I was warned long ago, as a kid that credit cards were scams, but you know surely... surely a big well-respected business would participate in a fraudulent activity right?
Here is my experience.
After moving to Texas I was offered a credit card with Washington Mutual. It had a good low interest rate .99 plus the prime rate. At the time that was about 9 percent. That would only go up (or so I believed) if I defaulted or was continually late with my payments.
Well, it had a limit of 2500. I figured it could help with additional expenses etc. I had good credit from paying consistently on my student loans and so I figured that's why I was being offered a pretty good deal.
For the first couple years I barely used it, but then I needed it to pay for a few unexpected fees that arose. My job required me to liability insurance for massage, and then we had a major car repair. So suddenly I was carrying a balance. The finance fees were pretty low and I paid more than the minimum balance so I wasn't too concerned.
Then our Wedding came about and we had a number of last minute expenses/plane tickets for a sister etc. that were not covered in our budget plus another major car repair... The next thing I knew I was about 100 dollars shy of my credit limit. Ouch. So I stopped using the card for anything and moved money around to make sure that more than the minimum got paid every month.
Then I get a bill and in it I noticed that the previous month had incurred an additional fee. $39 for being "late." But I wasn't late I had sent the payment the same time I always had. Upon closer look I realized that they had moved my due date from the 14th to the 12th. Since I was paying electronically I had not noticed the discrepancy on my bill.
So I'm out $39 dollars. The next month I sent them my payment on the 12th brilliantly figuring that they wouldn't dare do the same thing again. They had moved the due date to the 10th. $39 but in addition they had raised my interest late a few points for being late the previous month and with the higher interest rate the finance charges had put me over my credit limit.
So they charged me an "over credit limit" fee. I was shocked. I had not used the card in several months and it hadn't occurred to me that the over-the-limit fee could apply to their finance charges and fees. So to sum up I was charged $39 dollars as a penalty for being charged $39 dollars late fee as a penalty for them changing my due date and for them raising my interest rate for being past my due date which they had changed the previous month without notifying me.
In all the minimum payment for that month was $170 dollars. The problem was with my income I could not afford to pay that month and pay the card down enough to keep them from pulling the same scam the next month. So I borrowed enough money from my husband to pay off the card entirely and then paid him back slowly over the next year.
So of course I should have ripped that card to shreds... but... I figured I might have an emergency...
I did my brakes went out and I was pregnant. The guy at pep boys talks me into getting an extra 900 dollars worth of repair that was needed... and could go out any day. I was imagining being in a wreck if I didn't get the x, y, or, z fixed and losing my baby. Good God, what do I do?
So 1600 dollars goes on the credit card. We had enough money to pay down the balance in a few months plus I wasn't anywhere near the limit, I certainly wasn't going to use it for casual spending (and I didn't). So why worry.
Oh, I know Washington Mutual had gotten into financial hot water and so while my card lay with no balance on it for about a year they had jacked up the interest rate to 29 percent.
Suddenly I had finance charges of over $80 dollars a month. I was thinking I could pay $200 a month and be balance free in 8 months.... but no. When I saw the $80 dollar fee I was shocked.
Even when they had previously raised my rates I had never paid more than about 25 dollars in finance charges. So I decided the time had come for abandoning the Wamu credit train. I moved my balance onto an American Express card that would have 0 percent interest on balance transfers for the first year and a low fixed rate of 3.5 percent after that. Whew... dodged a bullet.
Thus begins the next credit scam, American Express.
So my husband and I decided that we weren't going to fall for any more accounting tricks from credit card companies. Our minimum payment was only about 10 dollars do we decided we would send them $10 dollars every week. Which we did.
They were getting at least 40 dollars a month, and this continued for over a year. Unfortunately I used the card for something. I don't remember what now, probably an insurance premium. But it bumped up the minimum payment to over $10 dollars.
Of course we were sending them well over that so why would it matter? The answer is that creative accounting always wins. About 6 months late we get a notice in the mail that went something like this:
"Due to the continued delinquency of this account we will be raising your interest rate to the default rate of 29.9 percent."
We were shocked? What the hell were they talking about?! We had been sending them money every week for over a year and a half, and had consistently well in excess of the minimum amount due.
We checked our account statement. Which naturally we hadn't bothered to look closely at for the past few months. On it we found 2 late payment fees of $40 dollars for the past two months respectively.
They claimed our payments were late. How could they be late?! We had consistently over paid!
We called them to find out. As it turns out there was an 8 day period (I think it was 8 days, its been a while so I may be a day or two off) in which a payment had to arrive to be considered "on time."
One of our payments came during this time each month but for the past two months they weren't receiving the whole minimum balance (now more than 10 dollars) in that limited window (a window they had never ever ever mentioned on any paper, verbally or otherwise.)
So all the money that came in in the first week of the month did not count toward the amount due. It counted as a payment on the previous month. They had to get the money between the 7th and 15th in order for it to be counted toward that month. Any additional payments received in the last part of the previous month also didn't count.
So since our payments were only in part we were "late," and being "late" twice made us "delinquent." So they charged us... I mean ripped us off of... I mean STOLE 80 dollars from our account and then tried to raise our interest rate. We were able to cancel the account in time to prevent the new rate from applying, but it still floors that anyone is allowed to get away with this blatantly fraudulent activity.
Of course when we complained we were told that "this is what all the big banks do," or "this is standard industry practice."
Translation: The big banks and credit card companies make most of their money by defrauding their own clientele.
These are the businesses that we were told were "too big to fail." They are all still out there and our tax money paid them to stay afloat.
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