10 Credit Card Company Tricks To Beware

Are you smarter than a credit card company? They’ve got billions riding on their belief that you’re not. Check out these 10 methods, via the Americans for Fairness in Lending, credit card companies use to make extra money off you that you may not even be aware of, knowledge that could save you hundreds in extra fees.

1. Fees and More Fees

On any given month, you might pay a late payment fee, overlimit fee, cash advance fee, balance transfer fee, foreign exchange fee, bill payment fee, Western Union fee, and whatever else your lender can devise. Not to mention monthly and annual fees.

2. Tricks to Make You Pay Late

These come in many varieties. If you’re late you’ll pay a hefty fee and your interest rate may go up. Check each statement carefully and pay your bill as soon as it arrives.

Changing Due Dates – Your bill will not be due on the same day every month.

Early Due Dates – Bills may be due just a few days after you receive them.

Weekend Due Dates – If your due date is on the weekend and your payment arrives on the date, it
won’t be processed until Monday and you’ll be considered late.

Morning Due Times –Your payment may be due at 9am on the due date, not 5pm.

3. Approved Overlimit Charges

If a purchase puts you over your limit, your credit card company will approve the charge then hit you with an overlimit fee and maybe even raise your interest rate. Keep careful track of your balance and know that even approved charges may put you overlimit.

4. Universal Default

Pay Card A on time but pay late to Card B (or anything else monitored by your credit score) and your interest rate on Card A may jump!

5. “Any Time For Any Reason” Changes

Most contracts include this ominous phrase. It means just what it says – they can increase your interest rate on a whim. Teaser Rates That Don’t Stick – An introductory 0% interest rate can jump to 30% with a late payment or if you go overlimit. Don’t bank on keeping that 0% rate for the entire promotional period.

6. Retroactive Application of Higher Interest Rates

To make things worse, if your interest rate increases, they can apply the higher interest rate to the entire existing balance, not just to new charges.

7. Allocation of Payments

If you end up with two or more different interest rates, they will apply your payments to the balance with the lower interest rate first. The rest of your balance will continue to generate high interest charges until the low-rate balance is entirely paid off.

8. Tricky Interest Calculations

For some cards, you can pay interest on purchases from previous cycles. This is known as double cycle billing. Look for a card that uses the “Average Daily Balance” interest calculation method.

9. Credit “Protection”

Services like this may sound good, but they’re usually useless. The fee for the service likely exceeds the minimum payments it would cover if you became sick or lost your job. Avoid add-on products like this.

10. Binding Mandatory Arbitration (BMA)

This provision requires that you resolve any conflict with an arbitrator selected by the lender, which means you give up your right to take the credit card company to court.

Scan your contract and terms and conditions to see if they apply to you. Don’t worry, if you try really really hard, it’s possible to understand your credit contract’s language…oops, that’s trick number 11, not writing contracts in plain English.

[via AFFIL]
(Photo: Ben Popken)

Comments

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  1. phospholipid says:

    Due dates/times, you crafty russians you.

  2. thebluepill says:

    This is proof positive that most all people should avoid Credit Cards, and for that matter, debit cards as well.

    Every one of these is a scheme to bilk people out of their money, en’mass. why do we do it?

    Fiscally responsible people can still get ensnared in this trap and do they really need the credit anyways?

    Poor people can’t afford the fees and interest and get sucked in to a cycle that leads to bankruptcy and financial loss that spills out in to other parts of their lives..

    And what do we get for all of this? The ease of not carrying cash? Is it really worth it?

  3. Legal_Eagle_In_Training says:

    :sigh: I can’t WAIT to get rid of my credit card debt. It’s only about $4,000, and it wasn’t from reckless spending but some living expenses when my husband had an accident at work that put him out of work for months. But the credit card companies have definitely made it hard to catch up.

  4. thebluepill says:

    @Legal_Eagle_In_Training:

    I did away with mine in 2005 and haven’t looked back. I keep a Debt Card for online orders and the like and use cash for moth other things.. There is no real compelling reason for me to have a credit card.

  5. Legal_Eagle_In_Training says:

    @thebluepill: Yeah, it seems that cash is the easiest way to force yourself to see what you’re actually spending.

  6. Nepkarel says:

    Yeah, they slap you with fees until you’re bankrupt. However, I am always truly shocked how easy it can be to have fees removed.

    Just give them a call, and ask them. It’s a little embarrassing, but since the credit industry has no shame itself, why would you worry? Last month, I got out of about $100 in late-fees, just by calling them and reminding them that I usually pay on time, and that I believe the fees were ridiculously large compared to the balance ($35 late-fee on a $25 balance).

    My approach is to simply ask them to remove it, arguing something simple that is true. I am a good customer, I usually pay on time, etc. I avoid dramatic stories. And I stay horribly friendly. Make it easy for them.

  7. nrich239 says:

    @Legal_Eagle_In_Training: Cash is def the way to go. I was on the debit card for everything boat for a while but swiping a card doesn’t phase me while having to hand over multiple $20 bills is visible pain.

