The Ten Sneakiest Credit Card Tricks
In my review of the credit card industry, I have come up with what I consider their sneakiest tricks... in no particular order:
1. Card offerings that suggest a specific credit line or interest rate but minimize the fine print "UP TO" so that a responder takes the time (and authorizes a credit check) under false pretenses (because, for example, the credit line or interest rate is only for FICO scores of 800 and above).
2. Card contracts that are so NOT plain English even Harvard Law Professors (like national credit card expert Elizabeth Warren) don't have a chance at understanding them.
3. Applications that reference "FIXED" rates when in fact the only thing fixed about these rates is that they do not float with an index (like the prime rate) YET since these rates can be changed AT WILL by the card company, they are far from FIXED by any normal interpretation of the word.
4. Cut-off times (e.g. noon) which cause payment to be deemed "late" EVEN IF the payment is received on the due date (but after noon).
5. Credit line reductions which come disguised as junk mail so that cardholders unknowingly exceed their credit line and thereby incur over-the-line fees and penalty interest rates.
6. Similarly, grace period reduction notices which come with a monthly bill (also disguised as "junk") so that anyone who pays on the same day every month will be likely to be late, thereby incurring late fees and penalty rates.
7. Double cycle billing procedures which calculate interest due on the average of two prior balances even if one of the two balances has been paid as of the date of the new bill.
8. Punishments which "do not fit the crime:" the imposition of significantly higher interest rates (sometimes double) when a card holder is one day late.
9. Misallocation of payments - when a card holder has balances with different rates, most card companies will apply any partial payment to the lowest-rate payment. So, if for example, a card holder who has a 0% balance transfer rate (with a $1,000 balance) and a 15% rate for all other purchases, charges $500 and then makes the payment on time, many card companies will apply the $500 against the 0% balance and leave the $500 charges alone, accruing interest at 15%.
10. Invoice timing which study payment patterns concluding for example, that most people pay their bills the first week of every month and then send bills (with calculated grace periods) with due dates that end right before the first of the month inducing late payments.
As I was preparing this list I thought of more than ten sneaky tricks but decided to end here and ask readers to send me their suggestions for future lists.
Jim Randel is the author of The Skinny on Credit Cards (RAND, 2009) available at www.theskinnyon.com or Amazon.
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Back in the day when I was struggling with credit card debt I discovered another trick the CC companies used. Buried in the fine print was the warning that if you sent your payment in an envelope other than the one provided it would add three days to the processing time.
Also, like most everyone I receive an endless stream of CC solicitations. I often take the postage paid envelop and insert a rather snide letter directed at the poor schlub who will open it suggesting they avocate for a union.
How ever could you avoid the "sneakiness"? Heavens, I do believe these companies make you actually read the material they send.
HMMM, so envelopes from the company "which come disguised as junk mail "? Really? The mail we get from the (3) credit card companies says "Account Related Material" on the cover of the envelope. Solution:READ.
Then the dastardly "due dates that end right before the first of the month" Why that's unheard of!! Can you imagine putting the due date on the bill? Guess what? READ the bill.
The fact that reading scores in the US continue to rise (not because of NCLB) is belied by junk posts like this one. Mencken had it right: no one ever went broke underestimating the taste of the American people. Or their reading comprehension.
Young people who move a lot ... Make sure you call the card copmpany everytime you move to insure your bills get to you!! In the lag time for the bills finding you the interest is piling up !! Or don't use the cards unless absolutely necessary of course :)
i think this is related to #7 in Jim's post but I just got a statement showing that I was charged interest for the previous months "average daily balance" even though I had a zero balance last month. Our interest is still quite low (knock on wood) and we almost never carry a balance for more than 2 months. So I love it that I get charged interest even tho I've paid my balance...
See Jeff Kreisler's Profile
Credit card companies are amongst the greatest of all cheaters. Along with oil companies, pharma, and TV, they belong in the cheaters Hall of Fame. In fact, they are, in Chapter 25 of "Get Rich Cheating." Check it: http://get
"Just by reading this book you'll earn an asterisk next to your name. You'll be laughing all the way to the bank, assuming other cheaters haven't forced it into bankruptcy yet."
— Rachel Maddow (MSNBC)
"A very funny book with a very timely message"
— Terry Jones (Monty Python)
I find it very ironic that as I'm reading this, Google ads are showing offers for credit cards saying, "Bad Credit OK!"
I am glad that some posters here have always had good fortune in their lives and have always been able to pay their bills electronically the same day they arrive. I am sure that their good sense, talent, and self-reliance will always continue and that they will always prosper and grow more lovely with time.
However, for the rest of us who have either failed in our diligence or have had children, medical bills, a broken tooth, a need for new glasses, a lost job, a husband who gambled or who left to find himself, a relative who died without a pre-purchased plot of ground, a car that broke down far from home, long commutes with gas at $4 a gallon or just bone-tiredness that didn't allow us to rush home from work and tear open the envelop and pay up right then and there....
