Credit Card Companies Want Consumers To Become “Deadbeats”
Credit card companies like it when their customers make payments that earn them 28% or more on their money. They like it even more when consumers pay late or not at all!
At first this may seem like a crazy thing for the banks to want – why wouldn’t they want their customers to pay extortionate rates to fill their wallets? Well, the answer is quite simple… they want to make even more money from you; this they can only do if you fail to honor the original agreement.
For example, this is what typically happens when you are late on a payment: -
- Your low teaser rate, or sometimes even a reasonable interest rates, gets jacked all the way up to 35%. And this is where it’ll stay forevermore! Just one late payment or your credit score falling, not an unusual occurrence in this economic climate, is all it takes.
It does not matter if you have been a loyal customer for years. The bank’s argument for raising the rates are that they have to manage the risk of you paying late or perhaps not at all. This is of course is complete and utter rubbish. The 2009 Credit Card Reform Bill will only delay the rates from rising which will obviously help, but in the meantime you’re at the mercy of the credit card company. And they want your money!
- You get assessed a late payment fee which can be anything from $25 to $75. Another, insanely profitable center for the banks.
The way to avoid this scenario is of course to pay your bills on-time and to resolve any disputes prior to the payment due date. If you have to make a payment by phone or online to make sure you beat the payment due date. Watch out for additional fees for telephone and online payments though (something that the 2009 Credit Card Reform Bill should fix).
Carrying A Balance Means More Money For The Banks
Alright, so you’ve made your payment on time and you think you’ll be assessed minimal interest. Well it seems that more and more credit card companies are moving toward a two cycle billing process because it means more money for them. Typically, when an average daily balance (versus 2 cycle billing) is used to calculate interest, you pay interest only in subsequent months following the month in which the purchase is made. With 2 cycle billing, however, the interest charges accrue from the day you make the purchase!!
Even though, your credit card issuer maybe using average daily balance to calculate the amount of interest that you pay, they may switch the billing system on you with very little notice. So beware!
Payment Due Date May Be Inaccurate
Even though the credit card companies put a payment due date on their statements, it can be, and usually is, misleading. This, once again, favors the bank so that they make more money. Some banks have a 9am payment posting deadline on the due date. Well, this means that if your payment is posted by the end of business, usually 5pm, on the payment due date, it is still considered late! The conventional closing time for banks is 2pm, so why do a lot of the banks use an earlier time? All together now… “to make more money”. Hopefully you see the common thread here, and the dirty tricks that credit card companies are using to bilk consumers out of billions of dollars each and every year.
These are just some of the tricks the credit card companies use to cheat customers. More will follow in a follow-up article entitled “The More You Screw Up The Better”. Stay tuned!
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