Credit card holders, especially students and first-timers, can avoid some service charges and fees by learning the game, knowing certain rules, and reading their statements thoroughly.
Credit card companies aren’t in the business of customer service. They’re in the business of making money for credit card companies.
If customers pay their balances in full -- that is, never carry any portion into the next month -- the credit card company doesn’t earn interest on their accounts.
The companies find other ways, in the form of service charges and late fees, to encourage what has come to be called "revenue enhancement."
Don’t help them enhance their revenue. Start by opening your wallet or purse and taking out all your credit cards.
How many cards do you have?
If the answer is more than one, it’s too many.
The American family has, on an average, fourteen pieces of plastic on which debt can be accumulated.
Each month, I receive a half dozen or so credit card offers in the mail. I throw them in the fireplace unopened. One is all I need, and that’s how many I have.
Two cards means two bills, two accounts to manage, two payment deadlines to remember. Three cards means three of everything. And so on.
Credit card companies know that life is fragmented; that people work two, or three, jobs to survive; travel on business, have housefuls of kids to tend, are addicted to entertainment. That most can’t afford to pay business managers to keep their affairs in order. That a lot of them are simply disorganized. They’re betting that all the distractions will make people forget what their cards look like, let alone the due dates. The companies also know that many card holders are decent and honest Joes and Janes who will eventually pay up, late fee and all.
In 2002 there were 386 million active pieces of plastic with VISA on them. One in a hundred accounts (one per cent) past due is still 38.6 million. If only half of those accounts eventually pay up, Nineteen million times the twenty dollar late fee is . . . well, you get the picture.
In the second quarter of 2005, 4.81 per cent of credit card accounts in the United States were more than thirty days past due.
The credit card companies want you to have more cards. Don’t play their revenue enhancement game.
No wonder the VISA brand is on vanity credit cards depicting everything from scenic panoramas to puppy dogs to pro sports logos. (I don’t get it. I’d be embarrassed, after this baseball season, to pay for something with a Detroit Tigers credit card, officially licensed by Major League Baseball.)