For us, we use the lessons learned from our ancestors when they faced hard time. We create a secondary economy. We find a way to make cash on the side and we use that to pay off the leeches. We will do it and we will come out free on the other side.
The other one I like is that if you report your card lost or stolen, it ends up on your credit report. That was pretty sneaky the first time I learned about it.
All of these and more are reasons I decided not to carry credit cards anymore. They are filthy slugs, those corporate financiers, and I do not give a damn about my "credit rating" anymore. I will not be enslaved to some artificial definition of how "worthy" I am.
I pay cash for everything now. It has enforced self-discipline, made me smarter at personal finances, and more generous to those who need it.
Living debt-free has also helped me cut my greenhouse gas emissions because I no longer need to work extra hours or drive extra miles or consume extra goods and services simply to pay off usurious interest rates. It's unburdened me from the fear of being unable to afford things, simply because if I cannot pay cash for it, I truly don't need it, yet.
Being out of all debt (mortgage too) is the SINGLE BEST THING I've ever done for my finances. It's made weathering the economic downturn much, much easier. In combination with redefining what I really need, being debt-free is actually enabling me to save money, even in this economy. It's even made it possible for me to finally, for the first time in 20 years, purchase health care for myself.
Credit cards suck. Avoid using them at all costs. If you must, carry only one and then only for emergencies. Those bankers do not need or deserve your money. Learn to cut them off. You'll be better off for it, guaranteed!
Yeah, these are all sneaky things and they should be stopped.
But.....si
If you don't have enough cash to buy something, then you don't need it.
Here's a 'gotch ya' for those of us sliding down the steep slope towards bankruptcy:
When you can't make your minimum monthly payments besides hitting you with $39 a month late charges and jacking up your interest rates to nearly 30% they also hit you with a credit line reduction.
As your late fees and accumulated interest charge spike you suddenly exceed your credit line and.... guess what... you get an additional $39 charge for going over the limit on your credit line.
Hey, I need a bail out too. Not a shove towards the precipice of bankruptcy!
You also have to keep in mind that the credit card company is chargeing the vendor at point of purchase anywhere from 2.9% to 5.9%. BOA almost doubled my interest rate for no reason whatsoever. I have never made a late payment, I own my home and car outright. I promptly paid off the balance and will not use it again. I just wish I could cancel it without hurting my credit rateing. I imagine if I don't use it they will do it for me. All this because the credit card companies were issueing credit cards to any warm body, and now they have a bunch of defaults.
Go ahead and cancel it, your credit rating will bounce back in months not years and you already own your home and car so like many of us, you won't be on the market for a new home or car soon. I'm paying off my cards and canceling them as I go. I don't plan on using credit to buy anything in the future, banksters be damned.
Online Bill Pay - I have begun taking advantage of this service in order to pay the bill faster. Regarding Bank of America Visa (might be Chase now) online payment service, the current interest rate applicable is becoming increasingly difficult to locate on the website. The section for making payments shows nearly all information except for the actual interest rate (balance, credit limit remaining, due date, etc.). Just the other day it took me nearly half an hour to find the interest rate. I wrote a letter to McConnell asking him to get on board with Chris Dodd's current push to limit credit card companies' ability to manipulate and take advantage of the average consumer. He wrote back but didn't have much of a response other than for me to watch for legislation to be introduced soon.
BTW, sneakiest trick to get back at them...
Call their call center whenever you have a fee you don't like, yes, ideally you get the fee waived, but...
It costs them money to staff the call center, and an 800 number still charges them for the (long distance) charges. Once you get a human being, keep them on the line as long as possible, if they waive your charge you hang up, but if not, you get the moral satisfaction of costing them as much as possible.
Or if you determine that there is no way to get a human on a given 800 number, get an old phone modem, and call their 800 number every time it hangs up every night while you sleep.
It is a triple-combination of three ancient crimes: swindling, usury, and deception. Loan-sharking.
Look anywhere in the ancient law-books of cultures who have come before. The Book of Deuteronomy. The Q'Oran. Hammurabi's Code. Hindu. Buddhist. Shinto. ALL of them repeatedly talk about the relationship between creditors and debtors. And, universally, the creditors are scoundrels. No less than the gods themselves are made to utter dire pronouncements against them.
So, this is nothing new. Nor, probably, is their confident ability to bribe influential lawmakers into doing their will ... and the willingness of corrupt lawmakers to do their bidding.
It will cost me a mere $510 million, which I can easily get from one months' worth of usury and illicit fees, to pay the 51 Senators whose votes I need a nice $10 million apiece bribe to carry out my wishes. And I'm sure that I can find 51 fools among their numbers.
And as for the 305 million of you who are affected by this? Like Jacob Marley, I see no reason why I should care. Sure, "a rising tide lifts all boats" and leads to real prosperity, but I'm a greedy man. Extortion and usury make more mo-nee for me-me-meee
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