Credit Cards

[Tunga]

I just received in the mail a notification to my credit card amount. These appear in my mailbox periodically and most times they end up in the trash. I read through the "Important Notice of Change in Terms and Right to Opt-Out". I was surprised that the credit card company was making a fundamental change to the account and using this innocuous vehicle as a tool to affect this change. They probably figured most individuals never read them and as a result will give up their rights without even realizing they have a choice.

For as long as I can remember, credit cards have a grace period. If you pay you bill in full by the time it is due, you are not charged any interest. But this notice took that away. Under the "Grace Period" provision, they revised this provision as follows:
"We accrue periodic finance charges on a transaction, fee, or finance charge from the date it is added to your daily balance until payment in full is received on your account."

I contacted the credit card company and asked them if this provision removes the grace period and charges a finance charge from the date of purchase irrespectively even if you pay the account in full each month. The company representative indicated that was the case, but she said that I have the option of "opting out" and there is no penalty to "opting out". So I decided to Opt-Out.

For those that like to pay off their credit card each month, it may be worth your effort to read your "notice of change of terms", should you receive one.

[tofu]

I would so cancel that card.

[ToSeek]

So often they'll send you something marked "IMPORTANT NOTICE ABOUT YOUR ACCOUNT", and they're either offering to transfer balances or giving you checks that turn into charges to your credit card (with no grace period). But you do have to make sure it isn't something that matters.

[DOOMMaster]

I know that most American Express cards don't have a grace period, simply because they require you to pay the entire amount in full every month. Although my main reason for not getting one is the rather ridiculous $80-$200 a year charge just to have the card. Sorry, I'm not going to pay that much money just to pretend I'm important.

But I have heard of Visa and Mastercard companies that do not have grace periods, although they tend to be the type of cards that are associated with high risk (with opening fees, high interest rates, and other various charges that no one with even mediocre credit should even bother considering).

While I typically read all the Important notices I receive everything month, this type of action does concern me. You wouldn't happen to be willing to say which banking/credit company this is, would you? I know many people are very protective of their finances, but I would really like to know if any of the companies I am currently using has started using such a policy. I might have to do a little more investigating regardless, though.

[mike alexander]

I may be confused, Tunga. Are you saying the company offered the (hidden) options of either paying interest on all purchases from the day of sale to the day they get payment, OR choosing the traditional 2-3 week no-interest period in which to pay up? And that the 'opting out' was just, in fact, telling them you declined to pay the extra fees?

Please tell me I've misinterpreted.

[Gillianren]

But I have heard of Visa and Mastercard companies that do not have grace periods, although they tend to be the type of cards that are associated with high risk (with opening fees, high interest rates, and other various charges that no one with even mediocre credit should even bother considering).

Back when I was still doing the Horrible Telemarketing Job of Doom, a woman called in for one of the high-risk, high-fee cards (which would actually help your credit a great deal if you kept up your payments), and she started yelling at me about the fees (because, you know, totally my fault and something I can fix), and saying, "If my credit's so bad, how come I have 15 credit cards?" In short, she got her causation backwards. Having 15 credit cards is not a positive thing.

I have to say, though, the experiences I had convinced me to avoid credit cards as long as possible. (Not, of course, that I could get one at this point even if I wanted one.)

[Ronald Brak]

I am fantasically wealthy. I have never owned a credit card.

There may or may not be a connection.

[Tog_]

I had a boss that kept his credit card frozen in a pint of ice. If he wanted to use it he'd have to wait for the ice to melt enough to see the number. Most of the time, he had though it iver enough that he just re-froze it.

I think I have an overdraft on my debit card that will work like a credit card, but I have no desire to ever test it.

THe one I get a lot are the companies that call up to tell me that I'm pre-approved, and that they will be sending the card out to me. All I have to do is cal them back to activate it. I tell them I don't want it and not to send it. They say, well it's all ready to go. We'll just send it out today. I'll reply that when it gets to my house I'll just be cutting it up into little bits anyway so why bother?. They still send it, then call me for a year afterwards to findout why it hasn't been activated.

[Tunga]

I may be confused, Tunga. Are you saying the company offered the (hidden) options of either paying interest on all purchases from the day of sale to the day they get payment, OR choosing the traditional 2-3 week no-interest period in which to pay up? And that the 'opting out' was just, in fact, telling them you declined to pay the extra fees?

Please tell me I've misinterpreted.

Basically the company was changing its policy and eliminated the grace period. Interest would be charged beginning the day of purchase. This change would go into effect automatically on 1 December. But I had the right to opt out of this change and keep the original policy. There was no penalty associated with opting out. So its a no brainer. But I wonder how many people will fail to call because they failed to read the notice of policy change.

[mugaliens]

My card accrues interest from the date of the transaction, but that interest is only charged if I pay after the due date.

So, once a month, three days prior, I pay in full.

No interest, even though I charge everything (probably $4,000 worth a month, which is like carrying a $2,000 balance, stored in the bank earning ME interest (for a change) rather than the other way around).

I don't think my bank has earned 10 cents off me in the last decade, as I don't keep my cash with them, either - it goes straight into a serious of carefully managed investments with another firm.

[Donnie B.]

Interesting coincidence -- yesterday I received one of those "Important Notice" letters for my primary card.

This one had to do with the balance transfer fee. It's going up, which is no hardship to me since I pay off my account every month. However, I was given the chance to opt out of the higher fee.

However, if I do opt out, my account will automatically be canceled at the end of the current term. That is, if I opt out I can continue to use the card until its expiration date under the existing fee structure, but then I'm no longer a customer.

If Tunga's opt-out option carries no such penalty, then I can see only one explanation: the company is trying to get rid of what they call "deadbeats": people who, like me, pay off their balance every month. Any such customers, if they miss the notice, will suddenly see interest charges every month and will quickly move to some other card. If they do see the notice and do opt out, nothing changes. But I bet a lot of people won't, and I bet the card company thinks the same.