Shadox: One; Citibank: Idiots

The antics of the credit card companies are well known by now, and periodically I have written posts about the subject as well. However, last week I got a first hand experience in how sleazy, obnoxious, insidious and malicious these card companies can be. My particular incident involved Citibank. Here is the story.

My wife insists on manually paying the credit card bills every month because she "wants to verify all the charges". The fact that we have never found a false charge and that even if we sign-up for automatically paying off our monthly bill we could still check and dispute any charge is not sufficient for her. For some reason, the fact that I download all credit card transactions into Quicken every day, also does not satisfy her. Anyway, our Citibank credit card bill was due on Thursday, May 14. On May 15, Quicken showed me a late charge on the card. My wife forgot to pay the bill. I immediately went online and paid off the card in full, I also initiated automatic bill payment. From now on, the bill will be automatically paid in full every month. However, while I made the full transfer on Friday, the charge could not clear until Monday, due to the weekend.

After the charge cleared, I called Citibank. I explained the situation and also explained that I had signed-up for automatic bill payment. I asked for the late fee and finance charges to be reversed, citing our long history with the bank and our excellent credit rating. Here is where the situation rapidly degenerated into a complete fiasco. The agent was willing to reverse a $39 late fee we were charged, but was not willing to refund a finance charge of $97. I was upset, but not overly so, after all paying late was our own fault and some penalty may have been justified. But then I started to do the math... a $97 finance fee for a 3 day late payment on a balance of $2,600? Something seemed fishy...

I asked the agent what interest rate was applied to our balance. He answered that the rate was 26%. My voice went up two octaves and my volume increased by 20 decibels. 26%? How was that possible? Our card had a rate of 8%... the agent calmly explained that as soon as the payment was late, the interest rate jacked up. I was steaming, but then I did the math and the numbers still didn't work out. How could even 26% yield a $97 finance charge in only three days? The nonplussed agent was glad to explain. In a calm and steady voice he told me that as soon as the payment was late, finance charges immediately begin to accrue on the full amount charged to the card, not only the amount that was late. Since we had charged another $3,800 (or something like that) that would become due on June 14, we were charged interest on that amount as well...

Now that's what I call insane. Here is the way I see it. The $3,800 would become due on June 14. I had paid off the full amount on May 17 - which in my book means that the $3,800 was not paid late, it was paid 27 days EARLY. So in my book Citibank was charging me a huge financing fee on money that was not yet due.

That is when I went berserk. I told the agent, admitedly, using a few unkind words, that I have had enough and that I did not care about the consequences. The account was paid in full and I wanted it closed that instant. In fact, I wanted to close all three Citibank accounts that my wife and I have owned for the past 8 years. I couldn't care less about any damage to our credit score. I could not be bothered to remember that the Citibank Mastercard is the card that we use with all vendors that do not accept American Express. I just wanted out, and I wanted out that instant.

The customer service representative was undaunted. He did not miss a beat and very politely told me to hang on while he transferred me to the appropriate person. The next person who got on the line was a very collected customer retention specialist. He spoke to me like I was a five year old throwing a tantrum - which in many respects was a good description for me at the time - without wasting a second he immediately:

1. Reversed the finance charges;

2. Confirmed the return of the late fee; and

3. Gave me a 1% cash back on all purchases for the next 6 months.

He "asked for my permission" to keep the accounts open and made a very deliberate effort to chat me up. He explained that I was a great customer, with an excellent credit history and that he understood how everyone can make mistakes - himself included. You know how in the movies you see police officers talking would-be jumpers off the ledge? That is pretty much how this guy talked to me. I thought it was condescending, but ultimately it was effective. I got off the ledge and I agreed to take the bribe and keep the accounts open.

Well, why did I do that? Actually, it's very simple. Even though I was furious, closing the accounts would have been against my self interest. I was perfectly willing to break a few dishes and walk away in my anger, and in my mind I would have been justified in doing so, but I am not out to punish Citibank, nor am I vain enough to imagine that anyone at Citibank actually cares if I stay or go. They care about statistics and big numbers. A single private customer makes no difference to them. Closing the accounts would have left our credit scores in worse shape and would have created a hassle of trying to find a new card in a hurry. There was nothing to gain from walking, and something to gain by staying.

