I spoke too soon

We see that out here since a long time. It's because they get socked with stiff fees.

The topper was >25 years ago when I wanted to buy a camera. Negotiated a deal, whipped out my Amex. "Oh, you need to pay with another card, with Amex we'd have to go back up in price". Taught me a lesson.

I used to see that too, _many_ years ago. Looks like it's returning. Ah! The benefits of "change" :-(

...Jim Thompson

Yep, better get used to it. Banks are now super-restrictive with credit cards. Meaning even people with fairly good credit won't get any, and possibly some stores might go back to cash-only. Folks with good scores may find themselves with paltry limits such as $500 where the question arises what good a card is for. For our country that may not be a bad thing because it re-educates people in budgeting. Now if Washington would heed that advice as well this would be nice.

My wife had one cancelled because it had a lock on 11% annual, and she wouldn't agree to "new terms" of "prime + 18%" ;-)

...Jim Thompson

Unless something has recently changed, it violates contracts to charge more for using credit. It doesn't violate it, though, to charge less for cash. Six of one, half-a-dozen of another, I know. But one is okay, the other is not.

For example, Visa's contract says, "You may not impose any surcharge on a Visa transaction. You may, however, offer a discount for cash transactions, provided that the offer is clearly disclosed to customers and the cash price is presented as a discount from the standard price charged for all other forms of payment."

See also:

Some states have their own laws that in effect restate the contract terms, as well. In those states, you can just call the attorney general's office and complain. Otherwise, you need to contact one or all of the credit card companies they do business with and complain.

Jon

They jacked mine up to 29%. I paid off 1/3 of the balance, then called and said the rate was too high. Without needing to say another word they said they'd lower it to 10%, which they did, probably because of a large payment combined with consistent on-time payments. Maybe they see it as a demonstration of intent to pay it off and never to default. They threat of default is probably why they need to charge high rates to make some money back early.

If you always pay in full it shouldn't matter.

Or drive people into bankruptcy and see nada, zip, zilch. It's stupid. Anyone who accepts whatever phantasy rate they charge might have no real intention to pay their debt in the first place.

Or not be smart enough to know any better. I've met enough like that to know they exist.

Jon

Yep, I have met people who have a load of credit debt at 20-some percent interest and then a savings account with enough in there, "earning"

Yup. I was thinking of that case and a few others, as well. Some don't even have the money handy to pay them off. They live check to check. But some fit one or more of these: (1) cannot really read with understanding the bills they get and won't even realize there was a rate hike, at all; or, (2) may notice at some point that there may have been a rate hike [see a higher number than they remember or though was there before] but aren't wise enough to think about the idea of actually calling and asking for a lower rate; or, (3) are too frightened by any "complicated" phone contact of any kind and simply cannot make such a phone call even if it crossed their mind.

My youngest son, autistic and 23, would fit closer to (3). He's very detail oriented and would read and recognize such a change and probably feel very sad about it. But he is simply unable to make such a phone call. It's beyond his skill set. There are many like that, as well.

Jon

Hi Jon,

Yes.

There are some cultural things going on here too... with a couple of significant exceptions (e.g., when purchasing a car), many people just aren't used to haggling (which is essentially what you're doing) and prefer a "take it or leave it" approach.

Of course, the big game here is that the CC company knows that in the majority of cases, the reason people don't pay off their credit cards is *because they don't have the money to do it with*. Those folks don't have a lot of leverage, so if they request interest rates to be lowered, the CC company isn't looking at, "will they switch to a competitor if I say no?" but rather "will they declare bankruptcy if I say no?"

They do have something to be frightened of: If the credit card company decides that you're too "risky" (and making phone calls to them has the potential to do so), they have the right to close your account and demand that you pay it off in 30 days, which (again) many people can't actually do.

Granted, most people who get into financial trouble with credit cards knew they were living beyond their means... what percentage of people were spending money they didn't have on "toys" vs., e.g., medical care I couldn't say, though. (Probably far more with toys, although even something like a 50" TV looks pretty cheap compared to even something like a broken arm these days.)

---Joel

and

payment

of

Ok, that's a health issue and one cannot judge folks like your son. In those cases it becomes important to have someone in their life whom they can fully trust. That doesn't have to be a parent and beyond some age it can't be a parent anymore. But it needs to be a person who is willing do such a phone call for him, and show him how it's done.

I remember sitting down with someone from the office after hours a long time ago. Concerned about not being able to save anything extra for retirement. What they spent on rent and commute money was huge. So I did a back of the envelope calc what it would mean if they bought a house. They ended up doing that, paying about the same but slowly it's becoming theirs. Come time to retire they'll have substantial equity built up that, as renters, they would not have. Best decision they ever made, they once said. Sometimes all it takes is such a meeting and it doesn't have to be an expensive financial advisor.

Yup!! I've paid in full every month for well over 25 years. No matter what the interest rate, so long as the grace period from the purchase date until the payment due date remains, I'm OK. Haven't paid a cent of interest in ages, so they can jack up the rate to 40% and it won't bother me. I pay for almost everything that I buy, whether locally or online, with a Discover card that gives "cash back". It's not a lot, but better than nothing. I pay the credit card bill online, so I don't even have to write a check and buy a stamp. Every few months, I cash out and buy a couple steak dinners on the proceeds. No interest and cash back... what a deal! And Booo!! on debit cards. No grace period, fewer protections against defective merchandise/services, and no cash back.

There are debit/credit combo cards. No cash prize but you don't even need to take any action to pay it off (and miss the grace period because the DC-3 on Podunk Island blew a head gasket and there is no Internet).

You probably realize this, but that is just your own money you're getting back... you get 1% or whatever back, but the CC company is charging the merchant an additional 1.5-3% or so to process the transaction in the first place, and of course that's being passed on to you via a higher purchase price.

Of course, 1% back is a lot better than 0% back regardless of where it's coming from if there isn't a cash discount avaialable... :-)

---Joel

Yes, I do realize that, but without that feature on the card, I wouldn't get a penny of it back; I have to pay the full price to the merchant regardless whether I pay with cash, check, Paypal or Discover, so I think of it as a rebate that I wouldn't otherwise have.

For sure, the consumer pays for it all in the end. It's like putting a tax on manufacturers' profits. A business never pay a cent in taxes... all of that cost is passed on to the consumer in the form of higher prices for the merchandise and/or service. John Q. Public is soooo gullible to believe that big business is evil for making a profit, and the Government is the Lord and Savior for making them pay tax on the profits.

Dave M

My checking account (at Associated Bank) comes with one of those. No interest or payments, it just draws directly from my account.

Tim