  8. VA_White says:

    We said good-bye to credit card debt a few years ago after capital one raised our interest rate for no obvious reason. We had one of those “fixed” low rates and when we charged vacation on the card to get the buyer protection that a credit card gives, they more than doubled our fixed rate and didn’t tell us why.

    Fuck you, Capital One, fuck you and your shitty retarded commericals. Fuck you with a cactus. We paid off the card and closed the account. Now we have one credit card for reserving rental cars and booking hotels but we do not charge anything.

    My blood pressure is down, our wallet is fatter, and life is much better.

  9. Dobernala says:

    @thebluepill: Debit cards are bad, though, if you ever get your card/number stolen or need to do a chargeback.

  10. rwyuan says:

    Regarding this tricks, while knowing them may help you rant intelligently at a party, it seems there is little you can do about it.

    All credit card companies use the same tricks. It’s seems difficult to follow the traditional consumer advice of taking your business elsewhere.

  11. pal003 says:

    It’s not an either/or of these 10 practices – I can say that Bank of America proudly utilizes all of these despicable tricks. Truly Bank of A$$holes!

  12. Dyscord says:

    Wow. I’m not surprised. Banks do the same thing for some of these. The Overdraft “protection” stands out. It lets you overdraw your account and then you get slammed with fees.

    The Weekend Due Dates should be illegal though. I guess they expect you to pay before hand, but if you pay on a saturday and it posts on a monday, you should be given a break. geeze

  13. Ben Popken says:

    @rwyuan: You can choose not to get cards with double-cycle billing, but yes, otherwise, legislative action is needed…or…don’t use a credit card.

  14. JustThatGuy3 says:

    @thebluepill:

    What do I get for using a credit card? Well, 1.5% cash back on everything I spend, easy expense tracking, the ability to charge back, and no hassle in carrying cash.

    Cumulative interest and fees I’ve paid (excluding some 5.5% student loans I moved to a credit card at 1.9% interest)? About $60, when I goofed and missed a payment a few years back. I get that much in cash back every month and a half.

  15. bravo369 says:

    The due dates is what i always notice. It’s not just credit cards though. i have received gas and electric bills that are due within 14 days. i know when they usually come, 30th or 1st of the month but often are due by the 11th or the 14th. god forbid i go on vacation for the 1st 2 weeks of the month, i’ll get 2 late notices on bills.

    i believe my credit card due dates have changed but those are usually paid off in full well in advance so i never notice. they do at least give me close to 4 weeks to pay though.

  16. Tank says:

    @VA_White: lmao at “fuck you with a cactus”. ya just made my day.

  17. khiltd says:

    Chase has a wonderful security feature that actively prevents you from logging into your account and paying your bill if you happen to be away from your home computer and telephone. They also love setting your due date to Federal holidays.

  18. wontanamo says:

    for late fees, just tell them that you never got the bill (assuming it’s paper, of course); that gets me out every time.

  19. jwinston2 says:

    Yes Capital One is easily the worst of them by far, unless anyone can tell me of another credit card company that has pulled the following:

    In 2007, Capital One ran a 0% balance transfer scam. They sent out massive pamphlets advertising no cost and 0% APR on balance transfers. However, in the fine print they had a 0% balance transfer statement that only applied to balance transfers after the initial introductory offer APR. In the terms they made up a new transfer called a special transfer APR which had a range of interest from 14%-24% for balance transfers during the introductory APR, usually the first 6 to 12 months of the card. The purpose of these pamphlets was to trick people into believing they would be getting a no cost 0% balance transfer when in fact they would not. You would only find out about this special transfer if you read the fine print or after you received your first bill with 14-24% finance charges on persons transferred balance. Now most people would say read the fine print, and this is part of the scam, when you read the fine print it would list the usually APR terms, with a balance transfer listed as 0% but with a asterisks which explains the special transfer conditions further down in the offer, in my mind this is unbelievable deceptive.

    I still do not understand how they have been allowed to get away with this without being sued by someone. I would say anyone banking with Capital One should try to leave as soon as possible as this is and was clearly a deceptive business practice.

  20. WiglyWorm must cease and decist says:

    @thebluepill: I do not live beyond my means. I make sure I am able to pay all my bills, etc. But I still need credit. Why? well, number 1… Sometimes sh*t happens and I need money right now to cover an unexpected cost. Number 2: I like owning a car and I want to own a house in the near future. I need a credit score for this. So I’ve taken out credit cards, and I bought a laptop on credit as well.

  21. dveight says:

    @thebluepill: I agree with JustThatGuy3 on this one. I get 5% back on gas. Up to 1.5% on grocery. My money is earning interest for me. I get in and out of stores faster. I can issue a charge back. I also get protection like extended warranty or accidental damage.

  22. Stile4aly says:

    Sounds like you’re getting the companies both ways. If the due date falls on a weekend you’re upset because payments don’t process over a weekend. If they change the due date to accomodate a weekend, then you’re upset for that too.

