Finance Matters

Posts Tagged ‘credit card’

Your local library isn’t the only place to score free – and legal – music these days. 

In honor of the SXSW festival, Freemusicarchive.org is offering up tracks from 122 artists rocking the stage in Austin this week. 

Download all your favorites here.

And while you’re in Austin, be sure to download Retailmenot’s reloadable coupons for all the tasty food trucks on site. 

Now see 12 things to never buy full-price >

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When Tamer Abdel-Azim tried to cancel his two-night reservation at the Sheraton Phoenix Downtown Hotel recently, the property happily obliged. Then it charged his credit card a cancellation penalty of $430 – the full amount of his stay.

“I really need your help,” he wrote.

Then he sent me his confirmation. At the bottom, there was this little item:

“RESERVATIONS ARE PRE-PAID AND NON-REFUNDABLE. IF CANCELLATION TAKES PLACE, GUESTS FORFEIT TOTAL ROOM CHARGE PLUS TAX.”

Ridiculous? Sure. Whether the hotel re-sells the room or not, it gets to keep his money, which seems a little absurd to the average consumer. But it’s just one of the more common fine print “gotchas” I encounter every day as a consumer advocate.

By the way, if you want some great examples of outrageous fine print, check out Mouseprint.org, a blog that explores some of the absurdities of customer contracts. You’ll laugh until you cry.

Here are five other kinds – and my tips on how to avoid becoming entangled in them.

But you didn’t opt out.

Some of the worst contracts involve forcing a customer to opt out of a purchase by unchecking a pre-checked box online. This happens frequently in the travel industry, where I spend a lot of time mediating cases, but it’s common everywhere. You have to read your purchase agreement carefully before clicking the “buy” button.

Auto-renew.

Many contracts contain provisions that automatically renew a subscription at the end of a year, whether you want to or not. Those aren’t evil in and of themselves; it’s the companies that insist a customer who failed to notify them before the auto-renew kicked in, and charge them for an entire year of a service they don’t want, that benefit the most from the “auto-renew” gotcha.

You opened the box.

It’s not just the contract, which can be unfair and even onerous – a so-called “contract of adhesion” that only applies to the customer – it’s the fact that you agree to it just by opening the box or breaking the shrink-wrap. Pretty tricky, huh? The only way to avoid it is to not buy the product. It does get worse, by the way: if you buy a product online, clicking “download” sometimes constitutes your agreement to … well, whatever the company wants you to agree to.

We can change this agreement anytime, for any reason.

The most customer-hostile contracts contain provisions that allow a company to change them at any time, for any reason, and to impose their new terms retroactively. You see these a lot with loyalty programs, like frequent flier programs and frequent customer clubs. The only way to avoid such terms is to not participate in the program.

Did we forget to tell you about our policy?

A contract filled with fine print is really nothing compared to the policy behind it. You may have combed the end-user agreement for objectionable content, but when it comes to a refund or exchange, that’s often a matter of company policy.

What is the policy? Great question. Often, the policies aren’t articulated until you need to make an exchange, which is when they drop the bad news on you.

These “gotchas” are only a sampling of the worst of the worst. And for hotel guests like Abdel-Azim, who was trying to cancel his Sheraton reservation, they are difficult and expensive lessons learned. I run across many other egregious examples of fine print every day, and the odds are pretty good that you have, too.

Don’t get taken by them.

Christopher Elliott is a consumer advocate who blogs about getting better customer service at On Your Side. Connect with him on Twitter and Facebook or send him your questions by email.

This post originally appeared at Mint.

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See Also:

• 3 Spending And Saving Mantras The Recession Turned Upside-Down
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The amount of money lost due to credit and debit card fraud fell to £341m in 2011.

This was 7 per cent less than the amount lost in 2010 and 44 per cent lower than in 2008, when £610m was lost through card fraud.

Since 2010 the number of fraudsters impersonating people to use or steal their cards has fallen by 41 per cent, while fraud through the use of fake cards has fallen by 24 per cent.

In 2011, card fraud was at its lowest level since 2000 when £317 million was lost through this type of crime.

Much of the improvement is attributed to the adoption of anti-fraud technology, including online card verification software and the wider use of chip-and-pin technology overseas.

Overseas fraud fell by 15 per cent in 2011, to £80 million, its lowest level for 12 years.

‘Card not present’ fraud posed the biggest problem last year, with £221 million being lost.

This type of fraud, where cards are illegally used to order goods online, by post or over the phone, represented nearly two-thirds of all card fraud last year.

DCI Paul Barnard, head of the police cheque and plastic crime unit, said: “As technological advances have made our payments more secure, we’ve seen a spike in more simplistic crimes.

“Many scams involve customers being conned into handing over their cards and PINs, or their telephone banking security details by someone calling, pretending to be their bank or the police.”

In related news, the Bank of England has reported that 7 per cent of all outstanding 2011 credit card debt was written off as unrecoverable.

