How Credit Card Issuers Cheat
If you have ever thought that credit card fraud happens only because there are tricky fraudsters who manage to obtain your credit card number and charge you for their purchases with your credit card, think again! Credit card issuers are also known for their dirty tricks and the long list of class actions against them shows another dirty side of the credit card technology. It is true that most of the tricks of credit card issuers rely on your negligence but still a fraud is a fraud, no matter how nice its legal outfit is.
Generally, the dirty tricks of credit card issuers are not as blatant as those of online criminals. Instead, they are more refined and very often look like legitimate actions but actually they are aimed at pumping more money from you. And the worst is that more and more credit issuers adopt new dirty tricks. If there is good news, it is that class actions against unscrupulous credit card issuers have also become more and more common and very often credit card issuers have to pay millions as compensation for their unscrupulous practices.
The assortment of tricks revolves around charging you late fees when you actually have paid on time, charging you over the limit fees when you have not reached your limit, unfairly increasing your interest rate and charging you for products you have not consented to use. Lately some companies started fining their customers for closing their accounts and even for not using their card! You see, the creativity of cheaters is inexhaustible and if customers do not stand for their rights, credit cards might become a legalized way of fraud.
The tricks related to late payments are a whole group. These include tactics like not posting your payment on the date it has been received or changing the due date without notice. Fortunately, both practices are now illegal but prior to one or two lawsuits that managed to change them, many credit card issuers used them to collect some more money. If you avoid paying in the last minute, this decreases the risk of being charged for late payments. One variety of this trick is when your payment is received on Saturday but is marked as received on Monday, though actually it has been processed the minute it has been received because most credit card issuers have credit card processing centers that operate 7 days a week, 24 hours a day.
Different charges and penalties are also common. Besides the late payment fee, which typically is $29 or more, you can get penalized if your balance is too high (no matter that it is under the credit limit, the issuer regards you as a high risk customer) or if you have gone over the limit. In the second case they might have the right to do it, if it is fixed in your contract but very often the subject of dispute is if you have reached your credit limit or not. A very common reason is when there is an unsettled dispute over payments you have not made but the issuer charges them to your bill. You know that you are under the limit but actually you aren't because the unauthorized charges are still on your statement.
A really unbelievable penalty is the one for not using your credit card for some time (6 months or more). It can be predicted that unless this practice is officially declared illegal by a legislative body, more and more credit card issuers will resort to it. Similar is the case with cancellation fees. The first such case was with Advanta when due to its striking fraudulent practices, an overwhelming majority of its customers decided to close their accounts. Then Advanta invented the $25 cancellation fee.
Usually the one-time penalty of $30, $4o or more is followed by another, long-term penalty – increase in the interest rate. And here the occasions on which this is done are several – late payment, too high balance (you have become a higher risk), and so on. And then, even if you are a brilliant payee, the rate will not go down for years on end.
Another very common trick is making you pay for goods or services that you have not ordered. The most famous example is credit insurance. The idea is that you get insurance for those bad times when you are ill or unemployed. In case of a such event, the insurance company will pay your monthly payments for you. Sounds too good to be true? Sure, having in mind that there are only a few cases when the insurance company kept their promise. In all other cases, including cases of cancer and serious injuries, the insurance companies rejected payment because, you see, the recipient was not ill enough to be unable to pay!