Today’s post is the third and final post in my series on consumer advice from credit card companies.   Earlier this week, I examined Advice From Amex and Advice From MasterCard.

Today Is Visa’s Turn

While Amex had a very simple site, and Mastercard had a really slick one, Visa has buried their site under a menu.   First, you have to click on “Using Visa”, and then you get many options, one of which is “Personal Finance Resources”.  Then, they reference you to another site called “Practical Money Skills For Life,” a site is created by Visa.

What They Get Right

On the Visa.com site, I give the kudos for laying out the disadvantages of credit cards somewhat clearly:

• Potential higher cost of items (interest and finance charges, other fees) if paid back over time.
• Easy to spend beyond your means, resulting in financial difficulties.
• Not paying bill on time can negatively affect your credit history, making it more difficult to get a car loan, a mortgage, or even acquire car insurance.

As far as I can tell, that is the closest any of the three major networks come to telling you that interest and finance charges are bad because you end up paying a lot more for your purchases.   They also link to annualcreditreport.com, the only official site for free credit reports.

Over at their Practical Money Skill site, they do provide information on the CARD Act.

What They Miss

As with Amex, they fail to spell out how your FICO score is weighted.   Strangely, they boil it do to saying that: “The 3 C’s of credit refer to character, capital, and capacity. These are areas the creditor generally looks at prior to making a decision.”

Ok, that is about as vague as you can get.   Sure, they spell out what they consider character, capital, and capacity, but why beat around the bush?   Why not just spell it out like Mastercard does:

According to Fair Isaac, FICO score factors are:

Payment History – 35 percent

Amounts Owed – 30 percent

Length of Credit History – 15 percent

New Credit (number of recently opened accounts, number of credit inquiries, etc) – 10 percent

Types of Credit Used – 10 percent

They also go in some humorous directions on their site for advice for students. Take a look at their page for credit card resources for students. Their first suggested book is How to Get Out of Debt, Stay Out of Debt, and Live Prosperously by Jerrold Mundis. Sounds great, right?    It turns out the book is twenty years old, and according to the review posted on Amazon From Library Journal, “Mundis flies a countercultural flag: debt is “wholly unnecessary,” and “bankruptcy is not an option.” Again, just the kind of propaganda we would expect from a credit card company.

(Note, as you can see from the comment below, Jerrold Mundis has informed us that his book is available in an edition revised in 2003.  Nevertheless, Visa still links to the older version on their site.   While it was outside the scope of this blog post to read all three books, Mr. Mundis points out that his book actually does take a highly critical stance on credit card use, not what I would have expected from a book on Visa’s suggested reading list.  Thank you to Mr. Mundis for pointing this out.)

Their other two recommendations are from 1995 and 1999, almost equally out of date.   What’s even stranger is that neither of these books seems particularly geared towards students, they are just general personal finance books from the self help section.

But the winner for vague propaganda strewn advice is clearly their Credit Quiz.   It takes merely a glance to see that it is one of these quizzes that some bozo put together where they think all of the answers are A.

1. When do you tend to pay your credit bills?
(a) When I receive them
(b) As close to the due date as possible
(c) I skip some payments

2. What portion of your credit card bills do you pay each month?
(a) The entire balance
(b) A good portion of the amount I owe
(c) Only the minimum payment

3. How much of the credit line do you owe on your credit cards?
(a) None, I pay my entire balance each month
(b) Less than half
(c) I have charged up to the limit on most of my cards

4. How much of your monthly income goes to pay credit card bills?
(a) Less than 10%
(b) 11%-20%
(c) More than 20%

5. Do you know your credit card debt?
(a) Yes
(b) I have a rough estimate
(c) I’m afraid to add it up

The most bizarre thing is that they don’t tell you the correct answer is A, they just say “Did you answer “c” to any of the questions? Then you might need to re-examine your budget, financial priorities, and credit obligations”

Actually, There are a lot of problems with this quiz.  In the first question, I would say B is the correct answer.  So long as you pay your bills electronically, and everyone should, I would always have the payment sent on the due date so the money stays in your account as long as possible.  Why pay early?   Also, in number three, they pass up a clear opportunity to tell people to pay their entire balance in full every month, but instead allow the answer of owing “less than half” of your credit line to be sufficient.     No, I didn’t really expect that they would tell you to always pay your balance in full, but it is interesting to see how close they actually come to doing so.        The forth question, How much of your monthly income goes to pay credit card bills?” doesn’t really matter if you pay your balance in full.

Conclusions

They do mention the CARD Act, AnnualCreditReport.com, and some of the drawbacks.   Nevertheless, their bizarre credit quiz, their FICO score omissions, and their worthless reading list force me to give this site a C.

This week, I have been examining the credit card advice being handed out by the major card processors themselves.   I didn’t expect much, and I wasn’t disappointed yesterday, when we all had a good laugh at some of the inaccuracies propaganda, an hypocrisy at Amex’s consumer advice page.

Today Is MasterCard’s Turn

First, I have to give MasterCard some credit for creating a couple of slick looking sites called the Learning Center and Priceless Pointers.    They make Amex’s site look like a high school HTML project.   That said, their approach to personal finance is a little bit disorganized, with much of the information from the more basic “learning center” overlapping with the much more slickly produced priceless pointers.   Furthermore, they mix all sorts of coupons and discount offers with advice on getting out of debt.  It is kind of contradictory to offer advice on getting out of debt while linking to merchants where you can spend more money.

