You say that customers that pay off the credit card balance every month are "bad customer." I actually automatically pay of the balance from my checking account every month and don't get a paper statement--how could I possibly NOT be earning money for the bank (and payment systems)? If this is a losing proposition for banks, then they REALLY need to change their business.
Thanks for the stories! You do an excellent job of conveying important information.
In answer to Debbie, I don't think it's established that ALL charge cards will now charge interest "in advance" during the first billing cycle. Liz said that Karen's Macy*s card was unusual in doing this. I have to say, their tactic is insidious. By "charging" you interest, that is then "refunded" (not really) to the card, which you have to spend at Macy*s to get back (unless you make a stink and demand a true refund check), Macy*s is using their "advance interest" plan to coerce you to spend MORE money at Macy*s again. Vicious cycle, eh? I'm skeptical of the legality of this. If they're "refunding" your interest, they should be able to cut you a check at your discretion. Of course, this would cost them more money that it's worth in some cases, and you might have a long phone call to endure before a representative gives you an actual refund. I also had an airline charge card pitched to me during a flight to St. Thomas last year ... but by a TERRIBLE salesperson. Oh, she was a terrific flight attendant, but clearly not skilled in sales. She handed out only the applications (which disclosed the $75 annual fee in fine print somewhere), but not the brochures that they were torn out of. So the only pitch and assurance I had was verbal, over the aircraft PA. On my return trip they gave me a full brochure. As Gomer Pyle would say, SU-prise, SU-prise, SU-prise. To the credit company's, um, credit, when I called to complain and cancel the card, they reversed the fee and canceled the card with a minimum of fuss (3 minute phone call).
I always pay off my credit card every month to avoid paying interest. I am infuriated that the companies are now charging interest as soon as the transaction is made. It is not my fault the bill comes only once a month. What do you think of these options for avoiding interest? 1. Stop having monthly expenses such as utilities billed directly to credit card and go back to writing checks; 2. use PayPal instead of credit cards for online purchases; 3. try to make purchases at the end of the billing cycle; 4. cancel credit card (I hate to do this because I've only had one card my entire life and it's been active since 1993). Any chance the law can be changed to make charging interest in between billings illegal?
After graduating from college, I signed up for a credit line with my bank to cover overdrafts of my debit card. Unfortunately, I forgot about this little transaction, partly because I never activated the card and foolishly thought this meant the account was not active. Meanwhile, the bank "accidentally" linked my parents' overdrafts to this card, racking up 600$ in fees from the wrong account, and 200 from mine. They were unable to tell my parents why their statements didn't add up. Now we have 850 to pay off, and my parents are more than confused. I have cancelled any further transactions, and wonder if getting a loan to pay it off in one check is possible with my presumably awful credit? What do you suggest for ending this situation ASAP, coming up with money I don't have?
What is the current rate that credit cards charge merchants?
Also... why don't these merchants offer a cash discount to the consumer that is equal to this rate. They would have their cash immediately. Checks may be another matter.
My brother pays cash for everything. He wanted to get a better rate for his home owners insurance and went through an independent agent. No one wanted to give him insurance due to his lack of credit. One finally did then subsequently dropped for lack of credit even though he paid the annual fee in full. The handshake closing the deal based on your integrity and good name are no longer part of the marketplace.
Re: credit cards and interchange fees
I'm a little concerned about your apparent lack of concern about fees charged to merchants. I have a small bookstore, employee two full time people and one part timer at 20 hours a week. I could hire another person at 16 hours a week with the money I pay to the banks to process credit cards. The jobs and money leaving our communities is simply huge and deserves to considered when making buying decisions.
If you have a card that is carrying a balance but have stopped using it in order to pay it off--Do you think it's smarter to cancel that card to aviod fees related to lack of use, or is it wiser to keep it open even if you no longer are spending with the card? Also, does your current interst rate stay the same with cancellation, or can creditors raise it even after the card is cancelled?
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