Credit Card Tricks

cathie54July 18, 2006

...so I saw the re-run of the "debt-diet, part 5" on Oprah last week. That guy on the show said there's even a credit card that offers 0% for 5 years! I said to myself - "I need one of those!" lol!

So off I am to search for that card on computer...never found it. You know how things go - one thing leads to another on the internet. I found myself on some consumer action site that lead me to do a search: " Credit Card Tricks ".

Now a LOT of these I was aware of, but some of them were news to me! For example - shopping for a car loan or mortgage can increase your cc APR!!! Paying off in full every month can raise your APR! How about the "Musical Address"? (I noticed that happened to one of mine a year or so back - It USED to go to a neighboring state, and suddenly it was going across the country!)

I haven't read all of them, but here's a few I did read for starters:

http://www.bankrate.com/brm/news/cc/20021106a.asp

http://www.fool.com/ccc/secrets/secrets04.htm

http://www.smartmoney.com/consumer/index.cfm?story=20050728

There are more: Do your own search, and see what pops up. It's pretty alarming.

Which info is most alarming to you?

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Meghane

Yeah, we were near our limit on one credit card -NOT over- never late, always paid more than minimum due, and they jacked our rate up to over 20%! Needless to say, we immediately used the extra $ that we had been paying on the other CCs to pay off that one. Then they had the nerve to call and ask why we had paid off the balance! DH told them that their cancellation letter was in the mail and they can take their interest rate hike and shove it up their you-know-what because we had been perfect customers for over 10 years, always carried a small balance, never late, paid more than min all the time. The poor CC company shlub didn't know how to respond, so DH hung up.

So I guess the moral is watch those interest rates, even if you're a perfect customer!

    Bookmark   July 18, 2006 at 2:07PM
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western_pa_luann

"Paying off in full every month can raise your APR!"

Yeah - but it doesn't matter WHAT the interest rate is when you pay off in full every month! 0% or 22% - it doesn't cost me a dime....

    Bookmark   July 18, 2006 at 2:24PM
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jlhug

Meghane, if that ever happens again, call the credit card company and tell them you are going to close your account if they don't lower your interest rate. Many times, they will lower it if you have been a good credit risk.

    Bookmark   July 18, 2006 at 9:23PM
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chelone

Any credit card company looks on its customers as "cash cows". The cows browse month to month, with little understanding, let alone appreciation for what will happen NEXT month.

Those customers who pay in full every month have earned the monniker, "deadbeat" Seems unfair, but hey! the company makes no money from them... they're "deadbeats" in the eyes of those who tabulate interest payments. But just because they don't "produce" the way the herdsman may wish doesn't mean their contribution is unworthy in the big picture.

I don't care what the interest rate I'm charged is because I pay the amount in full every month. And if I carried a balance forward to the next month and the rate wasn't to my liking... I'd be right on the blower to question it.

Credit card companies rely on two kinds of people... those who pay in full and those who don't. Each has bargaining power; one pays the operating expenses, the other pays dividends.

    Bookmark   July 18, 2006 at 10:14PM
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sharon_sd

"Those customers who pay in full every month have earned the monniker, "deadbeat" Seems unfair, but hey! the company makes no money from them... they're "deadbeats" in the eyes of those who tabulate interest payments."

In fact the credit card companies earn a lot from those of us who pay in full every month. They charge the merchants a percentage of every transaction. Consumers pay both indirectly and directly.

    Bookmark   July 19, 2006 at 9:53AM
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kats_meow

I recently had a credit card company raise my rate for no obvious reason (I was current on all payments to that company and all other payments of any kind and I had no history of late payment at all). However, around that time my credit score went down. Why? credit inquiries on my account. Why? We were getting ready to sell our house and buy land and build a new house and we had a bank and a mortgage broker pull a credit report on us. We didn't actually borrow any money from them but just the inquiries dropped our credit score.

When we sold our house, we paid off the account that raised our rate and we'll never use them again.

    Bookmark   July 20, 2006 at 1:07AM
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blackcat333

It's sad that you agree to a contract and are supposed to be playing by the rules, but the credit card companies feel they can just make you their financial plaything, whether you are a person who pays on time, carries a balance, or pays it all off every month.

Even if I paid it all off every month, I would be pretty mad to have my rate go up to 20% or more. Of course you can cancel it and get a card with a lower rate, but that affects your credit rating. What the card company is actually hoping is that you DO finally have an emergency and then they'll get all their interest.

