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This is a guest post from Sonia Coleman. It originally appeared in slightly different form at her blog, Coleman Unlimited.
Last night I had to call my bank to follow up on a rebate check for my new Fujitsu ScanSnap that bounced (it’s that “crisis” thing again, I guess). It’s a great scanner, but I am a bit annoyed at having to do double to paperwork due to their third-party rebate service having insufficient funds.
After I got that piece of business settled, the bank customer service person asked me if she could tell me about a great new credit card they were offering. I sighed and waited for the spiel.
The customer service woman (whom I will refer to as Bank Lady going forward) said, “You’re already pre-approved for $15,000. And for the next 12 months, this card has 0% financing and only 7.5% after that, which is the lowest in the industry.”
“Does the card have any cashback bonuses?” I asked.
“We offer cash advances,” the Bank Lady replied.
“No,” I said. “Cashback bonuses. You know — like 1%, 2%, or 3% back on purchases.”
The Bank Lady paused, confused. “It’s 0% for 12 months.”
“I know,” I said. “What about you giving me 1% or 2% back?”
Another confused pause by Bank Lady.
“I don’t keep a balance on any of my credit cards,” I said, “so the APR percentages don’t matter to me. What I’m looking to find out is if your card will pay me to use it. I have one that gives me 3% back on my purchases.”
“What’s the finance rate on that card?” the Bank Lady asked.
“I don’t know,” I said. “I don’t keep balances on my cards, so the finance rate doesn’t matter! I am asking if the card gives bonuses or cashback.”
“Oh, you mean points or something like that?” the Bank Lady said in a moment of breakthrough.
“YES!” I said
“No, we don’t offer any points,” the Bank Lady said. “But we do have 0% for 12 months…”
I interrupted: “I’m not interested. My credit cards pay me money; I don’t pay them!”
After a few courteous thank-yous between me and the Bank Lady, the call ended. I was in shock. I don’t think this poor child of the modern era even knew that credit cards could pay you, much less that you didn’t have to keep a balance on them and search aimlessly for the lowest percentage rate.
All I can say is: “Wow!” Banks should be educating their customers on how to better manage their finances instead of taking advantage of their lack of financial sense. But maybe they should be educating their employees, too.
This article is about Credit Cards, Funny Money, Real-Life Saturday, 10th January 2009 (by J.D. Roth)
January 10th, 2009 at 7:54 am
Not surprising at all. Many of the graduates of the high school where I taught for 16 years ended up in these types of customer services jobs. (Please be aware that to graduate is not a great accomplishment, when 1/2 of the school was in summer school each year and also spent senior year scrambling at adult ed to make up failed credits - many of the summer and senior teachers were chosen for their “generosity” in giving grades). Nope, not surprised at all. Dumb as doorknobs.
January 10th, 2009 at 7:55 am
Its unfortunate that the rep is trained to sell, but does not know the product that they are selling. I am a big fan of rebate credit cards. I use Amex which gives me 5% on gas/cell phone, freedom from chase which gives me 3% groceries and the new schwab which is 2% on everything else.
January 10th, 2009 at 8:06 am
We gotta know when we’re talking (like for free) to a salesperson and when we’re taking (or paying for) fiduciary professional advise. People mix the two up all the time.
I thought about doing banking recently and read part of the teller’s job description is to cross-sell products to people that weren’t looking for them. It pays a commission.
January 10th, 2009 at 8:11 am
EXCELLENT post.
Wish everybody were disciplined enough to have their credit cards pay them, instead of the other way around.
January 10th, 2009 at 8:28 am
Good post but would you mind telling us what credit card you use?
Also, JD, I remember the excellent post that had recently covering the different types of credit cards that are out there. Would you mind doing a quick update for the new year?
January 10th, 2009 at 8:37 am
I’d sure like to know what card she’s using to get 3% back. Is that on ALL purchases? I have a Citi Card that I am pretty happy with, but when I opened it 4 years ago, it offered 5% back on gas and groceries and 3% on everything else. It’s been slowly whittled down to 1% for all purchases!
January 10th, 2009 at 8:41 am
@MitchK
I’m torn on the whole credit card thing. Like this guest author, I’ve reached a point where I can use a credit card responsibly and think it’s a great tool. At the same time, I’m reluctant to promote them.
I did write about how to choose a credit card in September, but at the present I have no plans to follow up on this. It’s just not something I want to make a recurring feature. I don’t mind writing about smart credit-card management now-and-then, though. (I have a post later today that updates my story of the 63-page credit card agreement, for example.)
If you crave up-to-date credit-card info, check out Credit Addict.
January 10th, 2009 at 8:42 am
It’s true, you got really bad service, the agent probably tried her best but may have been new. The fact of the matter at a call centre, everyone is new. It’s a stressful job coupled with low pay and very little job satifaction. A “veteran” is someone with six months experience on the phone.
I’m tired of people going on blogs/message boards etc and trashing call centre employees. So here I vent.
I resent the fact that people think we are dumb.
I worked in a call centre for FIVE long years (that’s like 25 years in a regular job). This type of work requires intelligence and the ability to multitask. On a typical call you have to talk to the customer, write notes, use at least 3-4 different (buggy) tools all at the same time. During the call. Excessive “after call work” (mean more than 30 seconds) is frowned upon. This amount of multitasking requires extrodinary concentration. Agents do this for 7-9 hours a day, call after call after call. It’s exhausting.