From my perspective, writing this post and helping folks to understand the true nature of Citibank is a better way to deal with these would-be highway robbers than closing my accounts would ever be. In this context, it is interesting to point out that some of the penalties and fees that Citibank charged me would have been illegal under the new Credit Card Bill of Rights that was signed into law just last week. If an MBA personal finance blogger can fall prey to these unconscionable lawful muggers, I am guessing the vast majority of the population is also susceptible.

A final thought on this situation: I find it appalling that such behavior is going on while Citibank and their ilk are relying on public funds and interest free loans from the government to finance their activities. They are in effect taking our money, lending it back to us, and charging us exorbitant fees for the pleasure of doing business with them. Well, Citibank, consider this my one finger salute to you.

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It's Just a Credit Card, Stupid!

The reactions I get from people when I pull out my American Express Blue credit card never cease to amaze me. Folks really like the way it looks and often people ask if they can see it up close. See, I don't get that - it's just a credit card. We use the Blue card because of the cash back rewards, and I couldn't care less about what it looks like. Anyway, a few weeks ago in the Wall Street Journal, I stumbled across a full page add for a new card: a black VISA card - I am not going to add a link to this page, because I don't want to encourage the lunacy I am about to tell you about. If you are really interested, look it up on Google.

The card, marketed as the "World's Most Prestigious Credit Card", is supposedly made of carbon graphite (WTF?), but wait, it gets better. Here is a quote from the card's website:

Black Card is not just another piece of plastic. Made with carbon,  it is the ultimate buying tool. The Black Card is not for everyone. In fact, it is limited to only 1% of U.S. residents to ensure the highest caliber of personal service is provided to every Card member.

What?! The ultimate buying tool?! Look, using a credit card is not brain surgery. It does not require specialized tools, any old piece of plastic will do just fine. You know, I think some stores even accept cash if you insist. Also notice the blatant attempt to market a credit card as a status symbol... you can only get it if you are in the top 1% of the US population... Give me a break...

The best part? An annual membership fee of $495... 

Here's my take: if you apply for the card you are a member of a very distinct group, but I don't think it's the same group you set out to join...

I think I'll stick with my no-fee 5% cash back Blue card, thank you very much...

Here are a few other credit card related posts from around the PF blogosphere:

Consumerism Commentary had a couple of posts recently about the new credit card bill going through congress.

American Consumer News published a post about the right ways to use credit cards.

The Dough Roller reviewed a new credit card by Citibank.

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Making Counterproductive Decisions

Most sales people, receive a large part of their compensation in the form of commissions. Incentives play a huge role in the success of companies, and even of entire economies, which is why I was very surprised when a few days ago I was told about the commission structure of sales people in a certain high-tech company. The sales people in this company were paid a commission of x% of sales for meeting their quota, and continued to receive the same commission rate on every dollar sold up to 200% of their quota. However, and here's the killer, once they reached 200% of their quota, they were no longer entitled to receive a commission.

Most people reading the above paragraph would immediately understand that this policy is self-defeating. It actually gives sales people a disincentive to deliver superior results. A sales person who can get a big sale but that has already reached 200% of his quota will have an incentive to delay the sale until such time as he can get compensated for it. Of course, the executive that designed this compensation policy evidently did not understand that by making this decision he was acting in contradiction to his own economic interest. His thinking probably went: "if this person sold three or four times his quota he could be making a killing at my expense" or "we can't have anyone making half a million dollars in this company". So while he is acting contrary to his own economic self-interest, he actually believes he is doing the right thing.

Unfortunately, none of us are immune to making self-defeating decisions: eating that extra doughnut even though we are trying to lose weight, or putting money in a savings account even though we carry 18% APR credit card debt, or procrastinating on that important project even though we know we really must get started. Why do we do this? There are probably many reasons, but here are some of the ways in which I try to avoid acting against my self-interest:

1. Game It Out - before making a decision, I try to "game out" the scenario while trying to cause the worst outcome that I can. In other words, if I am the sales person, not the executive, how can I take advantage of the compensation package I am trying to design? 

2. Keep My Interests in Mind - it is always useful to remember what it is that you are trying to achieve. For example, an executive designing a compensation package for sales people must keep in mind that he is trying to maximize profit, not to maintain a cap on salaries or fight for social justice.

