CREDIT CARD CONFIDENTIAL - An Insider Reveals How To Avoid Heartbreak, Wasted Fees & Identity Theft

Looking for good deals in credit cards despite the credit crunch? So are my friends.

They’ve been asking me if there are any good deals on credit cards, and for some info on how the economic crisis is affecting the credit card business. So I’ll give you the inside scoop I’ve been sharing with them.

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Credit cards and Christmas are as inseparable as bacon and eggs or Great and Expectations. It has become tradition to overspend and bury ourselves in credit card debt “for the sake of Christmas.”

Yet, when we cannot pay off those bills in January - and perhaps not in February, March, April, or May either - that isn’t a gift, but self-abuse. So maybe it’s time to adopt a new tradition.

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Yesterday the Office of the Comptroller of the Currency, the federal agency that oversees credit card issuers, rejected a request by banks and consumer advocates for a credit card debt forgiveness plan that had the potential to forgive up to 40% of a consumer’s debt should he or she qualify.

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What is a hanging authorization on a credit card account? 

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What should a merchant tell you when your purchase doesn’t go through? More specifically, what is a merchant’s responsibility when it comes to handling credit card “declines” when those “declines” are unlikely to be because a purchase was “disapproved?”

To be clear, there is a difference between a credit card purchase not “going through” and a “disapproval” of a purchase.

The most common reason for credit card purchases not going through has to do with breaks in the transmission of electronic data. In this case the merchant receives neither an approval or a disapproval.

While a merchant may not be responsible for what an electronic system does or doesn’t do, that merchant is responsible for what he says to the customer when those bad swipes happen.

Unfortunately, a merchant will most likely tell you, his customer, that the purchase was “declined,” or “turned down” or “didn’t go through” yet, in the scenario I described in a previous post, none of those statements are true.

The worst consequence of these false statements, however, is that these descriptions all suggest to the customer that none of those swipes have had any effect on his credit card account or credit limit when, in fact, they have.

In fairness and in the interests of accuracy, a merchant should tell a customer whose card has just been declined that the bad swipe might have produced an approval but, for some reason, the approval has not been delivered/received. The merchant could also add that, if the swipe went through, then there has been a deduction against the customer’s available credit for that amount.

Furthermore, if the merchant has made more than one swipe and they all have gone through (even though the merchant hasn’t received confirmation of it) all those approved, authorized purchases are waiting to be posted to your account.

Merchants know that this happens often enough, yet they choose not to tell you about it.

I expect they don’t mention it because the merchant knows that, in doing so, he could create a hassle for himself. He might be busy and have little time to explain the ins and outs of credit card purchase declines.

Or he might be afraid he’ll give you the impression that he uses inferior or malfunctioning equipment which might annoy you. He may fear that the two of you might find yourselves in a disagreeable conversation which could negatively impact other customers in his store. Worst of all, he might fear losing you as a customer.

So, instead of mentioning this possibility, the merchant will most often keep swiping your card knowing full well that he or she could be creating a hassle for you.

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Who is to blame for the credit card declines I’ve been describing? Are these credit card fiascos the fault of merchants?

After all, In my previous post I discussed how a merchant will run a purchase through, get a “decline”, then run it through two or three times more with the result that ”declined” purchases keep being approved, with each one eating away at your credit limit.

I often receive phone calls from customers whose accounts are in good standing, who attempted purchases,  who were told by merchants that their cards “didn’t work,” or who were shown that the card didn’t work by the merchant who ran it through again as a demonstration, and who were informed by those merchants that they needed to either provide a different credit card or pay with cash should they still want to make those purchases. 

As discussed in my last post a customer should call his credit card company immediately upon being told his credit card purchase has been declined because the purchase may well have been approved. A purchase may be approved but, because of breaks in data transmission, the “approved” reply may never reach its destination (the merchant’s credit card processing equipment) so that the merchant reports that the purchase was “declined”.

Furthermore, to prove that the card will not work, sometimes a merchant may keep swiping the card which can add “approved authorizations” to a credit card account and decrease a customers available credit.

So, if the cause of these “declines” is primarily due to the fallible nature of an electronic processing system, can any merchant really be assigned any of the blame for these credit card purchase fiascos?

As with most things in life, the answer isn’t black or white, but gray.  

More on this in my next post.

Look to www.MoneySavingCreditCardSecrets.com for information about the credit card industry that you won’t find anywhere else.

When your credit card doesn’t work, do not pull out another credit card. Instead call your credit card company to find out what’s going on. This is the way to avoid bigger problems.

That continues to be my oft-repeated advice yet, over and over again, I talk with credit cardholders who do not follow this advice. They don’t follow it because they are embarrassed or flustered when their cards don’t work. Plus there is always pressure on them from the merchant to just pull out a second card.

Don’t ever give in to that pressure. Allow me to illustrate why not by going back to our restaurant example from my last post.

Let’s say that you have just treated your spouse to a lavish and romantic meal in a candle-lit bistro on your anniversary. Your heart is full of love as you gaze at your spouse and your mind is elsewhere.

As a result, you barely glance at the bill before handing it and your credit card to the waiter. The waiter sees that your generous tip has brought the bill total to $149.40.