    I’ve dealt with credit problems in the past and what I do now to avoid issues are that I’ve set up automatic payment with all my credit cards. I have a minimum pay set up automatically, and I have an additional payment set up through my online bill pay. That way even if something screws up with one of the payment methods the other will cover the payment. Additionally, I set all my payments to pay at least 1 week before the due date.

    The 10 items listed above aren’t tricks, they’re standard amongst all credit cards. Take some time to set up the infrastructure in advance and understand how credit works and you can avoid almost all of these problems.

  23. jddphd says:

    As noted above, it is possible to use credit responsibly, especially since doing so can be to your benefit, as demonstrated in my own case by countless free flights I’ve earned!

    It is also definitely the case that it is your responsibility to use credit responsibly. I’ve had my own experiences with debt (which includes getting myself out of it) and I can say with conviction that if you’re getting *consistently* shtupped by your credit card company then shame on you. You MUST keep on top of your bills. You MUST pay them on time (you people who play the float know you who are). It’s not hard to find out when they are due. And there are plenty of tools and organizations and loads of information where consumers can find information. If you’re online then you’ve got no excuse whatsoever.

    here’s an example with some very useful links:
    [beginnersinvest.about.com]

    Did you know you can get free copies of your credit report from each of the 3 credit bureaus? They are legally required to give you one free copy of your credit report each year. Check it.

    And for pete’s sake don’t spend money you don’t have. Emergencies are one thing. Nintendos and them brand new $150 shoes aren’t.

    As someone who came upon fiscal responsibility late in life, I know these things aren’t always immediately apparent. But if your money matters to you then you need to make time in your life to learn the basics about using credit responsibly, saving money, spending and budgeting wisely, etc.

    [/endrant]

  24. dveight says:

    @thebluepill: Doesn’t look like my post got posted so here it is again. If they both post…sorry!

    As WiglyWorm and JustThatGuy3 stated, there are many reasons to own and use credit card. Cash back, unexpected cost, ease of use, protection (warranty and accidental damage,) credit score, and your own money could/should be earning you interest in the mean while.

  25. FLConsumer says:

    @thebluepill: @Legal_Eagle_In_Training: Credit cards all-the-way for me. Cash is too easily spent and unaccountable. Seeing my current tab for the month on-screen clearly shows me where I’m wisely & not-so-wisely spending my money. This is especially true with the smaller purchases that tend to be more likely to be impulsive buys.

    Now, using credit cards as CREDIT cards (ie: money you don’t currently have) is a bad idea. Drop your pride a few notches and see if friends/family can help you out with some extra $$ until your financial situation improves. MUCH harder to convince friends/family that it’d be a hardship if you didn’t get the new HDTV than weekly groceries b/c you’ve been injured and aren’t able to work.

  26. FLConsumer says:

    @jddphd: Amen, brother. Amen.

  27. stargazerlily says:

    @VA_White: What vitriol directed toward Capital One – and they deserve it! I authorized an online payment 4 days before the due date. Next bill came up online, and they hit me with Late Fee and Over the Limit – because silly me, I should have known they didn’t count Saturdays and Sundays as business days, even though the due date was a Sunday! That was it – I cut up every card and now use cash and debit.

  28. thebluepill says:

    @JustThatGuy3:

    Do you ever get burned on that CC? Do the perks outweigh the fees and interest on those items?

    if so, then yes, its useful.

    I Just really feel its a risk and a time-bomb for a lot of people.

    I really dont feel comfortable with a loan who’s terms can change rapidly for no reason at all and I have to watch like a hawk.

  29. Orv says:

    @dveight: Not to mention that you’ll have a hard time renting a car or booking a hotel room with cash.

  30. stargazerlily says:

    @WiglyWorm: I understand your argument, but you really don’t need credit cards to accomplish the goals you mentioned. Instead of relying on credit cards for emergencies, use a savings account – and receive interest instead of paying it out. And as for buying a home, there are still mortgage lenders who do manual underwriting. This allows the humans involved to actually use their brains!

  31. mac-phisto says:

    @rwyuan: actually, i disagree. i have a visa card thru my credit union – get this:
    1) went over the limit once by about $12 – no overlimit fee.
    2) paid my bill late once – late fee was $15 & b/c i paid within 3 days of the due date, they reversed the fee & i didn’t even call them!
    3) i’ve had the card for 13 years – my rate when i first got it? 12% FIXED & it’s THE SAME (in fact, it’s the only fixed rate card that i have that’s still fixed).
    4) they don’t do double-cycle billing or universal default or any other shenanigans & if i ever have a problem (which is extremely rare, i talk to jayne & she helps me out (& asks how my family is by first name).

    so, all you naysayers can chide me for envoking consumerist’s own corollary of godwin, but that’s the truth. you can still find excellent cards – you just have to look a little harder than rummaging thru the offers sent to your mailbox.

  32. rodeo40 says:

    I am more concerned with my bank’s trick to debit my account the largest transaction first rather than in the order they were purchased. That ensures them the maximum number of NSF charges.

