Yesterday, I went to town on Suze Orman’s terrible advice to pay only your minimum balance. Today, I thought that I would highlight some good content, for a change.

10 Things That I Hate About You

Well, not quite, but MSN’s Smart Money/ The Wall Street Journal put out a nice story on the 10 things that credit card issuers don’t want you to know.

My favorite is actually the first thing: 1. “We’re just waiting for you to screw up.”

That seems to sum up the motivation behind all sorts of things; late fees, over the limit fees, double cycle billing, bills due on weekends and holidays. If it all works out ok, great, but the moment you screw up, even by one day, boy, will it cost you dearly!

Number 2: “When it comes to identity theft, we’re part of the problem.” Here, they are just scratching the surface by pointing out all of the credit card offers and all of the cash advance. There are several other ways that credit card companies are working against you when it comes to identity theft. Off the top of my head I would mention data breaches and lack of signature verification.

Number 4: “Our ‘freebie’ rewards are anything but.” That is so true, yet how dare they mention United Airlines as “one card that stands out from the pack, with its one-mile-per-dollar ratio and host of travel benefits, including upgrades.” Granted, I think they are referring to the fact that mileage accruing cards tend to have higher interest rates and/or annual fees, and this particlar Visa is better than other mileage cards. But seriously, United Airlines is one of the worst airlines for attempting to redeem “free” travel. If you don’t believe me, read this guy’s story.

I do like number 5: “Debit cards should come with a warning: ‘Use at your own risk.’” This is the clearest explanation that I have read about the key difference between credit and debit cards. They look the same, and appear to act the same, but never confuse the two. The author points out credit card’s advantages when it comes to charge backs, however another big advantage of credit cards over debit cards is the free float that people who pay their balances in full can really capitalize on when using a credit card.

Number 6: “Paid in full? Not necessarily.” is also a clear explanation of another tricky practice, two cycle billing.

Number 7: “We’re accepted globally, but our exchange rates are from Planet Rip-off.” This is an issue that I have touched on before. Unfortunately, this recent article includes outdated information, specifically that Amex charges 2% for a foreign transaction fee. In fact, their rate recently went up to 2.7%. What I normally do is take my ATM card to withdraw cash. My bank, like many others, refunds ATM charges, which are actually less common overseas than they are here. Always be sure to notify your bank as to which countries you are visiting, even if you are only changing planes there. You don’t want a fraud hold placed on your card when your flight is canceled and you are making an unplanned stay in a foreign city.

For credit cards, the Schwab Card offers 2% cash back and no foreign transaction fees other than the 1% Visa fee. Capitol One is a close second with the same Visa fee and no transaction fee, while earning a mere 1% return.

Number 8: “We close early on payment-due dates.” This is a despicable practice, however, I have never been caught in this trap.

Number 9: “Our whims are legally binding.” This too is a kicker. The author says that the way to avoid this is to always read your mail from your credit card company closely. I have a better way. Never carry a balance. If you do that, changing interest rates are of no concern, and any other unfavorable changes can be easily countered by merely canceling your card and using one of their competitors.

Number 10: “Go ahead and exceed your credit limit — we like that.” This describes the weird practice of approving transactions over your limit, and then charging you an over the limit fee. Fortunately, the New Rules that go into effect next year should give you the opportunity to opt out of this “service”.

Overall, this is a really good take on some of the less scrupulous practices of the credit card industry. It is surprisingly cynical for the mainstream media. Perhaps it is a sign of the times that credit and banking industries are so reviled by the public, that MSN /SmartMoney/The Wall Street Journal is willing to publish an article that views them in such a harsh light.

Keep it coming.

This entry was posted on Friday, March 20th, 2009 at 23:17 and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.