Many credit card customers are getting notices that their accounts are being closed as of a certain date.

Millions of other credit cardholders have gotten notices of changing terms, and are calling in to close their accounts.

Be aware that the software interface that is used by the credit card call center reps to answer your questions and  process requests to close accounts is not programmed to make sure that you do not lose your rewards.

So, should you receive notice that your account is being closed, or should you decide to close a credit card account, then redeem your rewards BEFORE your account actually closes, or your rewards will, automatically, be forfeited. [Read more →]

A customer called to claim that there was a major discrepancy between the rewards program that she had agreed to, and the rewards program she was getting.

She was supposed to be getting a 5% cash back reward on certain purchases, but she was only receiving the rewards on a limited amount of these purchases. Her credit card company was putting a cap on the reward so that she was only getting this deal on the first $2500 of the purchases.

CUSTOMER CONTENDS OFFER HAD NO CAP

It was her adamant contention that she had a paper copy of the promotion in her hand, and it made no mention of a cap on this reward. [Read more →]

When your card is maxed out, you must add extra to your minimum payment, to make sure that your balance stays below your credit limit.

Otherwise you will get dinged for an over limit fee at the end of the month, when the interest that has been accruing all month gets added to your balance and takes you over your credit limit.

So many still do not understand this.

And that’s why the amount of money generated by penalty fees like late charges and over limit charges have increased by about $1 billion annually in recent years, and should top $20 billion this year. [Read more →]

The Visa system as we know it today, was started decades ago by a businessman who found himself in the embarrassing position of not having enough cash in his wallet to pay for a dinner for his clients.

He had the money to buy whatever he wanted; he just didn’t have it on him. He subsequently vowed that neither he nor anyone else in his financial position would ever be embarrassed in that way again.

The minimum payment on a credit card account was then set at full payment, due at the end of the month. 

The credit card issuer’s profits came from charging merchants (who were enrolled in the program) a percentage of the purchase price for each transaction, like today.

Plus each credit cardholder was billed a monthly fee for the privilege of having credit on demand.

A FORMULA FOR MORE PROFITS

Looking for more profits and a larger customer base, the minimum payment was reduced to 5% of the balance so consumers would float debt.

This attracted people who, for the first time, could buy things that they could not, otherwise, afford.

As the money-making potential of the industry began to be realized, cards with no monthly fee were issued in order to attract less affluent customers who would float their loans for extended periods.

Then the minimum monthly was reduced to 3% so consumers would float more debt longer.

Finally, the minimum monthly payment was reduced to 1% to 2% for lower-income customers, which pretty much guaranteed that the debt itself would never be paid off.  [Read more →]

Having fallen into the low-mininimum payment cycle, a lot of Americans and Canadians are in trouble financially.

Tens of millions, in fact.

Yet, in reading comments on blogs and on-line articles, understanding for the plight of the those who have entrapped themselves seems in short supply.

Those who comment seem to think that just because they resisted the traps set for consumers, or they have enough money for a standard of living that does not need credit, that those who fell in the credit trap are deserving of shame because they “should have known better.”

In fact, it is consumers who are being accused of “taking advantage” of the system, both in regard to the subprime mortgage meltdown and the credit card meltdown, even though it is they who are now losing everything they worked for.

[Read more →]

Following the lead of President Barack Obama who signed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 on Friday, Canadian Finance Minister Jim Flaherty has proposed changes to Canadian credit card legislation in order to provide more transparency for Canadian credit cardholders.

One of Flaherty’s stated goals is to help credit cardholders understand how much the credit they are getting will cost them in the long run.  

How will he do it?

His proposal is to make credit card companies provide a calculation for each customer that shows the total cost of paying off his credit card balance when only a minimum monthly payment is made. 

While the idea may sound good at first blush, it is deeply flawed.  [Read more →]

It’s already old news – on Tuesday, May 19, the U.S. House of Representatives overwhelmingly passed the Credit Card Reform Act of 2009. The bill now goes to the U.S. Senate where it is expected to pass in short order so that President Obama can sign it into law before Memorial Day.

Washington Wire has succinctly summarized the bill passed by the House:

 
Quite frankly, these changes don’t strike me as having as far-reaching consequences as consumers may expect them to have. My analysis follows. [Read more →]

This is the third of three posts on how to avoid balance transfer disasters. Balance transfer disasters occur because of  miscommunications, between customers and credit card agents, in regard to terms. The reasons why these communication mistakes occur were discussed in post number two. 

So, how can you avoid the kind of calamitous miscommunication that makes a balance transfer pointless or, worse, damaging to your finances? [Read more →]

Part 2 of a 3-part post. Most credit card balance transfer disasters can be traced to a problem with terms. The customer thinks he has agreed to one set of terms when he has actually agreed to a different set.

Such miscommunication occurs, primarily, when customers are speaking with overseas credit card agents. Yet, why exactly does this  miscommunication occur? [Read more →]

In our current economic climate credit card customers are seeking out low-interest promotional balance transfers as a way to help them manage their debt and, in some cases, escape bankruptcy.

However, before looking to transact a balance transfer on a new card, be aware that unpleasant consequences can impact your finances should a miscommunication occur between you and the credit card agent who is facilitating your transaction.

In my article Credit Card Balance Transfers – 6 Disasters To Avoid, I detail six financial disasters that can and do occur. This 3-part article discusses how to avoid such balance transfer mishaps.

The Cause of Balance Transfer Disasters

The problems discussed in Credit Card Balance Transfers – 6 Disasters To Avoid all revolve around a customer believing he is getting one set of terms when, in reality, he is agreeing to a different set of terms which can render the balance transfer pointless or, worse, financially damaging.

Unfortunately, once funds are transferred, there is no “going back.” The terms in place on the account cannot be changed. So it’s important for every credit cardholder to try and understand the causes behind these communication mishaps in order to avoid them.

Some of the errors can be caused by technological glitches, or caused by the errors of English-speaking North American agents who should know better.

Yet, in the great majority of cases, these problems are caused by overseas agents who simply make “communication errors” and/or omit some information that the customer should have been told.

Next Post – Part 2: Why These Communication Errors Happen