  33. thebluepill says:

    @mac-phisto:

    If they were all that way, then I doubt you would hear many complaints about it.

  34. RandomHookup says:

    @thebluepill:

    for moth other things…

    I have a hard time keeping up with the trends. Is this some kind of internets fetish kick and does PETA know?

  35. chrisjames says:

    Some of these are unavoidable with some cards, but I’ve said this before about #7: You can request a payment to be applied to the higher interest rate balance first. You can even do this after the payment has been received and applied to the lower interest rate balance. I’ve done this plenty of times on a few financing plans and cards, mostly because the request doesn’t carry over to the next month, so you have to do it again.

    They don’t have to respond I’m sure, but you won’t know until you try. The default is and always will be to apply it to the lower rate balance first unless the customer makes a request or legislation is passed forbidding it. Don’t assume you’re helpless about it, make some calls and they may actually listen and work with you.

  36. wiIdcatlh says:

    @stargazerlily: And if you use credit cards responsibly, which means not overspending what you can repay, and paying your balance in full every month, you don’t run into any of those problems. I pay for nearly everything (except for my mortgage) with credit cards, pay the balance in full every month, pay no interest while getting cash back/points.

  37. JustThatGuy3 says:

    @stargazerlily:

    Using a credit card maximizes your interest. If I pay for things out of my savings account, the money disappears today. If I pay for it with a credit card, (a) I get 1.5% cash back, and (b) I get to keep the money for as much as 7 weeks before I pay the credit card company = more interest for me.

    Definitely, though, I’m in no way advocating actually BORROWING on a credit card (i.e. paying interest).

  38. jjeefff says:

    Credit cards are a terrific consumer tool. For no annual fee, a credit card company sends me a plastic card. Then they let me purchase things without having the cash on hand. The credit card company allows me to wait a few weeks before having to actually pay for my items. If I pay for the items by the billing due date, I owe NOTHING more than the price of the items I bought. I can’t think of a better deal for consumers. Isn’t it only fair if I don’t pay up by the due date, I will owe interest on the balance?

  39. Bagels says:

    I have heard of this in the past, is it possible to call up a credit card company and ask to have interest rate reduced? I am trying to pay off my debt with Discover and I’m doing pretty well- paying 3-4x the minimum each month and not adding to it. But the interest rate is pretty high. They solicited me awhile back about some program where if I signed up for automatic payments each month, at the end of X number of months they’d reduce my interest but I declined and now I’m thinking I should have accepted.

  40. codehead says:

    @thebluepill: A credit card used well can be a wonderful thing. Used well includes paying the thing off, completely, every month. When I was younger (and had less disposable cash), I had the rule that I would completely stop using my card until I paid the card to zero — I only hit that rule a couple of times, thank goodness.

    With those rules in place, I have a couple of credit cards I use all the time. They all share the following traits:

    1. they have a grace period — they don’t charge interest on charges that happen during the month if you pay it off at the end of the month.
    2. they pay cash back (not miles, not points, but cold hard cash)

    Given this, I charge nearly everything on my credit card: gas, food, travel expenses, whatever. I never do balance transfers, I never do cash advances, and I never use the checks they mail me. Aside from the time value of the money I’m charging, I get a check from the credit card companies at the end of the year for several hundred dollars (yeah, we charge a _lot_). And since we’ve been good customers for so many years, we’ve been able to get interest charges removed the couple of times we’ve been a couple of days late.

  41. At work we all just read a book called Supercrunchers, about how big business makes its vast stores of knowledge go to work to squeeze every penny out of you. Naturally, credit card companies were front and center.

    But what it all comes down to is never to forget that a credit card company is a business, and their goal is a profit, and they will do whatever it takes to make one. What should they write on the envelope of a free credit card offer to increase the chance you’ll open it? They will test and test and optimize and test some more and continue to do so, because they can. (One of my favorite points from the book, by the way, was “If you call to cancel your card, the amount of time you spend on the phone is directly proportional to how valuable a customer you are . If you go right to a computer that says Ok you’re cancelled, that means the credit card company wasn’t making anything off of you. but if you get to talk to a human who offers you a better rate, you can be sure that she’s got a computer telling her exactly what rate to offer you to maximize the chances that you’ll accept.”)

    If you ever manage to truly “get back at” the credit card companies by figuring out a way to avoid every single fee, eventually they will just generate new fees. Now I’m seeing things like “Go with electronic statements, because we’re going to charge for paper ones.” It’s not that they’re horrible people (no, I don’t work for one of them :)), it’s just that it’s the nature of business. They’re not offering a free service, after all. The best we can hope to do is not drown in them all.

    Personally I have one credit card, and don’t carry a balance, except maybe once a year around Christmas when I go overboard and have to catch up for a few months.