3. Leave Yourself No Choice - knowing that I am a procrastinator, I try to force my future self to do the right thing by creating external forces that will help me make the right decision. For example, when I had my own business, I used to intentionally schedule customer meetings at 9:00 AM. That would help me get the day started without checking the NYTimes just one last time...

By the way, check out this article from Plonkee about folks making decisions contrary to available evidence. 

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Credit Card Lost and Found Again...

On Friday I went to a business lunch with a customer, and as expected I picked up the tab using my American Express Blue card. The surprise came that evening when I was looking for my card to make another purchase... gone! I immediately made the connection since the restaurant where we had lunch was the only credit card purchase I made all day.

Using the credit card receipt I called the restaurant and was reassured to discover that they did indeed find the card and that they would be holding it for me so I could pick it up the next day. Just to be sure that everything was honky-dory, I did called American Express to place a hold on the card until I could get it back. The American Express representative assured me that no other purchases were made using the card and placed a 24 hour hold on it. He told me that if I did not call back within the allotted 24 hour period, the card would be automatically cancelled and a replacement card would be sent to me immediately - the downside being that a new card number would thus be created, and I would need to make changes to all the places where my card number is currently used (iTunes, Quicken, Amazon etc.)

But, all's well that ends well. On Saturday afternoon I drove back to the restaurant and collected my card from the register where it was being held for safe keeping. It's not the first time that I had walked away from credit cards and ATM cards after making a transaction (but it's the first in several years). This typically happens to me when I am in the middle of an animated discussion with someone, talking on the phone or otherwise distracted. Apparently I am not very good at multitasking...

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Credit Room - Site Review

These days folks looking for a new credit card have a variety of websites catering to their needs with offers for matching their lifestyle and financial objectives to the most appropriate card for them. The Credit Room is one such site and the thing that immediately struck me when I visited it was the clean graphic style and appealing layout which are clearly aimed at visitors of the female persuasion. 

I found it very easy to navigate the site and information is very accessible. Visitors can search for cards by feature (e.g. fee free cards), reward type, or the strength of their credit score. Credit Room also offers a large number of credit related articles, many of which aimed at women (I don't think that articles such as "beauty and credit" are meant for tough guys like myself), and others of more general interest - such as this article about dealing with credit limits and this article about identity theft.

All in all, Credit Room is a very nicely designed site that does what it's there for, and does it elegantly. However, one area where the site misses the mark is in the advanced search functionality. This section is meant to allow visitors to search for the right cards based on multiple criteria, such as credit history, country of residence and type of user. The problem is that the functionality simply doesn't work. I entered my country of residence as the U.S., my credit history as good, and identified myself as a consumer... the engine found precisely zero cards that matched my criteria... clearly some repairs are in order.

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Save More by Using Your Credit Card

While consumer confidence reached an all time low last month, it seems like Americans are finally figuring out that paying down debt and saving more is the way to go, especially in tough times. Having said this, you might be surprised to hear me say the following: my wife and I make a conscious effort to put every dime we spend on our credit cards. No, we're not debt fiends. In fact we never carry a balance and we pay down our cards every single month. The logic here is very simple: we do this for the rewards. Over the past 12 months we got approximately $1,000 in cash back from our AmEx Blue and our Citibank Dividend cards. That's $1,000 tax free, and that's also what I call one of the very few free lunches you can find out there.

I first got acquainted to rewards credit cards in 1997 when I saw my father-in-law use a card that gave him a 5% discount on his gas, provided he filled-up at Shell. "Wow, that's pretty nifty", I thought to myself (I still use words such as "nifty" sometimes in my head, never out loud though...). Little did I know that there were even better deals out there. Our current favorite card is the AmEx blue - to date, we haven't found a card that offers a better deal. Also, since we have had it for several years now, our credit limit has grown to a level where we can pretty much use the card for everything, including job related expenses and travel, and not worry about exceeding the credit limit. That makes things pretty easy.

Anyway, even today you can still hear (and read) passionate arguments about whether cash back credit cards or the humble gas credit card is superior. Personally, I'll take cash any day of the week, but the point is different. As Americans are starting to adjust their financial lives to the new and gloomier economic reality, rewards credit cards can play a major role in boosting people's savings and helping them improve their balance sheets. Of course the key is to NEVER carry a balance, or else your financing fees will far outweigh any rewards your card offers.

