Debt Kit -- Settle unsecured debts for less than half of amount owed Credit Kit -- Improve your credit rating and reduce monthly payments by $200+ |
False Marketing Campaigns -- Most consumers don't realize that the zero percent or low interest rate credit cards they see advertised on the Internet, in magazines and on the television are reserved only for those with excellent FICO credit scores that are 750 or higher. Since 75% of Americans have FICO credit scores below 750, odds are you won't qualify for a premium credit card. And, if you do qualify, you probably don't need their low interest rate credit card anyway because you pay your balances off in full each month. The credit card companies are being very deceptive in this advertising because they know that most of the people who apply for the credit card are not going to qualify for the low interest rate. They know that the low interest rate will bring them more customers, most of whom will accept the credit card they are offered even if the interest rate is much higher. Interest Rates that Never Decrease -- Most credit cards come with a variable interest rate, meaning the interest rate is tied to an economic indicator, most often the prime lending rate. When the prime lending rate decreases, the interest rate on the credit card should decrease too, right? Well, most of the time it doesn't. To avoid lowering it, credit card banks simply raise their margin rate to compensate. But that really hasn't been an issue the last several years since The Fed has raised interest rates an unprecedented eleven times in the past several years. Credit card interest rates keep going up and up and up. Marketing credit cards to college students -- If you are one of the few people who can't seem to get a credit card or can't get one with a decent credit limit, consider enrolling in college. Your local community college will do just fine -- take a class or two, but remember, when you enroll at the college, check the box on the application that allows them to sell your personal information to any Tom, Dick or Harry who asks for it. That way, you will be besieged with credit card offers from the big credit card banks who love to give big credit limits to college students, most of whom don't even have jobs or an income any where near high enough to qualify for the credit cards with $2,000 or $5,000 limits. A scary percentage of college students leave college owing one or two credit card companies a great deal of money, with no means to pay it back. Sadly, dozens of young people have committed suicide as a result of massive debt they can't pay off. The credit card companies don't care about that. They pretend to care by creating little booklets for young people that warns them how to use credit wisely. But they encourage these students to run up big debt on trips, shopping sprees and the like with zero percent introductory offers and minimum monthly payments so low it will take 500 years to pay the card off if you just paid the minimum. All this because they're willing to bet that the parents are going to pay the cards off if Junior can't, just to keep him out of trouble. Ignoring Your Billing Dispute -- Every day hundreds of people open their credit card statements and find some sort of error or omission. Perhaps there is a charge they didn't make or they were credited for making only a $10.00 payment instead of the actual $100.00 they sent. And these people phone the credit card company and are assured that the error will be fixed. But then the next month arrives and the latest statement does not show the correction. A second phone call is made and the person is once again assured that the error will be corrected, but the third statement arrives and it still isn't corrected. A third phone call is made and the person is told that she has forfeited her right to have the error corrected because she did not comply with the Fair Credit Billing Act and notify them in writing of the mistake within 60 days, as this law requires. Of course, the credit card company did warn you of this since they are required by federal law to provide you this information in print along with your statement (it is usually on the back of your statement). But most people don't read that statement or know about the law and certainly don't want to take the time to write a letter. How to fight back: Always communicate with credit card companies in writing. If the matter involves protecting your legal rights in any way, send the correspondence certified mail, return receipt requested. See Resolving Billing Disputes Card Cancellation Fee -- This is a relatively new tactic used by only a few credit card companies, but expect it to be used by many credit card issuers in the future. Imagine cancelling your card because you have been slapped with a bogus $39 late or over-the-limit fee, only to find out you will also be charged another $59 for closing your account! One instance of this happening made national news: Customers of Advanta became so angry over unscrupulous billing practices that hundreds of them began closing their accounts. Advanta responded by immediately adopting the policy of charging a $25 to anyone who cancelled their card to keep their revenues up. If you're feeling frustrated by reading all of the above, perhaps it will make you feel a little better to know that sometimes consumers win. A good example is First USA (subsequently purchased by Bank One, then Chase). FirstUSA once treated their customers so shabbily they lost millions of customers in a very short period of time. |
Credit > Credit Cards > Dishonest Tactics Used by Credit Card Companies |