    [www.studentsplanttheseed.com]

  42. Bagels says:

    Has anyone had success asking a cc company to lower their interest rate? I’m desperately trying to pay off my Discover Card debt. I’m doing pretty well right now, I’ve been paying 2-3X the min and not adding anything to it whatsoever. But the interest is pretty high. I realize my credit, although i pay on time for everything, is probably not perfect so I don’t really have the “I’ll take it elsewhere” card to play. About a year ago they contacted me offering a lower interest rate if I signed up for auto bill pay and completed 6 months of it. I declined but I’m thinking maybe I should have taken advantage of it

  43. Bagels says:

    oops, double-esque post there….sorry

  44. dangermike says:

    The take-home lesson of the day:

    READ (AND UNDERSTAND) YOUR CONTRACTS.

  45. garbalover says:

    CapitalOne did the early due date thing on me. I fortunately checked my statement online and paid in time, but they are sneaky little bastards. I’d love to get rid of that card, but unfortunately that’s my first card and don’t want to lose the credit history. :(

  46. ChootinDaChit says:

    @Bagels: My advice is that you head down to your local credit union and see if you can get a fixed-interest loan from them, and use that to pay off the credit card. Then you can cancel and cut up the Discover card and spend a little time getting your financial house in better order so you don’t get in over your head again. When you’re ready to try credit cards again, start slowly and whenever you pull it out, remember that whatever you’re charging MUST be paid for in less than 30 days.

    I agree with the “pro” credit card side here–providing that you are only taking advantage of the purchase grace period, and paying them in full each month to avoid the ridiculous interest charges. My main rewards card gives me back hundreds in cash at the end of each year. I can’t imagine that they are making much if any money on me as a customer, but they seem perfectly happy to have me though.

    I have one other great reason for choosing a credit card over cash. I bought a grill and some accessories the other weekend, for a total of around $600. If my credit card was lost or stolen on that errand, it’s a quick call to fix it. If my checkbook were lost or stolen, I could end up facing a huge hassle with bad checks being passed (it happened to an old roommate of mine), and if my money clip were lost or stolen I’d just be plain old out of luck.

  47. rellog says:

    @khiltd: They may, but they (as do some others) also have an automated bill payment that you can set up online. You simply set it to pay the monthly minimum, and you’re never late. I always pay a second payment to pay down the principle. Not to say all the above things shouldn’t be outlawed, I’m just offering tips to avoid losing some money here and there.

  48. rellog says:

    @Bagels: Definitely. Contact them to see if it is still available. Auto-pay is a god send…

  49. kewl132 says:

    Hate to bring in politics on this but this issue is another reason to vote for Obama.

    [www.barackobama.com]

  50. kewl132 says:

    Or for those who do not want to got his website.

    # Establish a Credit Card Bill of Rights to Protect Consumers: Obama will create a Credit Card Bill of Rights to protect consumers. The Obama plan will:

    * Ban Unilateral Changes
    * Apply Interest Rate Increases Only to Future Debt
    * Prohibit Interest on Fees
    * Prohibit “Universal Defaults”
    * Require Prompt and Fair Crediting of Cardholder Payments

  51. dragonfire1481 says:

    I have only ONE credit card that I pay the balance on every month. I make a point to pay it as soon as I receive the bill as to avoid any late fees. So far I haven’t had any problems with late fees or mysterious APR increases. If you pay your bill promptly and in full each month you can avoid most of the sleazy tactics described in this article.

  52. NikonGal says:

    How can a card be due on a day you can’t pay it? I noticed my credit card payment is due this month on July 26th – a Saturday. Because I pay off my balance each month, I pay special attention to when it’s due (which does change every month). Some other precautions I take: 1) I always make sure the payment is paid the day before it’s due. That gives me at least one day to make sure the credit shows up online. 2) I always make my payment in person. I would never do business with a bank that doesn’t have a brick & mortar presence nearby. Paying in person ensures I get a *receipt* so I can prove I made the payment. It’s too tricky to rely on US Mail and lost payments. 3) I never sign up for automatic deductions. I just don’t like the idea of not being in control of what is deducted from my checking account.

    I also keep my banks separate. I have my credit card with one bank and my checking account with another – and never the twain shall meet.

    Having a credit card is a convenience I can’t do without. And I like the protection it offers. With due diligence and being a smart consumer, I can avoid most of these “tricks”.

  53. thebluepill says:

    @ChootinDaChit:

    They are making a small percentage from Merchant Fees on the products you purchase.

  54. Limekiller says:

    @codehead: My dad instilled exactly the same ideas about responsible credit card use in me when I went off to college. Like you, I use my card for darn near everything including utilities and insurance, and I’m diligent about paying it in full each month, on time. I’d use it for taxes too, but the IRS convenience fee exceeds the cash back bonus. Cash back on my Chase card is paying for a new iPhone as soon as they get back in stock. And the iPhone, and its monthly charges, are going on the card.

  55. darkryd says:

    So how about actually showing us ways we can fight back as opposed to just showing how we can be screwed?

    Are these practices legal? Can we contest them and how do we do so?

    C’mon Consumerist – help us fight back.

  56. WeAre138 says:

    Why are debit cards bad?

  57. @dangermike: For that, contracts would have to be written in English.

