Credit Card Companies Cash in on YOU! Common Mistakes to Avoid

October 13, 2008

credit cardsIn today’s troubling times every penny counts, and credit card companies are counting on you NOT to check your monthly statement so they make that extra penny. But it is not just pennies. In fact, cardholder inattention accounts for more than 25% of the profits of credit card industry.

The Three Most Common Mistakes that can be avoided: late fees, incorrect billing, and improper credits.

LATE FEES

In 2007 credit card customers paid $18.1 billion in late fees! A study out of Canada revealed that 6 out of 10 cardholders that incurred a late fee actually had more than enough money in the bank to pay the bill. In other words 60% of all late fees or $10.8 billion are a result of cardholder forgetfulness.

The credit card industry had profits of $40.7 billion in 2007. More than ¼ of all credit card company profit is dependent on customers being either lazy or forgetful! And oh are we late. A whopping 10.3% of all payments are late and incur a late fee.

Unless you are mad at your money and want to give it away there are two simple things you can do to avoid late fees. First, after checking your monthly statement, pay it at once. Remember the due date is the date that payment is received by the card company, not the day you drop the check in the mail.

Second, if the due date is inconvenient call the card company and ask to have it moved to later in the month. It is that simple. If you pay your bills on the first of each month, have the card company move the due date to the middle of the month. But be ever vigilant card companies CAN and DO move the due date, and it may creep back to the first of the month.

INCORRECT BILLING

Billing errors occur all the time. It is important to save your receipts and verify each charge against your monthly statement. Sometimes the merchant will put the same charge through twice, restaurants will make addition errors, and charges will be on your statement that you did not authorize. Billing errors are rarely in your favor. The FAIR CREDIT BILLING ACT requires creditors to correct errors promptly and without damage to your credit.

Other billing errors that are covered by the act include any charge for something that you did not accept delivery, failure to show a payment, and any item on your bill for which you need more information.

In order to be protected you need to notify the credit card company in writing within 60 days of statement. Click here for a sample letter to send to the company. In addition you need to pay the undisputed amount, but do not need to pay the disputed amount until the problem is resolved.

The credit card company must respond within 30 days and has 90 days to deal with the error.

IMPROPER CREDITS

Failure to give you proper credits occurs in two ways. First, the credit card may not have given you credit for a payment you made. More common is that you will not receive credit for merchandise you returned. It is important to keep not only sales receipts but also credit receipts.

If you find a crediting error the same rules as billing errors apply. You must notify the company within 60 days of the statement. The form letter mentioned above also deals with crediting issues.

Every year the credit card industry bets $10 billion dollars that their customers will be lazy and inattentive. And every year the credit card industry puts $10 billion in their pocket.