The Austrailian Pudding Guy, and How Not To Pay Electronically
by Jason SteeleLike all reward card junkies, the holy grail is the “Pudding Guy” aka David Phillips. This legendary true story was immortalized in the Adam Sandler movie Punch Drunk Love when the main character earned millions of frequent flier miles for purchasing tons of pudding.
The Pudding Guy From Down Under
Now, via Flyertalk, comes the story of Australia’s own version of the pudding guy. This man, known by the login name “lovestravelingoz”, took advantage of an offer from American Express to earn 10,000 mileage rewards points for every 20 transactions. Complicating matters was a revision to the rules that disallowed any spending Amex down under felt was not legitimate. For example, it was forbidden to split transactions up into multiples, so you couldn’t by gas by the tenth of a gallon, for example.
The post is rather long, but it makes for an interesting read. The lessons here is to always be on the lookout for new promotions. In their haste to generate revenue, the managers of the loyalty programs occasionally create promotions that they only later realize are overly generous. For the few who pick up on them before they are withdrawn, it can be a once in a lifetime chance to build up a “nest egg” of miles.
For me, my chance was the “Delta Promo”. Unfortunately, Delta miles are so devalued that while it turned out well for me, it was not spectacular. I redeemed awards worth maybe $5,500 in value for the effort of applying for a few cards, and redeeming 80,000 Starpoints, themselves worth almost $3,000 to me. I am still looking for the next great “pudding” deal.
How Not To Pay Your Bills Electronically
For someone who is a big advocate for paying bills electronically, I was always very skeptical of the idea. I have always refused to give any company authorization to take money from my account. I have read from many sources that once you give authorization, it cannot be revoked. You have to actually close your account in order to prevent these automatic withdraws.
These withdraws, sometimes referred to as ACH withdraws are promoted by all sorts of companies. The most common one is your mortgage servicer and possibly your home owner’s association. Following close behind are credit card companies and utilities. Occasionally you also see television products that are sold in “only four easy payments of $19.95!”. They are more than happy to start withdrawing money directly from your bank account, but much more hesitant to stop.
Here is the problem, you never really know when the company is going to make the withdraw, and for how much. Sure, they may say something, or even put it in writing, but give them a few months and they may just change the terms. The other possibility, is that they make a mistake. Take for example this one story from my home town newspaper, the Denver Post.
Its all really funny that the power company accidentally charged a small restaurant 1.3 million dollars, until your account is empty and you start bouncing checks all over town. The other problem with such “auto pay” systems is summed up by the restaurant’s owner: “I don’t look much. “
While you will notice a one million dollar mistake, if you “don’t look much” you are unlikely to notice other problems with your bills.
How To Pay Bills Electronically Without Risk
Always use your bank’s payment system where you manually specify the date of payment and the amount of payment. When doing so, use that opportunity to scrutinize your bills for errors and fraudulent charges. You can also keep track of how much power you are using so that you can try to conserve.
Another problem with most automatic withdraws is that you are authorizing a company to decide when to pay and how much to pay. If you are like me, you always want pay your balance on the statement in full on the due date. Instead, what you might find is that your credit card company would prefer to take out your entire balance due, or worse, your minimum balance, some time of their choosing before the due date.
Once, I tried to pay my Amex bill using their online bill pay system. Although I specified the the correct due date as the payment date, the payment was still late! When I called, they explained that it often takes a day or two after the payment date I specified on their website in their payment system, for them to credit your account! I was outraged, they refunded the late fee, and I never used their online bill payment system again.
What Happens When I Make A Mistake
When you specify the time and date of payment from your bank, the most likely problem is that you yourself make a mistake. That was why I had a late fee on one of my Amex bills the other month. I traced the problem back to myself specifying the wrong Amex account from my online bank’s bill payment screen.
I immediately contacted Amex and they were happy to credit the payment to right account and remove all interest and late fees. If you do electronic payment the right way, even when it goes wrong, it is easy to fix.
March 12th, 2009 at 05:31
I share the sentiment on automatic ACH Withdraws. I only allow one to occur and that is a payment to my student loan lender who takes off .5% for doing so.
However, I use all payee websites to make payments and have no problems with doing so. I would consider your run-in with Amex an outlier (Amex seems to be having trouble everywhere these days). Also, as you were able to do – it’s vastly easier to talk to someone in customer service from you creditor and tell them you used their website and to get refunds, credits, etc. taken care of in the event of a failure to credit the account. As for paying through your bank, I’m not a big fan. I only use my banking website to send check to those creditors where I cannot pay via their website. When the bank doesn’t mail a check or recently for me sent a check to Connecticut Power and Light instead of one of my loan providers, it becomes a real hassle.
My advice – stick with the payment on the creditors website, its great insurance against payments not being applied and you getting hosed.