    @jjeefff: Cash is still better. The rewards are an incentive to overspend. You’ll be surprised how less you’d spend if you only had cash.

  58. sean77 says:

    I love how the two options for consumers here seem to be:

    “Use cash for everything, who needs a house anyway?”

    “Creditcard companies are evil when you accidentally go over your $10,000 limit!”

    How about you don’t go over your limit? How about you actually pay off your cards? Build credit without abusing credit.

  59. Ragman says:

    @thebluepill: If you need to use cash to keep on your budget, then more power to you. Some of us are able to use credit cards to our financial advantage. Some readers would give you grief for using a debit card. Don’t expect your size to fit all – it doesn’t.

    Speaking of card cashback, sometimes you can luck out. Discover’s More program did 5% back on school expenses a couple of years ago, right at the time I had a $2500 tuition bill to pay. The university tacked on a 2% fee, so I netted 3% cashback.

  60. dveight says:

    @postnocomments: I have to disagree with how less I would spend if I had cash. I find that when I have cash, I make A LOT more small purchases, which over time adds up. When I make a big purchase, its for something that I want, so cash or credit, it doesn’t matter, I’m getting it one way or another. Therefore, maybe I am not the norm, but I spend less with credit, cause its always in the back of my mind that I need to pay it off at the end of the month.

    @stargazerlily: Using your saving accounts for an emergency? I’m assuming that he is referring to emergencies that he can’t cover at that time. Besides, even if he had a savings account, why not put it on the card and get interest on the savings account for another 4-7 weeks?

    @Bagels: It is a possible. I have actually gotten all of my credit cards lowered in interest wait. Many times, I would just call and tell them that I was planning on canceling the card due to the fact that I had others with lower interest rate. The would then transfer me to someone else who would lower the rate. Now, with you having a balance, I don’t know if this will work. You can always inform them that you want to cancel the card and that you are going to transfer the balance. That may get them to lower your rate, but YMMV.

  61. simona says:

    Opinions are like assholes, everyone has one. Mine would be pay off your credit card every month weeks in advance of the due date!

    Having credit card debit is like stabbing urself. Use them for convenience but spend only what you can afford.

    Credit Cards and credit is the way of our society. Everything from cell phone contracts to your next potential job uses your credit for evaluation.

  62. nighthwk1 says:

    (Most) credit cards aren’t inherently evil, it’s just that most people have misconceptions of how they work.

    Unfortunately, if everyone used credit cards wisely, the whole system would fall apart.

  63. rellog says:

    @NikonGal: You get “receipts” from online banking simply by copying an image of the screen after the payment. It almost always has a confirmation number on it as well.

  64. rellog says:

    @nighthwk1: I disagree with that statement. Most credit card companies use dubious (at best) practices with their customers. Even if terms are clearly stated in a TOS, it doesn’t mean their fair or even should be allowed to enforce them.

  65. Ecoaster says:

    I still get paper statements and I pay them as soon as they show up. You only get into trouble with changing dates if you let them sit around.

  66. Cyclokitty says:

    I put nearly all of my household expense (including groceries) on my cc. I pay my bill off in total each month, and I receive tons of points. I use the points for free movie tickets. I use to be in serious debt (student loans, crummy part time jobs after uni, still need to eat and go to the dentist), but once I paid it off I made a promise to myself to only use the card when I can actually paid it off when my statement arrives. No can pay, no can use. Sometimes it hurts when I see toys I want (I’m talking to you, iphone).

    The credit protection is a complete scam. I use to get calls biweekly from the bank asking me to buy the insurance. I told them it wasn’t worth the paper that wrote it on. If you are employed full time, then they’ll cover the lowly monthly minimum. But only if you are full time. Part time, self employed, unemployed, you’re out of luck and out of even more money. I told the CSR the last time they called me that I would cancel the card and move my accounts somewhere else if they didn’t quit calling me. It’s a bank. If I need something I can easily find them.

  67. You can avoid #1 with Clear by American Express.

    I wasn’t paying any fees on any card, but it’s nice to know that Clear really has none, along with a 31-day grace period and 1% cash back. And cashiers keep telling me it looks cool.

  68. OmegaRed59 says:

    Like all tools, you must use credit cards wisely. I have never paid a credit card company a dime, and I just received a $250 rewards check. I would advise others to live below their means and not carry CC debt, but to use rewards cards. Free money.

  69. arungupta says:

    Credit card is something NOT to be avoided. What is to be avoided is overspending. Credit card is free money but you have to be on top. I use my credit card for everything imaginable, groceries, gas, bill payments, dining out, takeout, home improvements…you name it.

    I make sure that I do not overspend and pay in full every month. I have setup automatic payment withdrawl of the full amount from my checking account every month. This way, the responsibility for payments is on the credit card issuer, not me. I have setup alerts to remind of approaching billing date. I have signed up for paperless billing. Every 3-4 months I download the pdf statements and save them for tax purposes.