Having conversed with you during your meal, and having tried to make your anniversary meal as special as possible, the waiter goes back, swipes the card and is mortified when your purchase is not approved. He does not want to bring this bad news back to you. Also, being relatively new, he is afraid that he has done something wrong. His first impulse is to flag down a seasoned co-worker. They stare at the device and the co-worker says, “Try it again,” which he does.

No luck. So he flags down the manager who hates technology, fiddles with it, and tries swiping the card himself. “It’s no good,” he says. “Ask for another card.”

The waiter comes back, informs you the purchase didn’t go through and says, “If you’ll just give me another card, I’ll run it right through and be right back.”

Now, I know it’s your anniversary and you want to leave, but it’s time to temporarily switch gears.

Do not hand him another card, no matter how badly you want to get out of there. Instead, call your credit card company even if you have to borrow the restaurant’s phone.

Now, when you first call your credit card company to find out what the problem is, you will hear your balance recited to you at the beginning of the call and then you will hear the amount of available credit you have left.

Whether you are listening to a “voice mail” voice that is reciting these facts or you are speaking with a live person, pay attention to see if there is a discrepancy between the two amounts.

For instance, let’s say that you have a credit card account with a five-thousand-dollar credit limit.

You hear that your balance is $2,503.61 and your available credit is $2,048.19.

What’s wrong with this picture?

You probably caught it right away. $2,503.61 plus $2,048.19 does not equal $5,000.00. Those two amounts equal $4,551.80 which means there is a $448.20 discrepancy on your account. Now how could that happen?

Remember the amount of the bill? It was $149.40. What happens when you divide $448.20 by $149.40?  You get 3, the number of times your card was swiped in an attempt to get approval for your anniversary dinner purchase.

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There are 10 basic reasons for credit card declines.  And, every day, credit card call centers get call after call from customers whose credit cards will not work or have been otherwise declined because of one of these reasons.

This is a scenario I’ve discussed before. You go to a restaurant, have a nice dinner, and hand over your card in order to pay the bill. The waiter comes back with the card and tells you that your credit card was declined.

Sometimes the waiter will recite a reason why your credit card purchase was declined. He or she may be correct as in “It looks like your card is expired.” Regardless, the rule as you probably know by now is this: Do not assume anything when your credit card is declined. Instead, call your credit card company to find out what’s going on.

To prepare you for that phone call, here is a list of the ten basic reasons for credit card declines and their “solutions.”

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On a lighter note, today I’ll give you a taste of some of the amusing conversations with credit card account holders that I’ve had. There’s a common theme running through all of them. See if you can identify it. 

As you know by now, I have a good deal of empathy for my customers and I do whatever I can to help them out. I am sure that, because I care, I give the mistaken impression to many credit card account holders that the corporate entity that is their “credit card company” also cares and offers personalized service. So I may well contribute to the ideas my customers have, as reflected in these snippets of conversations below.

Conversation #1:

This involved a customer who had maxed out his account and called in to try and get the over limit fee that was charged on his account waived. At the end of this particular call, the gentleman with whom I was speaking  tells me that he is “really disappointed” in the fact that I let his card go over limit. He then instructs me that the next time I see his account getting close to his limit, I should call him and give him “a heads up” so he’ll know he can’t make another purchase.¹

Conversation #2:

This customer’s payment arrived late and he was charged a past due fee. At the end of the call he complains to me about how long it took “us” to get his payment into his account. He tells me that, next time, he wants us to ”watch the mail for my payment and try to get it deposited quicker.”²

Conversation #3:

This customer was looking for a balance transfer deal and was disappointed to find that there were no promotional offers available for his account, so he asked, “Would you mind giving me a call the next time you see a good offer on my account?”³

Conversation #4:

This conversation is my personal favourite. This customer had trouble with his cable company putting incorrect charges on his credit card account. He was very disappointed in me for letting this happen. (Hmmm. So who gave the credit card number to the cable company in the first place, I wonder?)

Anyway, he asked me if I would ”mind keeping an eye on the cable company,”  and added, ”if you see them about to charge my account, stop them from doing it.” He said this, of course, in all seriousness.

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A ghoulish topic for Halloween involves credit cards and the dead.

Like it or not, we’re all mortal. Likewise, most of us will not spend our last hours paying off and closing our credit card accounts. So the dead do have credit cards, at least until the departed’s credit card issuer finds out about his death. Then the credit card issuer will kill the card itself.

Most of the time when the primary credit card account holder has died, the executor or next of kin will call the deceased’s credit card issuer and inform the agent that the cardholder has died. The agent who receives this information is required to refer the account to the probate department where the account will be closed.

However, I have encountered many active accounts in which the primary cardholder has been deceased for months or even years. In these cases it is not the dead who are rising from the grave to charge groceries, gas or jeans. Other authorized users on the account have simply continued to use the deceased’s credit card account. 

Typically, such a user will have his own card, a card on which his own name is embossed. He continues to use that card while assuming the deceased’s responsibility of making  payments in order to keep the account current and active.   

A credit cardholder in this situation may or may not realize that preserving this arrangement hinges on keeping the credit card issuer in the dark about the death of the primary account holder. Because once that cat is out of the bag, there will not be a ghost of a chance of keeping that account open.

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