I just hope the people who can pay down their debt wise up and do so. The amount of personal debt in this country is alarming!

    Bookmark   July 21, 2006 at 8:18AM
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western_pa_luann

I disagree that credit card companies are some sort of evil entity! You just got to beat 'em at their own game....

I use credit to MY advantage, and I carry no debt (even the mortgage is paid off). Well, I DO have some debt... but it is my car payment and it is at 0%.. so I really don't count that.

And, even though my Discover card rates HAVE gone up, it really is not worthy of my anger. If I DO have an emergency, I'll use the savings account.

    Bookmark   July 21, 2006 at 1:48PM
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clg7067

I canceled a credit card with an interest rate of 18%. I actually never used the card because of the interest rate. I guess they decided I wasn't worthy. Anyway, when I called and told them the interest rate was too high, the woman started _yelling_ at me and said that XYC card was a good credit card and I'd be stupid to cancel it. Good for what? I never cared to find out.

I'm surprized to find how much my interest rates have been creeping up. Some of them have increase by 5% since the Fed started uping interest rates again. Luckily, I hardly ever keep a balance.

    Bookmark   July 21, 2006 at 2:24PM
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chelone

I have never looked upon credit card companies as "evil", either. They're in business to make money, so am I!

I'm more disturbed by the lack of understanding so many people have about "credit". Credit is an EARNED priviledge. When you sign the slip you are making a promise to pay the ENTIRE amount in full at the end of the billing cycle. If you don't pay it off in full the company that has extended you the courtesy of paying in full at a LATER date has every right to be compensated for "carrying" your debt. That is right and that is fair. I do believe it's up to the person using credit to inform themselves of the interest they will be charged should the balance not be fully paid by the payment due date, and the length of the billing cycle.

But the rest is pretty much "common sense". Credit carries a cost, it's called interest, and every loan has one. Credit is a loan!

Companies that offer the convenience of a card that is universally recognized and accepted have a very large, lucrative market. It stands to reason that when they tell you what your "minimum payment" is they are giving you the figure that WILL MAXIMIZE THE INTEREST YOU WILL PAY for the priviledge of carrying a card so widely recognized. They don't have to do much of anything to earn a lot of money from people who simply don't understand the rules of the game.

Do I think that's "wrong"? NOPE! do I think it's "fair". YUP! Do I think it's a bit sleazy? yeah, pretty much... but hoss tradin', sales of bridges in NYC, and snake oil sales have been around for years. PT Barnum said it best, "there's a sucker born every minute" (or something like that, couldn't find it in Bartlett's). We need to figure out a way to "turn people on" to how the system works so they may then use it to THEIR advantage! How?

    Bookmark   July 21, 2006 at 3:55PM
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josestrauss

I pretty much agree with Luann. I don't even have a clue what the rates on my cards are. I don't think of credit cards as my emergency savings either. Just pay them off every month and its one less thing to worry about.

If you are intent on living beyond your means, you're free to shop around for the best rates. Your credit won't get too bad if you pay your bills on time, even if you do occassionally change cards.

The people that tend to complain the most are the ones that are strung out on mountains of debt. They also happen to be the biggest credit risks. Riskier debtors have to pay higher rates to compensate lenders for those higher risks.

    Bookmark   July 21, 2006 at 11:26PM
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cathie54

(WARNING - LONG POST)

Something interesting crossed my mind when I read the "credit card tricks" several days ago...

Our mail had been 'seeming' to take longer and longer to get to us past year. I thought it was 'just me' - or - because of where we moved to. Also, when I mail a pymt to utilities in our own city - it takes long to get there. (I have found out that our utilities that should end up within 10 miles from us actually get routed to the central P.O. FIRST - which is about 100-150 miles away (a whole different county) then processed and mailed BACK up to the area where we live! (Dumb!)

I started noting date and time outgoing mail goes into P.O., and started writing date rec'd on incoming mail.

Then, last November 2005, there was a news report on TV about everyone in Los Angeles County, CA receiving their mail late - and there was going to be an inquiry into what's going on. We are not affected by Los Angeles, but San Diego and San Bernardino Counties. Then I read a local news stating that the county OUR mail goes to had cut-backs to bare bones, and weren't hiring anymore employees. (Instead, the delivery persons were given double their normal routes - expected to do double delivery routes in less time than two delivery persons.)

