Common cheating tricks by credit card companies
Plastic money, which came as a blessing after the demonetization in November, has gained larger than ever popularity in last few months. Most of the people have started transacting digitally using plastic money i.e. debit and credit cards. With the onset in the demand of this mode of monetary transactions, credit card companies are earning a great profit. But do you know what cheats and tricks the credit card companies are adopting to earn greater profits from the user? If not then let us acquaint you with some of these used by credit card companies to cheat customers out of money:
Not posting your payment on the day it's received: It is required that the credit card companies post the payment on the date it is received. If they fail to do so, they cannot assess you late charges or added finance charges, but they do it anyway. A common tactic most credit card issuers use is to post only those payments received by 9:00 a.m. or 3:00 p.m. on a given date as being received on that date. Payments received at 9:01 a.m. are posted the next day despite the fact that all the major card issuers have payment processing centers that operate 24-hours a day, seven days a week. Doing this causes millions of customers to "pay late" and be slapped with a late fee, which accounts for billions in extra profit every year for the credit card industry.
Tricking you into paying late: The credit card issuers are required to email the statement at least two weeks before the due date, so companies have to resort to other tactics to get you to pay late. Their favorite way to get you to pay late is to suddenly and without warning changes your due date from, say the 25th to the 20th, so that you might pay late. If you do pay after the due date, they will slap you with a late fee and they might raise your interest rate from because you paid late.
Encouraging customers to carry a big balance and then penalizing them for doing so: If you carry a high balance on your credit card month-to-month, and never pay it off, you are telling the credit card company that you don't have the money to pay off the credit card.
Credit Insurance: This scam is used almost universally by the big credit card companies because it is such a cash cow for them. Credit insurance is supposed to pay off your credit card balance should you ever become unemployed or ill, and all you have to do is pay X amount per month based on your balance. But, actually, if you read the terms of the credit insurance contract very carefully, you will realize that the odds of you ever getting a dime out of them are tremendously low, no matter how sick or unemployed you ever become.
Universal default: When you apply for a credit card, you are asked to agree to all the terms and provisions of the credit card agreement before you will be issued a credit card. One of the provisions in that credit card agreement is commonly referred to as the "universal default" provision. Universal default means that the credit card issuer reserves the right to raise the interest rate on your credit card if you ever make a late payment or default on any debt owed to any of the companies to whom you owe money, be it a mortgage company, an auto finance company, or another credit card company.
False Marketing Campaigns: They lure you in with the offer of a great credit card and end up offering you one much less attractive with less desirable terms.
Marketing credit cards to college students: The companies try to give a credit card to the students who have no or very little knowledge. All this because they're willing to bet that the parents are going to pay the credit cards off if Junior can't.
Ignoring Your Billing Dispute: Sometimes some of the disputes like some sort of errors or omissions are observed by the cardholders and the companies don't resolve it and this is where the things go wrong.
Credit Card Cancellation Fee: Firstly, they compel you to pay amounts or over-the-limit fee and when you cancel the credit card, they charge the credit card cancellation fee.
We aren't recommending you give up using credit cards. Continue to use credit cards, but the only way to win with them is to
- get a credit card with no annual fee
- use it monthly but pay the balance in full each month; and
- never take cash advances or use your credit card to buy things you can't afford.
- The credit card company doesn't get any money from you if you do these things. If you pay off your balance in full every month, it doesn't matter what interest rate they charge you, because you never have to pay it.