Hi Everyone,
I just recently got hit with this personally so even though many of you have probably seen the story from Fred's e-mail, below I'd like to share my personal experience.
I've had a GulfMastercard card for years through Barclay's bank. I almost always pay my full balance monthly but my last bill was large. I could pay all but $400 of it before it was due so I did. The remaining $400 was paid 1 day late so I expected no more than a few dollars interest. Come to find out they charged me $57 because they are charging interest on the full bill amount even though at that point I only owed them $400. In years past a 1 day late payment would just be forgiven - I wonder if this is a sign that the house of cards is about to fall. I sure hope so.
Wendy
ConsumerWatch: Zero Percent Financing May Prove Costly
February 3, 2011, KCBS (CBS San Francisco Affiliate)
http://sanfrancisco.cbslocal.com/2011/02/03/consumerwatch-zero-percent-financing-may-prove-costly
Zero-percent financing deals sound tempting when you are making a big purchase. But they can have costly consequences. Justin Miller financed a new Tempur-Pedic bed through Citibank. Miller said the deal was a credit plan offering 12 months interest free. Even though he had the cash, he decided to finance $5,600. But after Miller made the last payment, he received a bill from Citibank for $1,332.70. A year’s worth of interest Citibank calculated at 25 percent. “I thought this is crazy, either this is some kind of joke or some kind of scam,” Miller said. But according to the statement, the plan expired December 2nd. Miller’s payment was due four days later, after the interest free deal expired on December 6th. “The statement due date was different from what they call the plan due date,” Miller said. In fact Miller believes the due date was intentional to fool customers into making their last payment after the interest rate expires. Jose Quinonez with Mission Asset Fund said it’s a common practice. Quinonez adds banks rarely go out of their way to tell customers about expiration dates on interest-free deals. “My recommendation to people is to make sure to pay off the whole balance completely in full by the 11th month, not wait till the 12th month to pay it off,” he said. Citibank refused to discuss the specifics of Miller’s case, but it told CBS 5 ConsumerWatch the terms of the deal are clearly explained in the seven page contract.
Every few years I've been able to pay down all my credit cards to zero, but for the most part, I've been a slave to monthly payments and interest. I've heard it's better for your credit rating to make regular charges and payments than it is to keep a zero balance. Years of doing this, however, has only increased my FICO by a few points. My scores have been better than average, but despite years of effort, I've never been able to attain top marks.
Then, in 2009 (I think), I forgot to put one payment in the mail on time and it arrived 5 days late. In addition to a $35 late fee, my interest rate shot up from 9.9% to 28.9% overnight. As jobs paying a living wage dwindled in my town, I found myself paying a few days late on another bank card and then on another. Each time, my "low" interest rate doubled or tripled and any amount of pleading on my part would fall on deaf ears. Years of careful attempts to raise my credit score was undone in a matter of months. The worst offender was Capital One. Every 800# listed trapped me inside a maze of automated queues. I soon discovered there was no way to talk to a real person about my bill.
I've noticed that banks have become more ruthless in recent years. Now, there is a practice of raising the interest rate on bankcard A when you pay late on bankcard B, even though they are issued by different banks and your payment to bank A was on time! Why are they doing this? Because they can!
The only way I know to win this game is not to play. You've heard this before, but it's good advice: Do everything you can to get rid of your credit cards. If you need to use plastic, use a debit card instead.
Noa
Had a few of them back in the late 70's, got fed up with how easy it was to use them irresponsibly, and cut them into little pieces and never looked back. My credit rating has suffered due to my lack of "interest" in credit/debt, oh me so sad, NOT! LOL
I have one debit card now, only because the bank wants its patrons to use them to verify accounts at the teller window. Hardly ever use it. Have never owned a cell phone. Don't care for the way society is becoming so accustomed to technology that could be wiped out so easily with one good coronal mass ejection splashed in our direction...
Actually looking forward to such an event that would shake us out of our convenience coma. Can't help but think it is the very thing we need to splash the proverbial cold water in our modern collective faces...
I wonder if they had credit cards and cell phones and the like in ancient modernity as in Lemuria and/or Atlantis??? I wonder what they would think of our take on modernity???
Good for you Chris, Noa what's with you girl? Get your act together - yea, I'm one to talk with my stupid $57 charge and probably another $40 coming up this month 'cause I'm still a bit behind.
Yes, I think this good advice will become more important in the near future with possible hyper-inflation coming up. Even though I'm generally a very disiplined person, financially speaking, the days of responsibly using a credit card and paying them off every month may come to an end soon.
Wendy