This was happening in Los Angeles, San Diego, and San Bernardino Counties. (Maybe other counties too - I don't know) But many people were complaining that their mail wasn't coming 'till 9 or even 10 o'clock p.m.!

Now, after all these months (about a year actually), OUR mail has been coming at decent times of day - (not after 7pm)

Since I got into habit of writing date rec'd on outside of INCOMING mail, I just happened to notice one month that a major CC statement arrived 9 days after "statement closing date". (I was actually making out my check on the day it arrived to get it mailed early the very next day.)

I got to thinking - "OK, give them one day from closing to get into mail. That leaves 8 days still. If goes into mail early tomorrow - and give the 'recommended" arrival time of 5 days - now were already 14 days into this before they receive. Then, once rec'd - will it actually get PROCESSED THAT day?" (Since I couldn't pay it in full - I've already accumulated at LEAST 12 days' 'average daily balance' interest - if not more.) I don't remember off hand if there's a 20 or 25 day grace period on this card.

I called them to ask where the bills originate from. They wouldn't tell me "for security reasons". I explained (to supervisor) that it was rec'd 9 days after close date, and with THAT, I'd pretty much have to make pymt same day or next day after I receive statement to ensure I'm not LATE with pymt.
(OH - I also had checked back a few statements before I called and found they arrived anywhere from 7-9 days later.)

First, supervisor told me that it all depends on the closing date as to when statements go out. AND, she'd be willing to change my closing date! I told her "No, I'll KEEP my closing date at this time, but I will continue to monitor".

The supervisor pacified me (and I fell for it!), and told me that she will waive the current finance charges for that month - it would be reflected on my next statement.

OK - next month statement arrived. The finance chgs were reversed as promised.
This is a CC I had done a bal trf on last year - very low APR till pd in full (unless I default).

Now I have to check - see if the 'regular' APR raised dramatically (above and beyond the 'norm') - due to this little issue. LOL!

I HAVE been checking them regularly since, and been receiving the statements within 5-7 days, which I find somewhat acceptable at this point. (Until I read otherwise!)

A few years ago CC's were so simple! They've gone crazy now - it's a full time job keeping up with all the monthly changes.
I really appreciate all of you who can pay in full every month. I'm working my bottom end off to get out from under these. I've been paying about 40% of my monthly income towards these. I realize it will take a little time, but I won't give up.

(P.S. - A local furniture store with really neat furniture went bankrupt a couple months ago. I read about it in our local news - the owners just disappeared. I got a notice in mail last week "special invitation" to buy funiture at "UP TO 70% off". (Key words: "UP TO".) I did some research, and found the attorney decided rather than auction the furniture off - would be better to have a 4 day special event. I wanted to go. I made a choice NOT to go. (patting myself on back...LOL!) We've been living for last almost 3 years either on computer desk chairs or floor. We trashed our very old, beat-up, ripped up, cheap, filthy couch/luvseat when we moved. IF company comes, they have to sit on either computer desk chairs or dining chairs - not comfy for visits.
I've decided I have a lot of stuff to try to sell first. Then, I will try to get something either "free" or very cheap (used) - whether it matches or not.)

Don't neg on me for carrying a balance on CC's. Stuff happens. I'm not shopping at malls or discount stores. We've "gone out to dinner" only TWICE this YEAR (family resturant - NOT one of those "fancy places".) We got slippers for Christmas last year, that's it! - no tree. We don't go to movies, amusement parks, etc. Basically - we are the most boring people on earth! LOL! We don't entertain. Birthdays - SOMETIMES a very small cake or cupcakes or even muffins - MAYBE a card. No "special night out".

Off to find my statement - see if APRs went up! Thx for your time...

    Bookmark   July 24, 2006 at 4:24AM
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jannie

I got my first credit card maybe 30 yars ago. In those days, interest rates were like 7% and there were no annual fees. I got a Mastercard for emergencies only. I never used it. One day I got a letter and it advised me the account was closed for lack of use over 12 months. Then I got a Visa card and nade a point to use it at least once a year. year. I always paid off the balance. Then they sent a letter advising me they were charging a $25 "annual fee". Seems like we just can't win. Now cards have an annual fee, higher interest, penalties for paying late, higher interest if you miss two payments in a year,etc. I am constantly getting offers to open new cards, transfer balances,"onvenience checks", zero percent for 3 months,etc. I shred and toss them!