Credit in Tough Times

Here is an interesting thought: in tough times, spend less and save more. I know that my wife and I have been watching our spending much more closely in recent months, and it appears that we are not alone. Finally, it looks like the American people are getting the message.

Which is why, for the first time since 1999, credit card borrowing is down. Take a look at this CNN article on the subject, but here is the punch line:

"The annual rate of consumer borrowing fell 3.7% last month. Credit card borrowing decreased at an annual rate of 0.8% while non-revolving borrowing, including student and auto loans, contracted by 5.4%."

That's actually quite impressive. You see? It looks like when it comes right to it, the American people can actually reduce spending. However, under the circumstances I am not clear whether this is folks being fiscally responsible; people simply running out of cash; or credit card companies reducing credit limits. The outcome appears to be positive, but I am not quite sure if the motives are completely healthy or not.

The news is not all good though... (actually, there is very little good economic news these days, but you get my meaning). With two thirds of the economy powered by consumer spending, the fact that people are reducing spending will no doubt reduce growth and will hit the economy that much harder. However, if that's what it take to make us realize that we have to live within our means as a nation, than it's probably about time that we learned the lesson.

So what's the right way to deal with credit cards in a time of crisis? Actually the right method remains the same in good times and in bad. Here are the rules my wife and I live by:

1. Pay it off - every month, no exceptions!

2. Essentials Only - If you know you'll have trouble paying off your card, buy exactly zero non-essential items (and that new computer or sofa are not essential).

3. Track Your Spending - make sure you know where every penny went and why.

4. Get the Right Card - since we pay off our cards every month, it makes sense for us to carry cash-back reward cards - which last year generated about $1,000 in income for us. If you are going to carry ANY balance at all, you should probably find the card with the lowest interest rate available. Forget about rewards.

5. Keep Some Credit Cards - some personal finance bloggers are dead set against credit cards. They maintain that there is no such thing as a good credit card. I disagree. At the very least, a credit card can serve as a last line of emergency access to capital, when more reasonable options are unavailable.

If you are looking for a new credit card, fair credit cards may be a good place to start your search:

Selecting the Right Credit Card

Picking the best credit card for your needs can be tough to do. I mean there are so many options available on the market these days (even with the current state of the economy). So here's an interesting concept, a website that sorts through all the available options and helps you choose the best credit cards.

This website gives you a vast range of options for finding the card that's right for you. For example, you can search for cards appropriate for your credit history, or cards that match your reward preferences. My regular readers know that I am big on cash back reward cards, so the first thing I did was to see which cards the site recommends in that category. The first card that appears on the list is Blue from American Express - which happens to be my favorite card. There are 6 other cards that are included in that list, but I couldn't tell what order these appear in. It would be useful if the site offered a method for sorting through the recommendations, by each one of the relevant parameters, but no such functionality is available. There are many other recommendation categories. For example, you can search for the cards with the longest grace periods or find the cards which are most suitable for users who take advantage of the cash advance feature (although personally I think that carrying a balance or taking a cash advance is a misguided and expensive way to manage your finances).

The press room section of the website is written blog style, and offers weekly articles on the topic of credit and credit cards, with some pretty interesting and useful information. There is also a section of the website that allows readers to ask specific credit related questions. All in all, this is a very good site, but it still requires some work. One area that requires improvement is the advanced search function. I searched for cards with the following parameters: country: USA; credit score: Excellent; Credit Card Type: Visa; and Customer Category: Consumer - pretty straight forward, but the site could not find any cards that matched the search parameters. I'm not sure why.

Anyway, if you're in the market for a new credit card or just want to figure out what's out there, the site is worth taking a look at.

Credit Card Rewards: Cash Back or Airline Miles?

Last month we received our annual cash back reward from our AmEx Blue card. The loot this year came to a total of $853. Not bad at all for a tax free bonus. Later that week I had a conversation with one of my colleagues and the topic of reward cards came up. My colleague uses an AmEx card that gives airline miles, usable on all airlines. So which is better? Cash back cards or airline miles cards? I vote for cash back cards, for two main reasons:

1. Cash is King - Cliche, but true. The biggest problem with cards that give you airline miles is that... you get airline miles. This is a very specific benefit that can only be used for one thing: going somewhere. Cash back cards, on the other hand give you an open ended benefit. Last time I checked cash was usable for buying airline tickets (as well as a few other items). Get your cash, buy your ticket or buy diapers, if you are so inclined.

