The Great Credit Card Swindle
How naive of me. Credit card companies are dishonest to the core.And after a quarter of a century using them, I should've realized how dishonest and conniving they can be. On second thought, “dishonest” is too nice of a term. Fraudsters is probably a better word to describe them.
Case in point: I’ve had to rely on credit cards for the last three years. Before that I never put more than $500 or beyond what I could pay in one month. However, due to unforeseen circumstances, I’ve had to make huge charges and cash advances to ride out tough economic times.
The tough times are behind me, or so I thought. The debt I entailed on my cards are large and need to be paid off in monthly payments – often at the minimum rate established by the credit card companies and/or the banks that initiated them.
Recently, I became perturbed by a credit card balance that wasn’t going down, despite not using it for months. Worst yet, the monthly balances were going up.
After two inexplicable months of this, I finally called their help desk to find out what was going on. What I discovered led me to do a little more investigation. And, that investigation ended up involving other credit card companies using the same nefarious tactics as the one I had contacted.
My Call to One Credit Card Company
After going through a litany of options on the credit card’s 24 hour service line, I finally reached an operator. Once in contact, I gave her my grievance about the upward progression of my monthly balance.
After looking up my statement, she told me there were three reasons for this transgression:
- The interest rates were included in the statement.
- There was a late fee attached to it.
- The monthly Payer Protection Plan was posted.
I couldn’t complain much about the interest rates. I knew the company was jacking it up from time to time. This alone is one reason you should always be careful about running up your credit card balances. There was little I could do about this, except to get my balance down as soon as possible.
The late fee, on the other hand, was a different matter. Often, a date is given; however, it’s usually based on Eastern Standard Time in the United States. And to make it more specific for them, they often state that the due date ends not at the stroke of twelve at their time, but at the end of the work day at 5 pm.
In the past, when I had only a few hundred dollars or less to pay a debt on a card, I would mail it out on-- or a few days before -- the due date. As long as it was stamped on or before that date, I would have been alright.
Somewhere along the way, that changed. Now, for a bill to be considered on time, it had to be in their office on or before the due date. Once I started getting late payment fees on my statement, I started paying over the phone to ensure that I wasn’t going to be dinged for this.
The credit card company, on the other hand, changed the rules again. In the last statement, I had paid my monthly on the due date – or so I thought. My due date is usually the 21st of each month for this particular card. As mentioned, I paid it on the 21st, but they processed it on the 22nd. As a result, I was charged a late fee. Why? The Eastern Standard Time rule kicked in. I had paid my bill at 2:30 pm Western Standard Time (since I live in California). Without realizing it, I had missed the due date by a half-hour.
Of course, the automated system failed to disclose that. I was given the impression that it went through that day. Any indication that the payment process would be delayed the next day was when the recording stated that “it will be processed within the next 24 or 48 hours during the work day.”
...it was a service that was meant to protect my credit card payments during tough times. With a monthly payment of 89 cents per $100 listed on the statement per month, it was supposed to offer insurance-like services
Insurance for Credit Card Payers
Finally -- and possibly the most fraudulent part --there was the "protection" the credit card company had imposed on my account. It goes by several names: payer protection program or payment protection plan. Either way, it’s the same legalized scam.
In my case, it was a service that was meant to protect my credit card payments during tough times. With a monthly payment of 89 cents per $100 listed on the statement per month, it was supposed to offer insurance-like services.
This particular service is one of many “optional enrollment plans” that are meant relieve customers who are unable to make their payments due to hardship, such as the loss of a job, illness, or other matters. In many respects, it works like an insurance policy and is based on the fear that one will not be able to make a payment.
Another fear added to the mix is identity theft. There are often several payment protection plans offered. They range from wallet protection (in case your card is stolen), credit score indicators, or fraud alerts. Most of these services can be relegated to one yearly payment. The payer protection plan that was on my statement, however, had to be paid on a monthly basis.
The plan appears appealing. In some cases, they’d offer deferment of payment for 24 months (It doesn’t eliminate the debt, however).
In some cases, credit card companies or the banks that issued them with the services were brought up in class-action lawsuits
Is it Worth It?
Upon learning of the Payer Protection Plan on my account, I delved in to find more information. It didn’t take long to find blogs and chat rooms filled with people complaining about this service. Also, many of them were not aware they had this particular service and had asked (to some degree of success) to have the service removed and to be refunded.
In some cases, credit card companies or the banks that issued them with the services were brought up in class-action lawsuits.
Many experts, such as radio and TV personality Clark Howard, have warned consumers against them. He has referred to this service as something akin to a legal scam that the banks and credit card companies are getting away with. Also, he stated that many of these protection plans are usually unnecessary and just a way consumers can “throw away their money.”
The companies claim it's an optional plan; however many credit card companies have found ways around this.
A common complaint in many Internet threads can be summed up in the following steps:
- The credit card company or bank calls card holder to offer the service.
- If the card holder doesn’t give a definite “yes” over the phone, they ask for permission to send more information and an application through the mail.
- If the card holder says “yes” to obtain the information and application through the mail, that person will be automatically signed up for the protection plan. The application doesn’t have to be filled out and mailed. The “yes” over the phone is recorded . This is affirmation they need to sign you up. Never mind the option.
In many cases, most people either don’t recognize it or believe that it was just one of many security items added to their card.
Still, there are those who are aware of them. And, once again, the chat rooms are filled with disgruntled users who have tried to utilize this plan. The common complaints are as follows:
- “Hardship” according the credit card companies are hard to define.
- It appears the credit card companies make it hard to utilize the service.
- Some companies make it hard to get rid of the service.
On a personal note, I can relate to some of these complaints. Sixteen years ago, a company I had used my credit card at was breached by hackers. As a result, the credit card company began their campaign of offering protection against potential identity thieves.
At the time, the fear of someone stealing my identity was there. And, it seemed that the credit card’s offering was the most legitimate and reasonable thing to get. Little did I know that attempt to protect my card was actually opening me up to their unscrupulous practices.
I can’t remember when I received the protection plan. Then again, I may have gotten the service when they asked to send an application to me (and I may have given them the “Yes” they were looking for without realizing it). Either way, I thought it was merely part of their protection services and didn’t give it much thought until recently.
At this point I haven’t mentioned the name of the credit card company I was dealing with. The reason is this: these practices are widespread throughout the credit card industry. In other words, why single out one company when it's an entire industry doing this? From small tactics such as lowering the credit without notice, tweaking the exact due date by time zones and offering protection plans that are often unnecessary.
It is imperative that consumers peruse their statements or question such plans. One good thing about finding this erroneous statement is that you can be reimbursed for it. In my case, the credit cart company was willing the credit me for a year’s worth (well within the thousands) of this service after I asked them to cancel it.
Still, I don’t plan to be this naïve on this matter again. I don’t plan on using my credit cards unless I know the companies are not trying to sell me “protection." As for now, I believe what the best protection can be. And it's not something the credit cards will like.
© 2014 Dean Traylor