    Bookmark   July 24, 2006 at 8:39AM
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western_pa_luann

Ask them to waive the annual fee.

I have never paid an annual fee on my Discover, DH's MasterCard and our joint Visa (which has a start date of 1976....)

    Bookmark   July 24, 2006 at 9:37AM
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cathie54

I too, got my first CC about 30+ yrs ago. Things were SO simple then. Not full of enticing "JUNK" advos to weed thru to find your statement, no "change in terms" every single month (or twice a month), no 3 pg statements to read to make sure you don't miss something IMPORTANT...

I have had CC's cancelled also for "non-use". Oh well, too late now. And I don't miss them.

I have ONE CC that I've had for many years that one year I had an "annual fee". I was confused - I never had an annual fee before on this card??? I called them. They waived the fee. Told me I needed to make at least 6 chgs per year to avoid the fee. I then marked the date (at that time I had Lotus Spreadsheet set up for everything). Then every year, I'd go to grocery store and do "seperate chgs" - SMALL chgs - and pay off immediately.
I've called them about three different years, and they always waived the fee. I've used this card for bal trfs, and even tho I don't do the 6 chgs per year since the last bal trf, I haven't had an anual fee either. (YET!)

    Bookmark   July 24, 2006 at 10:42AM
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bonelady

Here is an interesting trick. I have one credit card that I use on the rare occassion that I have to buy something that I can't pay in full for when the bill comes in. I paid about 50% of the balance when I received the first bill. I then checked the balance on-line about 3 weeks later and paid another 25%. I ignored the next bill because I had just made a payment, The following bill had a $25 late fee!

My second payment was still in the first billing cycle by 1 day!

    Bookmark   August 2, 2006 at 3:36PM
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western_pa_luann

Well, that's not a trick. You made two payments on the first bill, then chose to ignore (and not make a payment) on the second bill... gotta watch those dates ! :D

    Bookmark   August 2, 2006 at 8:40PM
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mary_md7

"Those customers who pay in full every month have earned the monniker, "deadbeat" Seems unfair, but hey! the company makes no money from them... "

The credit card company makes no money on finance charges, but don't they get a percentage of every purchase? If I write a check, they get nothing, so they should be glad I use their card, even if they don't get finance charges out of me.

    Bookmark   August 11, 2006 at 10:25AM
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joyfulguy

Memo to those of you who've had "credit" (i.e. "debt") card troubles:

Have you perchance had offers from other card companies? (Ha! Ha! Silly question, I know ... unless you've developed a *horrible* credit record).

When you call the company running the card that you use with a complaint, if they're not willing to at least go part way toward waiving some charge that you feel to be unfair, how about asking them whether they charge a fee to transfer balances out ...

... that you're sitting on an offer from another card co., and are considering changing cards ...

... so wonder what costs may be associated with leaving their service.

I'd suggest that you contact the other card co. first, for if they offer better terms, you may be able to convince the person that you're talking with to improve the rules governing your card (e.g. lower interest rate), etc.

That should get their attention.

But - like in dealing with children, employers, spouses or other entities that can become beastly if aroused - **never** threaten anything that you're unwilling (but certainly if *unable*) to carry through on!

(How many "spouses" can one person have ... well, at one time, anyway?)

ole joyful

    Bookmark   August 12, 2006 at 4:55PM
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brickeyee

"You made two payments on the first bill, then chose to ignore (and not make a payment) on the second bill... "

Call the credit card comapny up and demand the late fee be removed. They love to play this game. "It was in the same billing cycle". The card agreement does not typically say anything about this. You have paid 'ahead' and do not owe then the next payment.
If the first drone has a problem cancelling the late fee, ask for a supervisor.

    Bookmark   August 12, 2006 at 10:08PM
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cathie54

brickeyee wrote:

..."You made two payments on the first bill, then chose to ignore (and not make a payment) on the second bill... "
Call the credit card comapny up and demand the late fee be removed. They love to play this game. "It was in the same billing cycle". The card agreement does not typically say anything about this. You have paid 'ahead' and do not owe then the next payment.
If the first drone has a problem cancelling the late fee, ask for a supervisor..."

brickeyee -
There is no such thing as "paying ahead" on a CC when it comes to 'minimum pymt due' each month. Every month there is a 'min pymt due', regardless of how much one pays each month.

I think you mis-understood, as did I the first time I read it...(I had to read it like 3 times - lol!)