    What do I get in return? Free money for 1.5 months and points. I make large amount purchases immediately after closing of one billing cycle so I would have full 1.5 months to pay off.

    With reward points, in the last few years, I got a paper shredder, vacuum cleaner, drill and flashlight set, home theater power conditioner all for free. How much interest I have paid in last 10 years? $0. How much I have spent on postage in paying credit card bills? $0.

    In addition, I get return protection, extended warranty on credit card purchase and 90-day product satifaction warranty. I have tried couple of these and they work. American Express is the only card that offers all three. You also get online fraud protection which you will never get if you paid from your checking account.

    This article is good in that it tells people what to expect if they do not make payments in time. Bottom line, if you cannot make payments, do not get a credit card. Otherwise, by all means, enjoy the free money.

  70. quail says:

    I read somewhere or heard that a bill was in congress or before a committee that would address some of these things. It would force all credit card bills to be sent to debtors some 22 days before the due date. It would also force all payments to be equally applied to all debt on the card — no more will the payments be applied to the low interest loan while the high interest balance grows. Has anyone heard anything more on this?

  71. TreyWaters says:

    @Bagels: I will lead off by saying “It depends.” And obviously you will need to be in good standing, and the longer you have been with the company helps, too.

    But, yes, I was successful with having my interest rate reduced on one of my cards. (Like an idiot), I didn’t realize that one of my cards was variable rate. Called the company when I noticed the interest fluctuated up, and they said it was a variable rate card BUT she could change the rate I got, which brought my interest rate down ~2%.

    If you’re eligible for a credit union, I would recommend checking there for a new card. About a year ago, I switched my CU Visa to a new offering with 5.99% FIXED on purchases AND balance transfers. If you could find a similar deal, that may be able to help you out, too.

  72. andys2i says:

    The evil empire. I can imgaine the Credit card CEO’s sitting there and laughing at all the “commoners” as they devise all these sneaky tricks….

  73. anatak says:

    @mac-phisto: And that credit card company is the one that you work for? How many cubes down from you does Jayne sit?

  74. wonderama says:

    I usually pay off my balance in full each month. I’ve had a Chase Manhattan card change it’s due date once. I got a late fee and interest and when I found out that they had arbitrarily changed the due date, I calmly but forcefully had them reverse all charges against me.

    That’s the “free market” for you. Free to overcharge and make obscene profits while times are good and when they’re bad, the companies get bailed out by the government. Among many other things we need credit card reform.

  75. wonderama says:

    One more thing: paying online is the best way to avoid the late charges. Just set up a payment on the day before (weekend day or not) it’s due and you’re set.

  76. S-the-K says:

    I’ve been burned by #2 before. My other cards may have done it, but Discover made it so obvious. When I paid electronically manually, for every other card, the payment would be received and applied the same day. With Discover, they would always apply it the following business day. Maybe they have an earlier cut-off time than everyone else? If my payment was due Friday-Sunday (yes, weekend due dates), if I scheduled the payment to arrive on Friday, it would not be applied until Monday, incurring a late fee and double-cycle billing interest.

    Then, when I signed up for their automatic payment plan, they changed the due date on me. If you pay by check or pay electronically manually, it’s one date. But if you pay electronically automatically, they move up the date by two weeks.

    The only reason I keep my Discover card is that it is my oldest card. I have a small monthly charge on the card to keep it active.

  77. B of A (undisputed rip-off artists of the century) just proved how horrendous those fees can get…For writing two checks to a contractor, I got nailed with over $100 in “balance transfer” fees. Numerous appeals to them based on the fact that I didn’t do any balance transfers, and that nowhere on the checks does it say that they’ll incur those fees (the literature that comes with them mentions several fees generally associated with the account, including balance transfer fees, but doesn’t say anywhere that writing a check is the same as a balance transfer to them) — got nowhere. I just tried again to call customer service and got told “too bad, it’s an account fee and it’s non-refundable.”

    So basically, don’t do anything with your credit card– oh, no, wait, I think there’s a fee for that too.

    (BTW, before anybody says “don’t back with B of A”, I didn’t. I had Chase cards five years ago, that ended up with B of A in a series of buyouts. So nice when you can’t even pick your companies.)

  78. closeupman says:

    @Mary Marsala with Fries:
    Everyone knows those ‘checks’ credit cards send you aren’t like ‘bank checks’. They incur fees from the first day they are ‘cashed’. I always tear them up. If I need to use checks I use my BANK checks! Though the only time I need to use a check is when I pay my rent; otherwise I used my CC’s.

    “don’t back with B of A”….Huh??

  79. Debbie1975 says:

    I have another one to add. If you do automatic bill payments, check the mailing address on the credit card statements every month. I almost got nailed on this because I didn’t realize that, depending on the vendor, sometimes my bank paid them electronically and sometimes mailed them a check. I was shocked to notice that the mailing address on some of my credit cards changed every few months. Different PO boxes, different cities etc. I guess the credit cards on counting on a few late payments due to people not updating this fast enough.

