If you have a credit card – and most likely you have several of them – you are the victim of one of the largest legalized scams in the history of mankind.  Many people are deeply in debt and are paying huge amounts of interest on these "loans" because the banks that issue credit cards are playing them for suckers.

The chief gimmick in this con game is called the "minimum monthly payment."  Virtually every credit card bill prominently displays a small amount that represents the minimum that we must pay to keep our credit card active.  What this small payment actually represents may be buried in the fine print, but the bank doesn't want us to see that.  The bank wants us to believe that, by paying the minimum amount, we are paying back some of the money that we spent on whatever it is we purchased.  Chances are that we are not or that scarcely pennies of the mimum payment is payback.  The rest is interest – pure gravy for the bank or credit card company, a fee that we pay it (over and over and over) simply for processing our account.

Here's how it works.  (My figures may not be precise, but the principle is accurate.)  Suppose we purchase goods on a credit card that produce a monthly bill of $500.  We are told that our minimum payment that month is, say, $40.  We pay that, thinking that we have brought the balance down to $460 ($500 minus $40).  We have not.  A big chunk of the $40 (say $30) is interest; only $10 goes toward the purchase, so we have actually brought our balance down to $490.  Interest for the next month is computed on a base of $490.  If we charge absolutely nothing more during the next month, we get a credit card bill for $490, and the credit card company cheerfully tells us that we need only make a minimum payment of $40.  We do so again; however, $29 of that payment is interest; only $11 has gone toward the purchase.

Do the math so far.  We bought $500 worth of stuff.  In two months of making minimum payments, we have paid back $21 (so we're still in hock for $479).  Meanwhile, the credit card company has received payments of $59 in interest.  At this rate, making minimum payments each month, we end up paying two to three times $500 for stuff worth $500.  The extra money all goes to the credit card company.  No wonder these companies all deluge us with junk mail and advertising to get us to apply for credit cards.

Even if we allow that a much smaller portion of the minimum monthly payment is interest, we still wind up paying $750 to $1,000 for stuff that, if we paid cash, would cost us $500.  We wouldn't think of shopping at a store that jacked up the prices 25%, 50%, or more above the usual price, but we do essentially the same thing if we use credit cards and make only the minimum monthly payment (or slightly more).  That is how individuals pile up huge credit card debts.  As they add more purchases, greater proportions of their payments go toward interest and lesser proportions toward principal (the original cost of the purchases).  In simpler terms, less of our money is being spent on paying for the stuff we buy and more of it is going to the issuing bank just for letting us use its credit card.  Since banks make a lot more money this way, they don't want us to pay the full amount each month.  That's why "Minimum Payment" has such a prominent place on every credit card bill.

It's tempting, of course, to say that people should be smart enough to figure this out.  The fact is, however, that they are not, and the credit card companies know that they aren't.

Indeed, one doesn't have to be an utter dummy to fall for this scam.  My wife and I are both college graduates, quite capable of calculating percentages, and experienced in managing a checking account and a family budget.  Nevertheless, when we were younger and had an extremely tight budget, we often could not make much more than the minimum payments on credit cards, even though we were quite conservative about using them.  The accumulation of debt was very gradual, and it didn't occur to us to calculate how much of it was being paid out not for what we bought but for interest to the credit card company.  One day – quite belatedly, I confess – we did.  We were shocked.  We discovered that, for example, something we had bought on credit for $100 when we felt we needed it had, over time, ended up costing us $200 or $300.  We got out of the mess by taking out a debt-consolidation loan (with a fixed schedule of payments at a fixed rate of interest) to pay off our credit cards – and cancelled every credit card we had.  For several years, we paid cash for everything.

It was difficult then, and it would be even more difficult today.  Online shopping, which virtually requires a credit card, didn't exist then, so we didn't have that problem.  However, we had huge complications on those rare occasions when we needed to make flight or motel reservations.  Once, while visiting our daughter and son-in-law in Arizona, we needed to rent a car.  No rental agency would accept cash (which we had) or a check, so our son-in-law had to rent the car with his credit card – and lie about who the primary driver would be.  Though we had cash in our pockets and money in our bank account, we felt like deadbeats because we didn't have "plastic."

