Your Losing Hand

Using a credit card reminds me of gambling in Las Vegas.

When you walk through the casinos, people are shrieking as their slot machines pay off or they get a lucky roll at the craps table. You may see the occasional blackjack player sitting in front of a stack of chips representing winning bets. You think to yourself, if they can play and win, so can I.

But don't be fooled. In this crowd there are a lot more losers than winners.

Similarly, when you use a credit card, the odds are never in your favor -- no matter how many people around you appear to be winning.

The banks know and studies show that even those of us who think we are using credit wisely are suckers. That's because when you use credit, you often spend more than if you used cash. Even if you don't pay interest on the money because you settle the bill before the next billing cycle, or if you collect a plane ticket or two as part of a reward program, you're still spending more. That means the banks win and you lose.

So when the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration recently proposed rules to prohibit unfair practices regarding credit cards and overdraft services, I had to laugh.

Are regulators only now realizing how unfair certain credit card practices are?

Still, I have to give the agencies credit for recommending some industry changes that are greatly needed.

"I think the regulators went further than anybody expected," said Ed Mierzwinski, the consumer program director for the U.S. Public Interest Research Group.

If the provisions, which are still up for public comment, win approval, it would go a long way to protect cardholders from rate increases and other unfair credit card practices.

The proposed rules "are intended to establish a new baseline for fairness in how credit card plans operate," said Federal Reserve Chairman Ben S. Bernanke. "Consumers relying on credit cards should be better able to predict how their decisions and actions will affect their costs."

I urge you to weigh in on the matter. You can do so by sending your comments to any of the three regulators. There's a 75-day window for public comment.