So it looks nice, but with my propaganda and hypocrisy radar turned up, let’s see what I can find.     One of the Pricesless Pointers is a Frequently Asked Questions page (FAQ) with the question along the lines of, I have thousands of dollars in medical bills that I can’t pay, what should I do?   The answers they give are spend less money and try to negotiate your bills down.    The two major problems that I see are, 1) By the time you medical provider has put this charge on your credit cards it is too late negotiate them.   They have already been paid, and they won’t give the money back!  2) No where does it mention the possibility of declaring bankruptcy.   The question specifically mention “that there is no way that I will ever be able to pay” the bills.   If paying your bills is impossible, bankruptcy might be your best option.    I know if my life were at risk, I would probably rack up the credit card and declare bankruptcy rather than die and/or starve.   Of course, we don’t seriously expect MasterCard to suggest you even entertain such an idea, as their member banks take a loss when cardholders declare bankruptcy.

What They Don’t Say

Sometimes, propaganda is more about what they don’t say than what they do.   While I was critical of Amex for providing such a shallow overview of the CARD Act, I was unable to find any information at all on MasterCard’s site about the most important piece of credit card legislation in decades!   Like Amex’s site, I didn’t really expect to see any lessons about how much money you waste when paying interest on your credit cards.   There was nothing about how credit cards can either be used as a method of payment or a method of finance, or how difficult it can be to switch from one to another.   They say nothing on the issue of Foreign Exchange fees either.

What They Do Say

I will give them credit for mentioning the AnnualCreditReport.com web site in their guide to repairing damaged credit, as well as for breaking down the components of the FICO score.

Conclusions

They spent some time and money making parts of this site look good, but they still leave out the most basic credit card advice there is, never carry a balance.    They are also sorely lacking any information on the CARD Act.  All and all, I give this site a C+.

Tomorrow, I will conclude the series with a look at Visa’s consumer advice.

Last week, I told you how I was going to take a look at the advice that credit card companies offer their customers. I don’t seriously expect them to add too much to the discussion, as I know their interests do not exactly align with those of their cardholders, but I thought it might be a little fun to take a look.   Over the next three days, I will examine American Express, Mastercard, and Visa’s web sites.

American Express

Let’s start the series by taking a look at the web site for my good friends over at American Express.   Amex has a Consumer Resources page on their web site with sections on Credit Resources, Credit Basics, Credit Reform, and Protection.     Under Credit Resources, you will find some basic information about credit scores and credit reports.   Most of it is accurate, bu they fail to mention the weights of the various components of your FICO score.    These components are not officially disclosed, but they are widely known.   Since Amex is really just a large customer of FICO, it is likely that they are under some kind of non-disclosure agreement when it comes to this formula.   Just so you know, the first 35% of the FICO score calculation is your payment history, The next 30% of the FICO score calculation is your credit utilization (how much you owe divided by your credit limits), The next 15% of the FICO score calculation is your credit history.  The next 10% of the FICO score calculation is your applications for credit. The last 10% of the FICO score calculation is your credit mix.

Another failing is in their links.  They provide many links to FICO itself, as well as some to the various credit reporting agencies and even some government institutions.   What they fail to do is to provide a link to AnnualCreditReport.com, the only completely free way to receive the credit report you are entitled to by law.

Card Basics

Under their “Card Basics” section, they provide some really general advice on not spending too much.   I didn’t really expect them to tell you that the best practice is to always pay your balance in full, and I wasn’t surprised when I couldn’t find this universally accepted wisdom.   What did surprise me was that some of their basic “Account Tips” were actually inaccurate.   For example, they advise customers that: “calling American Express to alert us when you’ll be traveling abroad lets us know to expect charges on your account that are out of your normal pattern.”

That is normally great advice, but if you do call American Express to tell them you will be traveling abroad, they will tell you that you should not have bothered, as their system no longer requires such notification.    When I traveled to Brazil earlier this month, that was the response I received.    I could not tell you if I had any difficulty using my Amex there, as I never even tried.    You see, another interesting tip that they leave out is that you should avoid using your Amex outside of the United States, as they will automatically add a 2.7% foreign transaction fee to every single charge.   Kind of surprising that they would fail to mention this, especially considering the huge, pending legal settlement that they are part of on this issue.

Credit Reform

There is a little information the CARD Act provisions here, but it is very vague.   I find it interesting that they say

“Beginning in February 2010, the due date for your American Express Credit Card will not vary from month to month. Your bill will always be due on the same date each month.”

My understanding was that the CARD Act forbid companies from placing due dates on weekends and holidays, yet I have noticed that Amex continues to do so.   It appears that, like the Discover Card, they feel that they are complying with the letter of the law since they somehow accept payment seven days a week.   I wonder how they accept payments on Sundays and holidays when no mail service will deliver.   How does that work?    Do I have to visit their headquarters in New York city, or can I just use a carrier pigeon?

Then there is gem, “We welcome these reforms because it makes our industry as a whole fairer to consumers. And we are happy to adopt changes that make it easier for our Cardmembers to manage their credit.” If that is true, than I am sure that they do not belong to any group that opposed the bill, or hired any lobbyists themselves, did they?

Protection

This sounds ominous, but it is just an explanation of some of their benefits.  Move along, nothing to see here.

Conclusions

Their Consumer Resources website is a little on the vague side, missing some key points that even they should have been included, like AnnualCreditReport.com.   Their explanation of the CARD Act protections is razor thin, like some of their compliance practices.   Throw in a little misinformation and I give it a C-. It could have been filled with even more propoganda, but they just didn’t bother to dig that deep.