2. I Got Enough Miles - I travel a lot on business, and I have plenty of miles. Over 300,000 on United and over 150,000 on Continental... I never, ever get a chance to use them. Well, actually, I do use my miles for magazine subscriptions and I did use some miles last year to buy that nifty robot of ours. BUT - I got so many miles already, what would I do with more?

My colleague on the other hand, says that he ran the numbers and cash back or airline miles were basically a wash from a total value perspective. He says that the fact he gets miles forces him to take a vacation with his family - one that is free of charge. To quote him: "if we got cash, we would use it to pay for our groceries. Since we get airline miles we feel good about taking a vacation".

I say: to each his own. Personally, I don't need to play mind games with myself and I prefer the flexibility of having more money in my bank account. If we want to take a vacation, we'll take it. We don't really need an extra incentive.

What You Buy Can Hurt Your Credit

In its June 30 issue, Business Week published a piece about how some credit card companies are monitoring what customers are purchasing, and in some cases reducing their credit lines accordingly. This type of practice came to light in a recent FTC complaint against Compucredit Corporation for unfair practices. If you want to read about some pretty incredible predatory lending practices, I highly suggest you read that complaint - 44 pages of double spaced, highly readable, credit card horror stories. Wow.

Anyway, the topic of this post is one specific lending practice that Compucredit allegedly followed. Here is a direct quote from the complaint (page 34):

"CompuCredit has based these credit line reductions on an undisclosed "behavioral" scoring model that penalized consumers for using their cards for certain types of transactions, including transactions touted in their solicitation materials such as cash advances and transactions with the following types of merchants:

• Direct marketing merchants
• Marriage counselors
• Personal counselors
• Automobile tire retreading and repair shops
• Bars and night clubs
• Pool and billiard establishments
• Pawn shops
• Massage parlors.

76. In some instances, CompuCredit reduced subscribers’ credit limits to levels below their existing balances and then charged over-limit fees."

Emphasis on the last sentence is mine. I want to talk about these practices on two levels. One is the high-level business practices type of analysis. The other is the actual approach that was taken. First, let's talk about this business practice in principle. Generally speaking I think that looking at behavioral data, including purchasing data, to make credit allocation decisions is not a bad idea. If someone is shown to be a bad credit risk by their very purchasing activities, should the lender be forced to keep throwing good money after bad?

Let's look at a couple of the specific examples given: marital counselors - if someone is going through some marital issues, which may or may not result in divorce and financial hardship, I think it is very reasonable to consider them a higher credit risk. The same can probably be said for pawn shops. I am guessing that few people in good financial standing frequent these establishments, and in any case, there is probably a correlation between people who patronize pawn shops and people whose financial situation is less than stellar... So, in principle, if I was running a credit card company I would certainly want to consider factors that would increase my credit risk - including the types of establishments my customers were spending my money at...

Of course, this brings us to such questions as consumer privacy and adequate disclosure. As an avid free market capitalist, I am a strong believer that knowledge is the best form of regulation. For example, once the government forced food manufacturers to disclose the trans fat content of their food, this harmful ingredient quickly disappeared from many products available on the market. If customers are clearly told that their purchasing behavior is a criteria for the level of credit they receive, and they still choose to apply for the credit card, I have no problem with this practice. In principle, at least.

Now let's talk about the specific practice. The ability of credit card companies to lower the credit line after a purchase has already been made, such that the new credit limit is lower than the outstanding balance, is preposterous. The fact that companies are then able to charge their customers an "over the limit" fee is both ludicrous and criminal. This only works in the credit card industry. Can you imagine a situation where a car dealer would be able to increase the selling price of a vehicle three months after you bought it? What if the person selling you a house was able to change his mind about leaving behind his appliances after the deal had already closed and you moved in? How are these examples any different from the credit card company changing your credit line such that you are then forced to immediately re-pay money you don't have?