    Bastards

  80. jrobie says:

    There seems to be a back-and-forth going here between “don’t use any credit cards” and “you can use credit cards responsibly,” and I’m afraid I just don’t get it. Obviously you CAN use credit cards responsibly, but why bother?

    What is the advantage to using a credit card? I acknowledge the “earn interest on your money for up to 25 more days” argument, but that can’t be more than a few cents, and with credit card company’s gotcha tactics, it’s more than likely that you’ll get stuck with a fee at some point that will be more than you ever earned in interest.

    So aside from that, why use a credit card over a zero-fraud-liability debit card?

  81. ChootinDaChit says:

    @jrobie: Here are a few reasons:

    1. In my case, using the American Express Blue Cash means about $700 of FREE money back to me at the end of the year, just for using that card on my everyday purchases. No fees, no interest charges, just a big credit to my card in one happy month of the year.

    2. If someone gets hold of my credit card and starts spending on it, the credit card company is the one who is (temporarily) being soaked for the charges. If someone steals my debit card, that money is coming straight out of my bank account, and even if there is zero fraud liability on the card, I have to work to get that money returned to me (and scramble if I have bills due while it’s being sorted out). I’d much prefer the former.

    3. Many credit cards will automatically give you extended warranty protection on purchases.

    4. Using a credit card gives you extra leverage in a purchase, in the form of a charge back, if necessary. Thankfully I’ve never needed to do a charge back, but it’s good to know that I have that extra layer of purchase protection.

    Are those enough reasons?

    Just to emphasize again, though, I ultimately only use them because I’m paying them off each and every month, without fail. For the person who has trouble living within his or her means, credit cards may not be the answer.

  82. x10 says:

    Maybe it’s because I grew up poor, my grandma didn’t use her card ever, and my mom didn’t even have a bank account until a few years ago. But I don’t see why we need to make dealing with money SO. FREAKING. COMPLICATED

    I love my cash.

  83. kindall says:

    Zero-fraud-liability debit cards are only “zero-fraud-liability” when you notice there’s been fraud and the bank gets around to giving you your money back. Until then, the money’s gone. “Zero fraud liability” also doesn’t mean your bank can’t charge you an overdraft fee for any checks you happen to bounce because someone stole money out of your checking account. I would much rather the bank be out the money. It seems kind of funny to trust a bank’s “zero fraud liability” promise when we’ve just finished talking about all the ways banks find to squeeze credit card users.

    Here’s a good reason to get credit cards: bonuses! US Airways used to have affinity credit cards through two different banks. If you signed up for both, you got enough bonus miles for nearly two free flights. I had enough miles already to make up the difference. Both cards had annual fees, but one’s fee was waived for the first year. (How long do you figure I kept it?) The other annual fee was high, but $99 for two free flights anywhere in the US? Cha-ching!

    On my desk right now, I have offers from US Bank and Discover to give me a total of $110 just to sign up for their cards. Cha-ching!

    Other advantages: free collision coverage on rental cars; free travel interruption insurance; free warranty extension; free price-matching. (Benefits vary by card.) Cash back — lots, in some cases. I have a Discover Open Road which gives me 5% back on gas, for example; who can’t use that these days?

    Late payment “gotchas” are easily avoided by setting up automatic payments. These may be offered through your credit card’s Web site or through the site of the bank where you have your checking account. Usually you can choose to make a minimum payment automatically or to pay the balance in full. Works great; I haven’t paid any interest or late fees in several years.

  84. JustThatGuy3 says:

    @x10:

    Cash is freaking complicated. Keeping all those receipts, making sure I have enough on me, etc. etc.

    Credit is simple – one statement, transactions automatically downloaded to my computer. I know where every penny went, and can track it easily over time.

  85. usa_gatekeeper says:

    “Early Due Dates – Bills may be due just a few days after you receive them.”

    This is true with more and more businesses; they send out bills with UNDATED postmarks and indicate a due date that’s close to the bill’s arrival date. You look at the bill 2-3 days later, forgetting it just came in, and think, “OMG, I gotta pay this right now!!”

    Also – We pay our BofA Visa bill monthly with online BofA bill payment. Each month we check when the prior month’s Visa payment was officially “Posted” which can be 1-2 days after the “received” date. Don’t believe “same day” payment between BofA accounts. Waiting to xfr money 1 day before the due date is very risky.

  86. grand1 says:

    Just got off the phone with CitiBank after discovering that they’ve been stealing from us for months. For the past couple years we had a one-time low rate (for a balance we transfered from another account) that they promised would NEVER change unless we made a purchase. They constantly tried to get us to use the card, which we never did, just took our time paying off the original balance with a 4.9% interest fee. Now we just realized that some time ago, without notice, they upped our rate to 19.90%. I promised them that I would get the word out, including on the net, about their under-handed tactics – SO HERE I AM!! (But I see I’m a little late – – good going guys!) CitiBank may have managed to steal from us for the past several months, but I guarantee that it will cost them a lot more than that by the time I finish with them. Oh, and needless to say, my account with them is now closed.