There are some things, cardholders should not forget. And by cardholders we mean those with credit cards in possession, which is essentially all of us.
Do not forget to check the credit card terms before you sign for it.
Imagine this: you are young, inexperienced, never had a job; and you want a credit card. Using your parents’ cards is fun, but you want one of your own. You want more freedom and independence, and you want more fun. Unfortunately, you can’t be approved because you don’t have any credit history. Young and inexperienced, you don’t know yet about annual fees, rates of interest, penalties, maintenance fees and opening charges. And honestly, you don’t care. You just want to be approved.
Imagine this: you are young, already have some job, still no credit and you are in Wal-Mart. And you see this sign:”Apply for a credit card and receive free 2-liter bottle of soda!” You just can’t ignore it. Young and inexperienced, you don’t know yet about cash back rewards, flight mileage, free gas and other credit cards’ offers. What you do know – you love Dr Pepper. So you apply. And suddenly – you are approved! Plus free Dr Pepper! So you get a 99-cent bottle of soda in exchange for a 22% interest rate on a credit card. Did I say 22 percent? It was just a random example, pretty average, but not a promise. How about 79% APR? You probably think it is another random number, exaggerated to show that it can be high. You think it is a joke. But no, it is not. Financial institutions do not exercise humor. It is a real documented offer.
Imagine this: you are still young, possibly employed and need a new credit card. And now you cannot be approved because you DO have credit history. Because it is bad history and bad credit. And you find a nice bank, offering you a credit card regardless of your imperfect credit. Moreover, the bank states that it “focuses on individuals who have less than perfect credit”. You are such individual. And sure, you apply. And then you don’t forget to check the terms. That’s when you see the 79% APR. You don’t think it’s a joke – banks don’t have sense of humor. You think it’s a mistake. So you call the bank. And they say – no mistake, it’s a legitimate provision of the offer. “Are you kidding me?” – You ask. No, they are not; they don’t have sense of humor. You certainly don’t sign for this card. Thanks God, you DIDN’T FORGET TO CHECK.
To be fair, we need to mention that First Premium Bank, which was the creator of the above offer, finally came to its senses and lowered the APR – to 59%.
Do not forget to pay your credit card bill.
You don’t want late charges. So first time you are late, you call the bank, you explain, apologize and ask to waive the fees. You promise it will never happen again. You are being nice. They are also nice, and they waive the fees, because they know, it WILL happen again. And next time they will not be this nice. Next time you’ll be a recidivist.
Imagine this: you are mature, financially independent and you always pay your credit card bills on time. Even more – you pay them in full. You feel so good about following the rules and being such a good customer. You expect your credit card company to appreciate this also and reward you - somehow. No, they will not. Eventually they will try to get rid of you – somehow. They don’t want you to be a good customer; they want your late charges, cash advances and outrageous APR. “Come on, dude”, they might say, “if you pay in full and on time, why do you need a credit card? “ Really, why?
Do not forget to check the bank’s credentials.
Do you want your credit card bank to have a good standing? E-eh, not necessarily.
Imagine this: You are a mature responsible adult with some outstanding balance on your credit card. And your bank fails (happens all the time these days). Do you have to pay your balance? What if one day we’ll withdraw that taxpayer bail-out money and leave the TARP-fattened banks and credit card issuers to fend for themselves? Then, if they fail, you may be free of your debt. Unfortunately, when a bank fails, it is usually taken over by someone else, so you’ll still have to pay your balance, maybe even with higher interest rates. But it was a nice thought, though.
Do not forget to sign the back of your credit card.
This is required by law. Does anyone ever check it? Sometimes somebody does.
Imagine this: you’ve just signed your receipt. In front of the cashier. The cashier noticed that you had never signed your name on the back of the credit card. The cashier informs you that the transaction could not be completed unless the card was signed. You ask why. The cashier explains that it is necessary to compare the signature on the credit card with the signature you just put on the receipt. So you sign the card. In front of the cashier. Then the cashier carefully compares the signatures. As luck would have it, they match.
