Credit Card Debt

Chris Elliot has  a post on his travel blog about someone being hit with a “foreign transaction fee” when they booked through Expedia’s US cite.    To Chris’s surprise, the card holder had the fee removed by calling up the credit card company to complain.

Actually, there are no shortage of fees that can be removed simply by asking.    Those dubious “foreign transaction fees” are a good place to start.   If you have a good payment history, and you happen to miss a payment by accident, expect to have your “late payment fee” removed, just by asking.   A little harder is the annual fee, but many have had luck.   The last time I was asked to pay an annual fee, on my Starwood American Express card, I called to have it taken off.    Instead, I was offered several thousand StarPoints, which I felt had the equivalent value of the fee.

Just Because The Fee Is Removed, Doesn’t Mean Your Problems Are Gone

First, you need to get the name of the person who agreed to remove the fee.    Next, you need to write down their name, and the date and time that you called.    This is just in case you somehow do not get the credit that was agreed upon.   I have gotten in the habit of writing this information on the bill itself.   That way, I will be sure to retain it with my stack of bills that I file away every month.

Another problem is that they can remove the fee, but they may get you in other ways.   If you have a late fee removed, your credit card company may decide to suspend your account anyways!   This happened to the Capitol One account of someone I know.   They accidentally missed a payment, then they called to have the late fee removed.    No problem, said the representative.   The next day their account was put on hold until they made a payment.    That would have been nice to know when they spoke with the representative!

APRs

Yesterday, I addressed the question as to whether or not fees have been rising.  I have concluded that in general, they are not.   Sure, some fees are rising, but I think it is at worst consistent with long standing trends.    At best, you can find an equal number of fees being eliminated.

What is undoubtedly occurring is that APRs are going up.      I for one, do not think this is such a bad thing.   Hear me out.   I believe that most fees are essentially tricks and traps.   They are scams to get people to pay penalties, and they are incentives for credit card rules to be as tricky as possible.   If you don’t believe me, try explaining double cycle billing in a simple way.   Or try justifying bills being due on days that the bank is closed.

APRs on the other hand are an honest measure of interest rates.    I had a very interesting debate about APRs with someone from the payday loan industry last year on my personal blog.

While I am not a big fan of payday loans and triple digit APRs, to say the least, we did reach common ground on one subject.    We both feel that it would be more honest if “late fees”  were categorized as interest, with a corresponding APR.    As their representative put it:

REDIT ALTERNATIVE(14-day term)

$100 PAYDAY ADVANCE FEE = $15 fee = 391% APR

$100 OVERDRAFT PROTECTION = $29 fee = 755% APR

CREDIT CARD LATE FEE ON $100 BILL = $37 fee = 965% APR

$100 OFF-SHORE INTERNET PAYDAY ADVANCE FEE= $25 fee = 652% APR

$100 BOUNCED CHECK + NSF/MERCHANT FEE= $54.87 fee = 1431% APR

It makes sense that a payday loan industry person would have a problem representing their fees in APRs while other banks do not.

If banks have to find new sources of revenue as a result of the Credit Card Bill of Rights, I would rather they honestly represent these fees in their interest rates, rather than go after you with tricks and traps.

By Jason Steele
Yaab