Congress, the FTC, or whoever is in charge should quickly correct this situation. Credit card companies should be able to make changes that apply to future credit decisions, but never to balances that are already outstanding. Want to change the interest rate? Fine, your decision only applies to future purchases, not to ones that have already been made. Want to reduce the credit line? No problem, so long as it is not below the outstanding balance at any given time.

Late Payment on AmEx - Happy Resolution

Every few months, for whatever reason, we forget to pay one of our credit cards on time. Usually our payment is just a few hours late or at worst a day or two, but this time my wife only remembered to pay-off the card after I told her Quicken was showing a late fee of $38 and finance charges of $43. That's a total of $81 for a payment late by approximately one week. We really had no good excuse this time.

Luckily, because our mistakes happen infrequently, and usually not on the same card, we are usually able to reverse the charges. This time was no different and American Express refunded our money. Nevertheless, we really need to stop making those silly mistakes.

United Sucks (It's Not What You Think)

United Airlines sucks big time. No, I did not have a bad flight experience recently. My flights weren't delayed. My luggage was not lost. In fact, I fly United a lot and I actually prefer that airline to most others. So why do they suck? Credit cards.

My wife and I are enrolled in the credit bureaus' "no-marketing" programs. This means that the number of "pre-approved" credit-card offers that we are getting in the mail has greatly decreased. However, airline & hospitality credit card programs appear to be immune to our requests, and chief among them United Airlines.

Today I did some work around the house and finally got around to doing my shredding. It appears that I have amassed about 6 months worth of materials for shredding, and when I started doing the work, I noticed that there was a particularly large number of credit offers from United Airlines. This got me curious, so I actually did some counting and guess how many credit offers we have received from United in recent months. Let me save you the guessing: 55. This comes out to an average of about two offers per week (!) and these offers are not just for my wife and I. No sir. United seems to think that our five year old son really needs one of their credit cards as well.

I visited the company's website searching in vain for a way to opt-out of these useless and annoying offers. Guess I am just going to have to vent on this blog. So here goes: United, you suck!

If anyone knows of a way to stop this deluge of junk from United, please let me know.

Are Late Fees Frivolous Charges

A couple of weeks ago, an anonymous commenter left a long and interesting comment in response to my post titled The Most Expensive Loan in History - which is basically the story of how Citibank tried to charge us $82 for being a few minutes late in paying off our balance. We did not notice that the cut-off time was based on EST (rather than our local PST)...

Anyway, here is an interesting excerpt from that comment, which I have been thinking about for the past few weeks.

"...The late fee of $39, of course, is the most obvious, and its impact declines as the principal of the loan increases. Nevertheless, one ought to ask exactly what a late fee is charged for. After all, the lender is charging you interest for all of those late days, and interest is usually considered to be the cost of using money. So what is the late fee for? It is not for the employee who looks at the books every day to see who is late - we know that is automated. So what cost, for which the lender is not already being paid, does the late fee cover?"

Hmmm... good question. In other words, if you are already paying a pretty aggressive interest rate on your credit cards, can late fees be considered a frivolous charge? Here are the two alternatives I came up with:

Alternative #1 - Yes, What Are You Going To Do About It?

You could claim that late fees are frivolous charges. However, if you are a staunch free market supporter, like me, you have to take the position that this makes no difference. These are commercial terms between consenting adults (well, one adult and one company). If you agreed to be charged a frivolous late fee, it's your problem. Deal with it.

Alternative #2 - No, Late Fees Are Legitimate Payments for Breaking the Deal

OK. So you are paying a high interest rate on your card, but as part of the loan terms you agreed to make your payments on time. If you don't pay on time, the lender should be compensated for your violation of the agreement.

In either case, whether you agree with option #1 or with option #2 the result remains the same. While late fees may not be popular or even fair, the credit card market is clearly a competitive one and the laws of supply and demand dictate what consumers pay for the revolving credit they use.

The only problem I have with the notion of late fees is that credit card companies appear to be creating intentionally confusing and misleading contracts that seem designed to entrap consumers into needlessly paying late fees and other charges. A clear example of this is our little Citibank adventure. If you do not mean to entrap your customers, why else would you base the deadline for payments on a different time zone from the customer's own?

Citibank Late Fee Update

A couple of days ago I wrote about how Citibank screwed us by "upgrading" our account and essentially making us miss our payment due date. To add insult to injury they charged us $89 in late fees and financing charges for their mistake.

