009 will bring some relief from the ongoing mass looting of the nation’s wealth by the greedy and inept.

Links:

Credit cards gone wild: Shocking rate hikes
Cash Rewards Credit Cards
Gas Rewards Credit Cards
Bill Shrink: 8 New Rules
Credit Card Bill of Rights: Which cards are complying?