What happened is (IF I got it correct), they paid 50% of the balance. Then went back and paid another 25% 3 weeks later.

They assumed (since they paid 3 weeks later) - they would have no "minimum due" the NEXT month - thus, ignored the next months statement.

In reality, what happened is that they made TWO pyments in the same "billing period". They didn't pay it off in full tho.
SO...there is ALWAYS a "minimum balance due" as long as you carry a balance.
They 'ignored' the next statement in error - thinking they made a pymt towards the 'NEXT' month.
Well, they missed it by ONE day...the extra pymt fell into the previous months "pay period".
The 2nd month - there would still be a "minimum payment due". They didn't pay, so got slapped with a late charge.

(Does that make any sense to anyone? I'm quite tired!)

    Bookmark   August 13, 2006 at 8:39AM
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brickeyee

Read the card conditions very carefully. In many cases they fail to adequately define the payment schedule and how payments more than once per period will be handled.

    Bookmark   August 15, 2006 at 11:26AM
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western_pa_luann

Any payments made before the due date are in that billing cycle - whether it is the minumum or the whole payment, whether it is one payment or multiple payments.

I never knew it to be anything different!

    Bookmark   August 15, 2006 at 10:50PM
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dadoes

I would consider any remitted and posted payments to be within the current billing cycle, UNTIL such time as AFTER the NEXT statement has dropped. If I had a $2000 balance as of a statement dated 7/1/2006, and, for example, I sent in a $1000 payment on 7/8 and another $500 payment on 7/25, and both posted to the account before the NEXT statement drops on 8/1, and I didn't remit the minimum in response to the 8/1 statement, then I would expect the card bank would see it as I skipped a required minimum payment.

On the other hand, if I paid $1000 on 7/8 and $1000 on 7/25, that would zero the balance before the 8/1 statement drops, and then no payment would be due.

Timing is important.

    Bookmark   August 16, 2006 at 12:32AM
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cathie54

Responding to what 'bonelady' said - (about 9 posts up - Posted by bonelady (My Page) on Wed, Aug 2, 06 at 15:36)

Something similar happened to me quite awhile back.

I did a balance trf on a card. Got first statement and paid minimum due (it was like $120.00 min due at the time).
Then I made a 2nd pymt of $120.00 very close (either before or after the "due date"), expecting the 2nd pymt to "HIT" (be processed) in the NEXT billing cycle. (Taking into consideration mail delivery & processing time)
I think I mailed it the day before or day OF due date.

My next statement arrived, and I had a minimum pymt due of about $118.00 or $116.00 - something like that.

I called them up to inquire. Well...They rec'd the pymt AFTER the due date. However, that 2nd pymt applied to the previous month!

Here's why:

Let's say the "Minimum Payment Due Date" is the 17th of the month.

Pymt is mailed on 1st of month (PRIOR to the 17th) and gets processed/paid on the 8th. (I'm being 'generous' here on time)

Now, send a second pymt - lets say mailed on the 16th or 17th or 18th - because you KNOW it needs to travel thru the mail, arrive, be processed, etc. SO, you EXPECT it to arrive AFTER the "Due Date" - (17th).

And indeed it DOES arrive and is processed after the due date.
So, You're paid for the next month...RIGHT? NO PROBLEM!

EXCEPT!!! Hello? Your 2nd payment arrived and was processed on the 23rd.

Your new "BILLING CYCLE" STARTS on the 24th!
That 2nd payment applied to the previous billing period.
They don't "tell you" that there's this one week "GAP" between pymt due date and beginning of next billing cycle!

So, now you have to make yet ANOTHER minimum pymt that month!

I used to do the extra pymts once in awhile years ago. It was (if I'm not mistaken), if my due date was the 17th, my next billing cycle would start on the 18th.
Not that way anymore!

I was shocked when this happened to me awhile back...But HEY!...At least I made an extra pymt and was still able to pay the minimum due next statement.
PLUS, I learned something I was not aware of then, but I am NOW!

Helps for better planning...

    Bookmark   August 16, 2006 at 7:11AM
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dadoes

That is correct. The due date of a payment does not necessarily indicate the start of the next statement period. Check the "closing" date indicated on the statements.

I have several times checked my ccard account balance online and remitted a payment before the paper statement arrived ... but being as I always pay in-full, posting dates don't matter to me.

    Bookmark   August 16, 2006 at 2:18PM
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