Today my no nonsense fighter of a wife called Citibank and gave them a piece of her mind. Bottom line, charges reversed. Citigroup CEO should be arriving tomorrow at 5 PM to apologize in person and offer us his first born (no thanks, Chuck, we have three of our own).

Never acquiesce to unfair business practices.

While We are Holding You Hostage - Update

A couple of months ago I wrote a post about how American Express "held me hostage" when I called to activate my new credit card. Essentially, when you dial the number to activate your card, after you key-in your new account number you hear a recording saying "While we are activating your card, we would like to let you know about the latest in inane and useless products you have absolutely no need for, that will only cost you an arm and a leg..."

A consumer hearing this message is bound to think that there will be some additional action he may need to take following the drivel, or perhaps he will receive some confirmation message saying that the card was activated. The hapless consumer listens to the meaningless crap and is essentially held hostage for the length of this commercial.

Well, I got a new American Express card in the mail (the old one was a temporary card), and this time when I called to activate I refused to be held hostage. As soon as the mindless marketing pitch started I hung up.

Guess what? Card still works. "While we are activating your card", means nothing. Your card is activated as soon as you key in your account number. You can safely and happily hang up the phone.

Yet Another Fight with Citibank

We missed our credit card payment again and Citibank socked us another $86 in late fees and financing charges. Once again, it's Citibank's fault and I am tired of it.

Citibank "upgraded" our card. Previously we had a Citibank Dividend Card and they "upgraded" us, without our request or action, to a Dividend World card. The new card has absolutely no advantages over the old one, as far as I can tell. When the "upgrade" was performed we got a new card in the mail, with a new card number.

What Citibank didn't do, is move our statement e-mail alert to the new card. So, here is a summary: Citibank decided we needed a new card, moved us without asking us to this new card, did not move our e-mail statement alert to the new card, and when we consequently missed our payment (because we did not get alerted to the new statement) charged us $86 in fees and penalties. Is that incentive enough for them to "upgrade" people's accounts?

Here is what we will do. We are going to call Citibank and get them to revoke that idiotic fee. If they refuse to do so, we will close not only the account in question but also the other account we have with them.

I will keep you posted on our discussions with the bastards. Can you tell that I have had enough of credit card company antics?

The Most Expensive Loan in History

A few days ago I was running my regular Quicken check-up of our finances and I noticed something strange. Our Citibank credit card was showing a $39 late fee as well as finance charges of $43, with both of those fees also showing an immediate reversal. This seemed strange, so I asked my wife about it. Her explanation blew me away:

Apparently, she paid our full balance off as we do every month. However, she paid the bill on the last day of the cycle at a few minutes after 9 PM PDT. Apparently, the billing cycle is calculated according to Eastern Time not to according to our local time zone. The good folks at Citibank, and by good I mean predatory, charged us a total of $82 in late fees and finance charges for supposedly paying our bill 7 minutes late. I think that if you were to calculate the APR on this supposed "7 minute loan" you would find that Citibank tried to charge us the equivalent of 4 million percent per year in interest. My wife, being the take-no-crap fighter that she is, called them up and gave them a good piece of her mind, at which point they relented and reversed this travesty.

Seriously, if you feel that the credit card companies are out to get you, it's probably because they are. Seems we are not alone in our battle against the evil credit card companies. Here is another post on the subject that I came across a few days ago. Jeff of Jethro's World simply escalated the fight until the credit card company (Chase in his case) cried "uncle".

It is good that some of us are fighting back against these predatory practices, but I have to wonder how many people are just paying these fees without a fight? Once again, where is Congress when you actually need them?

While We Are Holding You Hostage...

It was only a couple of days ago when I wrote about American Express' dim-witted security policy with respect to their credit cards. Yesterday I received my replacement AmEx card in the mail and got another dose of lousy customer service from that company.

As with any other credit card, when the AmEx card arrives via mail it requires activation over the phone. When I called to activate my card I was asked to enter my card number at which point I got something similar to the following message: "Thank you for choosing American Express, while your card is being activated let us tell you about the following great offer..." This was followed by an approximately one minute inane commercial for the company's credit protection services. The thing that really gets my goat is that I know that this is an unnecessary delay - the actual activation of the card takes a second or two, if that. It is a simple database query. The use of the phrase "while your card is being activated" is contrived, and should be replaced by something like "While we are holding you hostage..."

