There's no other way to describe some of the unjust, unfair, unethical and unwarranted fees and penalties levied against well-meaning and responsible consumers. How else could one describe some of the outrageous practices credit card companies try to pass off as good business?
Two-cycle billing, for example. You would expect to pay interest on any outstanding balance, which remains on your account for thirty days. That's fair. But with double-cycle billing, you are charged interest on charges going back sixty days, regardless of the amount.
Say, for example, you paid off most, if not all of your credit card debt by the due date, leaving a small balance that you would expect to pay interest on. You paid the lion's share, in an effort to escape paying interest on the larger amount. But guess what? With double-cycle billing over a 60-day period, you are anyway: you pay interest on the small balance that remains, AND you pay interest on the amount you have ALREADY PAID.
Like it so far? Oh, it gets better.
Rate hikes can happen for any number of reasons. You may have mailed your payment, or paid over the phone, or through on-line banking well before the stated due date on the statement. However, all too often that due date refers to the day during which your payment needs to be fully processed at the credit card company. If that due date happens to fall on a weekend, don't expect the payment to be processed until the next closest business day.
Which means your payment is late, and your interest rate goes up. Same holds true if your payment is delayed in the mail, of if you make your payment electronically. You may think that you have gotten in "under the wire" by making your payment by phone or online by the due date. But if that due date falls on a weekend, it doesn't count. It needs to wait until the next closest business day for you bank to process the payment, then potentially another business day for that payment to reach your credit card company.
That puts you in default. And not only will you be charged interest, but your rate can go up. Way up. Up to 30 per cent and higher, in some cases.
If your rate IS hiked, don't be surprised if the higher rate applies not only to future charges, but also to past charges. It's all in the same pot. But it is akin paying for an appliance in full, only to be told a few months down the road that the price for the appliance had gone up, "so we need to collect more money from you, too..." It's the gift that keeps on giving...
By the way, there also might be a charge for the privilege of paying by phone or on-line. Some credit card companies are alleged to have introduced a fee for that service, too.
In other words, if they're not going to have the opportunity to ding you with late-payment charges, or a default interest rate, they'll ding you in some other fashion.
Then there's the universal factor. If you're late paying your credit card bill, then okay, you are moved to a default interest rate bordering on the stratosphere. But that could also happen if you are late paying your utility bill, or some other bill. Anything that would affect your credit score. And your credit score is something that the credit card company is watching like a hawk. The instant there is a shift in your score, they see an opportunity to squeeze more money out of you.
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You would. But not necessarily. Credit card companies have been known to charge full interest on the full 100 per cent, regardless of the fact you paid all but two per cent of the balance.
Some credit card companies have since dropped, and discontinued such deceitful practices outlined above, after negative publicity has shamed them into better behavior.
But not all. It seems, in the end, that it is not enough for credit card companies to be satisfied with having us so dependent on them for our everyday existence.
They want us by the short hairs, too.