By the way, do you need to sign your real name? It is no rule for that. As long as it matches your scribble on the back of the card. Some restrictions apply, though. A simple ‘X’ may not be enough for graphological expertise. So write something.
Imagine this: you are young, fun, daring, and you like pranks. You signed your card ‘Albert Einstein’. No one noticed. It is a name. Maybe no one even tried to read. Until you signed it ‘Justin Timberlake’. That drew some attention. Maybe they do try to read. Imagine you are a real daredevil. And you wrote ‘I stole this card’ on the back of the card. Now try to imagine what could happen.
Do not forget that most of banks’ transactions are automated.
Imagine this: you are very angry. You’ve just spent hours on the phone, disputing some outrageous credit card charges that have nothing to do with you. Finally, you managed to prove that they have nothing to do with you. It was a bank’s mistake. And now you are angry. But you should not be mad at poor underpaid customer service reps. They also have nothing to do with it. It’s a highly paid computer dude, who had infested the bank’s automated system with a bug. Customer service reps are nice – they never blame the dude. They diplomatically call it SYSTEM. ‘SYSTEM crashed’, ‘SYSTEM is slow’, ‘SYSTEM screwed up’. And you can never guess what this mysterious SYSTEM is capable of.
Imagine this: you got a new credit card, but never used it. You received the first bill. It said you owed $0.00. You ignored the bill and threw it away. The next month you still haven’t used the card, and you threw away another bill for $0.00. But the following month you received a very nasty note saying they were going to cancel your card if you didn't send them $0.00. Concerned about your reputation, you called the bank. They said it was a SYSTEM error and told you they'd take care of it. One day you decided to finally use the card, and found out that it had been cancelled. You called them again, and they apologized again for the SYSTEM error. They said they would take care of it. The next day you got a bill for $0.00 saying that payment was now overdue. Assuming, you’ve just talked to the bank yesterday, and this was yet another mistake, you threw this bill away. But the next month you got a bill for $0.00 saying you had only 10 days to pay your account or the company would have to take steps to recover the debt. Frustrated, you decided to play this game with the SYSTEM, and mailed them a check for $0.00. Amazingly, the SYSTEM processed the check. The next month you received a statement, saying you did not owe them anything. A week later, your bank called you. They wanted to know why you wrote a check for $0.00. They told you that your $0.00 check had caused their SYSTEM to crash. They said, they could not process ANY check from ANY customers that day. You explained and apologized. The following month you received a letter from the credit card company. It said that your check had been returned and that you now owed them $0.00. Unless you sent them a check, they would take steps to recover the debt. A few months later you managed to cancel the credit card.
Do not forget to cancel your card before you die.
Imagine this: you died. And you have an outstanding balance on your credit card. Or you don’t have outstanding balance. It does not matter – you don’t care anyway.
Better imaging this: you are young and alive, but your great-grandmother just died. And she had some balance on her card. So you call her bank and inform them that she has died three months ago. They say “We are sorry for your loss, but the account was never closed and the late fees and charges still apply.” They also say “Since it is two months past due, it already has been turned over to collections.” And you ask “So, what will they do when they find out she is dead?” They say “Either report her to frauds division or to the credit bureau, or maybe both!”
And you ask “Did you actually hear that she is dead?” They heard. And they suggest, you should speak with a supervisor. Supervisor gets on the phone. You repeat “'I'm calling to tell you, she died three months ago.” And the supervisor repeats “The account was never closed and late fees and charges still apply.” …This is going nowhere. You fax the copy of the death certificate to the bank. But their SYSTEM just isn't set up for death. And they don’t know what else they can do to help. So next time you tell them “She is not here anymore. Would you like her new billing address?” They say “That might help.” Next time they call, they tell you “Hey, you gave us a cemetery address!” And you say “Sorry for your loss.”
Do not forget – you never know how life can turn out.
Imagine this: you are an aging man with a peculiar hairdo and a nice job in real estate. Your name is Donald Trump and you need a credit card.