In its January Trends in Lending report, the bank said that average gross lending to individuals remained stable at £0.6 billion in the second and third quarters of 2011.

Capital One has launched a credit card suitable for customers whose credit score has been adversely affected by previous CCJs or defaults.

The ‘Balance’ credit card offers 0% on balance transfers until October 2012, the transfer fee is just 1.7 per cent and there is no annual fee.

It provides a small, manageable credit limit and could give borrowers welcome time to clear their debt without incurring further charges.

However, at the end of the six-month interest-free period, the APR is a hefty 34.9 per cent, which would make clearing any remaining debt very expensive.

Customers can add three extra card holders to their account, and will receive free purchase protection insurance and identity theft assistance.

Michael Woodburn, Chief Marketing Officer at Capital One said, “Balance Transfer offers have typically been targeted at customer with perfect credit ratings.

“Capital One has created a balance transfer for people who wouldn’t normally be accepted for this type of product.

Our new offering was developed in response to industry calls and we believe that it is a great offer for those with a sub-optimal credit history, who have existing debts that they want to move to a lower interest rate.”

Halifax has launched a new balance transfer credit card earlier this month, which offers a 2.9 per cent rate for 16 months, with no balance transfer fee.

At the end of the introductory 16 months the ‘Clarity’ card offers a reasonable APR of 12.9% (variable).

Halifax customers who have their main account with the bank can earn £5 cash back a month if they £300 on the Clarity Card during this period.

The Clarity is also available to customers who do not have a Halifax current account, but the cash back offer is not available.

Increasing your credit limit just means giving yourself the opportunity to spend beyond your means, right? Not necessarily. Increasing your credit limit can have a number of upsides if you manage your credit wisely. 

SEE: Check Your Credit Report 

Lowers Your Credit Utilization and Increases Your Credit Score
The FICO credit scoring model will ding your credit score if the amount of credit you’ve used is close to the total amount of credit available to you. That’s because it considers you to be at risk of maxing out your cards and having trouble making future payments. You might know that these risks don’t actually apply to you, but that’s how the scoring model works.

If you have a $2,000 credit limit and you regularly end up with a monthly bill of around $1,800, you’re using 90% of your available credit. Raising your credit limit will reduce that percentage and should improve your credit score.

Cheaper and Easier to Get Loans and Additional Credit
When you’re not using nearly all of your available credit, you appear to be financially responsible to the credit bureaus and your credit score should increase. If your credit score is higher, you will have a better chance of getting approved for a credit card, car loan or mortgage in the future. You’ll also have a better chance of getting a lower interest rate, since your credit score determines whether you’ll be offered the best available rate or a higher, risk-adjusted rate. (For additional reading, check out How To Dispute Errors On Your Credit Report.) 

Helps in an Emergency
Having a credit limit well in excess of your usual spending amount gives you a resource if you have a genuine emergency that you can’t pay for with cash. Say you’re traveling and you need to change your plans and return back home immediately – it probably won’t be cheap to change your plane ticket, and it’s easier to pay for a plane ticket with a credit card.

Increases Your Rewards
If you consistently pay off your balance in full and on time but you’re not putting all of your expenses on your credit card, it might be time to start. Having a higher credit limit can help you do that. The conventional wisdom says that you shouldn’t charge everyday expenses like groceries and gas to your credit card, but that advice only applies if you’re carrying a balance – it’s designed to help you avoid making a bad problem worse.

If you never carry a credit card balance, paying for recurring expenses on your credit cards won’t cost you anything and can help you earn more rewards. Those rewards can actually reduce your spending in other areas by helping you pay for vacations, gifts, clothes and nights out. (To learn more, read Rewards Credit Cards That Give Back The Most.) 

Lets You Make Large Purchases Efficiently
You already know that using your credit card to pay for large purchases is convenient and can help you rack up rewards. What you might not know is that your credit card likely includes a number of consumer protections that can come to your rescue if there is a problem with your purchase. For example, MasterCard’s protections include extended warranties, price protection and coverage for damaged or stolen items. American Express offers similar benefits. Check your credit card agreement to see what protections apply to your cards.

Helps You Avoid Credit Score Dings
One way to get access to more credit is to get another credit card, but increasing your limit on an existing card might be a better option. According to FICO, opening a new credit card can ding your score. When you open a new account, it shortens the length of your credit history, and a longer history often means a better score. The age of your oldest account, the age of your newest account and the average age of all your accounts are factored into the length of your credit history, and this metric affects around 15% of your score.

The Bottom Line
If you know you’re likely to spend up to your credit limit no matter how high it is, that major drawback will outweigh these benefits of increasing your credit limit. Otherwise, consider requesting an increase. It’s usually as simple as sending an email to customer service. (For more information, read How Many Credit Cards Should You Have?)

This post originally appeared at Investopedia.

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See Also:

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