I find this method of delivering a marketing message to be rude and obnoxious. I felt like AmEx was holding me hostage to their marketing message. Would my card be activated if I simply hung up the phone? After I made the call, I remembered that I ran into similar practices with Citibank when I activated my card with them. However, if I remember correctly, when I turned down Citibank's terrible offer (by pressing the appropriate key on my phone), I got something like "Are you sure that you want to decline this offer", followed by another 20 seconds of marketing drivel. At least AmEx did not sink to that low.

I don't care if those companies are advertising free money, whatever it is that they are selling, I am not buying. Companies must be made to understand that if they treat their customers like their property, try to force feed us their marketing messages or simply give us lousy service, we will retaliate against them by using our economic power.

In the course of the simple transaction of transitioning me from an expired card to a new one, AmEx has managed to turn me from a very happy long time customer, into an unhappy customer who writes blog entries about their unsatisfactory level of service. I am not sure that this is the outcome that they were going for.

American Express Security

My American Express Blue card is about to expire at the end of the month. This is my favorite card and I use it for practically everything (wherever they accept American Express), since it offers the best cash back rewards of the three cards that we hold.

Yesterday my wife received her new card in the mail, and since I did not receive mine I called American Express to find out what the reason might be. Well, according to the American Express representative the card was mailed to a different address. Since we have been living in our current house for the past four years, alarm bells in my head went off immediately. Could this be the beginning of a nasty identity theft case?

The first thing I did was to ask the representative what address my new card was sent to. He responded that due to security concerns he was not allowed to disclose that information to me. However, he said he could send me a new card immediately to the correct address. I then proceeded to point out the idiocy of his position - he would not give me the current address the card was sent to because he was, quote "not able to positively identify me", but if I wanted to get a new card all I needed to do was simply give him an address at which to send me one!

I realize that the representative was just following company policy, but what kind of moronic policy is that? If you have concerns about my identity, why would you let me make transactions with the card, or worse, send me a new card to a random address I give you?

I tried a different tactic. I asked him if he could tell me when the address was changed. He said yes, and gave me a date in 2003. The date he gave was the date we moved to our current address. The one at which we have been receiving our statements all these years, and at which my wife just received her new card. I put two and two together, and asked him if he could confirm that the address they had mailed the card to is our old address. He confirmed that this was the case. So it appears that my new card was sent to an address from which I moved 4 years ago.

At this point I had only one question left: if somebody changes the address on his account, does American Express send some sort of notification of the address change transaction to the old address? His answer was: "no".

OK, identity thieves of the world. It appears that American Express is really trying to help you out. By corporate policy it seems that everyone who has the account number can call and change the address on the account, and the company will not even bother to inform the card owner of the change. In addition, if the card owner calls to find out where his information is being sent, the company will not share this information because of... security concerns.

Riddle me this: how can the same company produce a great product like the Blue card, while simultaneously producing the most screwed up and idiotic security policy ever devised. Seriously, American Express, buy a clue.

Fraud Alert from Citibank

Earlier this week we received a fraud alert letter from Citibank. The letter explained that the company's fraud detection system found a strange pattern of activity on our card and that we should contact them urgently.

I found it a bit strange that an urgent fraud alert would come to us via the U.S. postal service which, while very reliable, is not known as the most expedient method of communication in the 21st century.

Regardless, I picked up the phone and called the number that was given. As you pretty much expect when calling any corporate service center in America these days, I was greeted by an automatic system that asked me to say my account number aloud. The system recognized my spoken words without any trouble and connected me to an agent without any delay. Of course, the first question the agent asked me was to repeat my account number. There's gotta be a law against that.

Generally speaking, the agent was polite and professional, she even waited while I took a business call on my cell phone. I thought that keeping a customer service representative on hold for once was a deliciously ironic turn of events. She took it in good spirits though.

At the end of the day, the "fraud alert" was easily cleared up. It turns out that the automated system spotted what it thought was a double payment to my son's day care center, and wanted to clear that transaction with us. Unfortunately, this was not a double payment, it's called parents paying for summer camp.

All in all, this was a very good experience. Kudos to Citibank for being both vigilant and courteous in their service.