Tactics Credit Card Issuers Use to Get You to Pay More |
Credit > Credit Cards > Dishonest Tactics Used by Credit Card Companies |
False Marketing Campaigns -- Most consumers don't realize that the zero percent or low interest rate credit cards they see advertised on the Internet, in magazines and on the television are reserved only for those with excellent FICO credit scores that are 750 or higher. Since 75% of Americans have FICO credit scores below 750, odds are you won't qualify for a premium credit card. And, if you do qualify, you probably don't need their low interest rate credit card anyway because you pay your balances off in full each month. The credit card companies are being very deceptive in this advertising because they know that most of the people who apply for the credit card are not going to qualify for the low interest rate. They know that the low interest rate will bring them more customers, most of whom will accept the credit card they are offered even if the interest rate is much higher. Interest Rates that Never Decrease -- Most credit cards come with a variable interest rate, meaning the interest rate is tied to an economic indicator, most often the prime lending rate. When the prime lending rate decreases, the interest rate on the credit card should decrease too, right? Well, most of the time it doesn't. To avoid lowering it, credit card banks simply raise their margin rate to compensate. But that really hasn't been an issue the last several years since The Fed has raised interest rates an unprecedented eleven times in the past several years. Credit card interest rates keep going up and up and up. Marketing credit cards to college students -- If you are one of the few people who can't seem to get a credit card or can't get one with a decent credit limit, consider enrolling in college. Your local community college will do just fine -- take a class or two, but remember, when you enroll at the college, check the box on the application that allows them to sell your personal information to any Tom, Dick or Harry who asks for it. That way, you will be besieged with credit card offers from the big credit card banks who love to give big credit limits to college students, most of whom don't even have jobs or an income any where near high enough to qualify for the credit cards with $2,000 or $5,000 limits. A scary percentage of college students leave college owing one or two credit card companies a great deal of money, with no means to pay it back. Sadly, dozens of young people have committed suicide as a result of massive debt they can't pay off. The credit card companies don't care about that. They pretend to care by creating little booklets for young people that warns them how to use credit wisely. But they encourage these students to run up big debt on trips, shopping sprees and the like with zero percent introductory offers and minimum monthly payments so low it will take 500 years to pay the card off if you just paid the minimum. All this because they're willing to bet that the parents are going to pay the cards off if Junior can't, just to keep him out of trouble. Ignoring Your Billing Dispute -- Every day hundreds of people open their credit card statements and find some sort of error or omission. Perhaps there is a charge they didn't make or they were credited for making only a $10.00 payment instead of the actual $100.00 they sent. And these people phone the credit card company and are assured that the error will be fixed. But then the next month arrives and the latest statement does not show the correction. A second phone call is made and the person is once again assured that the error will be corrected, but the third statement arrives and it still isn't corrected. A third phone call is made and the person is told that she has forfeited her right to have the error corrected because she did not comply with the Fair Credit Billing Act and notify them in writing of the mistake within 60 days, as this law requires. Of course, the credit card company did warn you of this since they are required by federal law to provide you this information in print along with your statement (it is usually on the back of your statement). But most people don't read that statement or know about the law and certainly don't want to take the time to write a letter. How to fight back: Always communicate with credit card companies in writing. If the matter involves protecting your legal rights in any way, send the correspondence certified mail, return receipt requested. See Resolving Billing Disputes Card Cancellation Fee -- This is a relatively new tactic used by only a few credit card companies, but expect it to be used by many credit card issuers in the future. Imagine cancelling your card because you have been slapped with a bogus $39 late or over-the-limit fee, only to find out you will also be charged another $59 for closing your account! One instance of this happening made national news: Customers of Advanta became so angry over unscrupulous billing practices that hundreds of them began closing their accounts. Advanta responded by immediately adopting the policy of charging a $25 to anyone who cancelled their card to keep their revenues up. If you're feeling frustrated by reading all of the above, perhaps it will make you feel a little better to know that sometimes consumers win. A good example is First USA (subsequently purchased by Bank One, then Chase). FirstUSA once treated their customers so shabbily they lost millions of customers in a very short period of time. |
Debt Kit -- Settle unsecured debts for less than half of amount owed Credit Kit -- Improve your credit rating and reduce monthly payments by $200+ |