Eventually, of course, we had to rejoin the credit card society.  However, as we acquired our new credit cards, we promised ourselves to always pay the full amount every month on time.  So far, by keeping a wary eye on how much "real" money we have in our bank account, we have done so.  We are strongly motivated to keep on doing so.  In the first place, we don't want to revisit the financial mess that we got ourselves into before.  Most of all, however, we are determined not to let the scumbag bankers/credit card companies play us for suckers in their legalized con game.

Now comes news that the banks are catching on to people like us.  My wife, who handles our finances, informs me that one of our credit cards (a VISA card issued by Bank of America) is charging a small extra fee every month, even if we pay the full balance.  This sneaky little trick was probably announced and explained in small-print gobbledegook somewhere on a statement, but Bank of America is probably hoping that we won't notice.  It's such a small sum.  However, it's $12 or $24 a year per card.  If Bank of America has a million credit card holders, that's $12 million or $24 million extra that the bank is raking in annually for doing absolutely nothing more than they have been doing.  One has to wonder what drives this additional charge, other than sheer greed and the conviction that we're all suckers who can be nickeled and dimed out of millions of dollars (just as many banks do with hidden charges for bank accounts).

I don't know how much money banks make from credit cards, but they must make a bundle because consumers are not the only fee-payers.  Any business that wants to offer customers the option of paying by credit card must pay a percentage to credit card companies for the "privilege" of allowing customers to use the card.  Thus, every business – from large department stores to small "mom and pop" or entrepreneurial operations – must cave in to the credit card juggernaut engineered by the bankers.

The credit card society is the result of a vast advertising (read "brainwashing") campaign engineered by the banking industry.  Part of the sales pitch has been that credit cards are convenient.  That is true, in a sense, but only because technology (first telephone shopping and then other kinds of remote-access shopping such as the Internet) have made credit cards the only viable medium of exchange.  It is not true, however, that we need to use credit cards for virtually every purchase, as many people do.  My wife and I still make all routine purchases using cash or check – gasoline, groceries, clothing, minor household items, and even books, DVDs, CDs, and the like (unless we're shopping online).  Not too many years ago, we bought a widescreen TV that cost more than $2,000.  The clerk's jaw dropped to the floor when I paid cash, but you can bet he didn't turn it down.  (I felt rather smug about cheating the credit card out of the interest on that purchase.)

The audacious brainwashing engaged in by credit card companies to perpetuate this scam continues.  A recent TV spot for VISA shows a fast-food place where everyone is happily buying burgers or whatever by using VISA cards.  The place is bustling.  Then a man steps up and pays with (gasp!) cash.  All action freezes to a stop, long enough to show the dirty looks the man gets.  The message:  If you don't use a credit card (preferably VISA), you are an antisocial dolt, a misfit, a pimple on the butt of progress.  The ad is a blatant lie.  I have rarely seen a checkout line slow down because someone is paying cash; however, I have often seen the line slow down because of some problem with a credit card – the card wasn't acceptable for some reason, the customer didn't know how to work the machine that takes the card (they're all a little different), or something else.

Plastic money is now so entrenched that we can never turn the clock back to cash and/or checks.  However, we don't have to go along with the bankers' scam as much as we do.  We can deprive the credit card companies of millions of dollars of ill-gotten gains if a significant number of us use cash or checks instead of credit cards whenever we make routine purchases such as groceries or gasoline.  We can endeavor, to our benefit and the detriment of the credit card companies, to pay our monthly credit card bills as completely as humanly possible and not fall for the "minimum payment" ploy.  We could perhaps petition our representatives in Washington to require every credit company to display prominently on its statements:  "Please be aware that the minimum payment reduces your debt by $X.  The rest ($X) is interest that we are charging you for your use of the card." Of course, given the federal government's own indifference about running up huge debts, such a proposal will go nowhere.