The amount of information agents have to learn (and then it changes every 3-4 days), the crappy tools that agents have to fight with every day, the pressure to end calls quickly, hit quality audit points, sell and be polite. Every second of a call centre employee’s work day is monitored. There is always someone, a manager,auditor, or customer just waiting for the agent to make a mistake and jump all over them. And then there are irate, abusive, intoxicated, and distracted customers. The call centre where I used to work had a portable defibrillator machine on site. It’s just a matter of time before it will be used.
To be honest, I suspect that 80% of the people who read/post GRS would not make it to lunch on a shift. The ones who could withstand a 8 hour shift would probably go home and get drunk or cry or both.
So that is my customer service hissy fit. Thanks for listening and I hope you at least understand what it feels like to be on the other side of the phone.
January 10th, 2009 at 9:33 am
@slackerjo: Couldn’t agree more. The thing you have to remember when dealing with people at a call center is that many of those places have high-stress, low-reward atmospheres, and many of them have an average staff turnover of 6 months or less (and I too say this from sad, bitter experience).
Because of this, they get people on the phones as quickly as possible with the minimum of training. This is why agents often seem confused if you go “off script” - they often don’t have specific knowledge that’s not on the screen in front of them, unlike face-to-face staff who tend to have more training and colleagues they can call on to help.
Also, never completely trust a salesperson, in a call center or otherwise. Even the most knowledgeable sales person will be tempted to sell the product that’s best for his commission, sales targets, etc., not necessarily best for you. Always keep in mind that a salesperson’s job is to *sell*, so never allow yourself to take their word at face value.
This is why I prefer to do most of my transactions online. While you may miss out on the opportunity for negotiation, a decent organisation will have the facts and figures laid out for you. You can see all the information, weigh up the advantages and disadvantages in your own time (even comparing to competitors at your leisure), and can get a hard printed copy of what it is you were told at the time you were looking.
January 10th, 2009 at 9:38 am
@ slackerjo- I completely agree. I have a theory that everyone should work in customer service at least once and on top of that a further stint in a call centre.
I worked in a call centre for a year- a fairly low-stress one compared to others, and the abuse I received somedays was astounding.
People often feel able to say more on the phone than in person.
Also as Slackerjo says the management has very strict expectations of job perfomance.
I know this wasn’t the point of JD’s article but I do hate the “all customer service reps are dumb” comments that frequently pop up after such an article.
January 10th, 2009 at 9:42 am
It is great that the author wanted a cashback bonus and I understand her frustration with the woman not understanding her need, but seems like she was blind to the fact that she could have still made money with the card. She could have stashed 50% of the card’s limit ($7500) in a money-market or savings account while paying the minimum balance for 12 months and in month 12 pay the card in full. Depending on how much she spends, she could have possibly made the same amount, if not more than she would have made with a card that offered a cashback bonus.
January 10th, 2009 at 9:58 am
I have sympathy for what Slackerjo is saying.
I think we need to be realistic in our expectations. Of course we would expect the bank rep to know that the card had points(and it sounds like she did), but we had to understand too that she’s been given a list of specific benefits to push at potential customers.
She’s there to sell you, not to ‘help’ you. Well, sales is supposed to be “helping the customer find what they want”, but she’s really there to help the interest of the bank in getting you into their product. To the extent that you agree that also helps you, that’s all part of the deal.
It helps the bank to push the excitement of being able to rack up a balance at 0% for a time — perhaps to let it stay there until they can start charging you interest on it. So they are going to push that benefit.
We have to take resposibility for the criteria that are important to us (like this poster did) and insist they be there before we bite. It’s called being an educated consumer. But don’t be surprised that the bank isn’t rushing to make it easy for you.
P.S. This was a guest article, not written by JD.
January 10th, 2009 at 10:13 am
@slackerjo:
The pay and turnover rate of call centers are not my problem. At my job, I’m not going to tell the client: yes, the software we wrote sucks, but you’ve gotta understand that we just hired a number of people straight out of college.
That is not the customer’s problem.
Maybe your point is that it’s not the CSR’s fault that they sound dumb, but I really don’t care who’s fault it is. This CSR sounded dumb, and this post is about the CSR sounding dumb. Obviously the CSR just wasn’t familiar with the product, and as a customer I don’t really care WHY that is; I’m just annoying that he/she has wasted my time trying to sell me something he/she doesn’t even understand.
I don’t think you have a strong leg to stand on if you’re going to complain about consumers trashing bad customer service reps. If your point is “it’s the employer’s fault”, then you should direct your ire toward the employers. I’m not in the CSR industry and I don’t care about the problems it is having, and I certainly don’t expect that someone in the CSR industry is going to bash me for not understanding the CSR industry. It’s not my job to understand the CSR industry!
January 10th, 2009 at 10:24 am
@ Jermaine - I was thinking the same thing. It’s a very simple type of arbitrage…but it would only make sense to do if she could invest the money in a moneymarket or cd that pays more than her current cash back card - right now moneymarkets are at about 3%, it might not be worth it to go to the trouble if you already make 3-5% cashback on your current card. But good point nonetheless.
January 10th, 2009 at 10:31 am
I wonder what would happen to the credit card industry if everyone who had one, always paid their monthly bills on time. I know that would never happen, but how would the CC companies make money? Things that make you go hmmmmmm…
Great article.
January 10th, 2009 at 10:32 am
The problem here is two fold. The writer did not call for a credit card - she was being sold one because she had the misfortune to have to call. The rep was instructed (and would probably be reprimanded or fired is she did not)to try to sell everyone this credit card. She was just following the script for what was probably even in her mind a bad idea. We all need to fight against the mandated sales pitches that we get when we have the misfortune to have to call in because of a problem.
January 10th, 2009 at 10:33 am
One credit card that gives cashback and has since the ’90s us Discover. They give 1% on everything and then you can sign up for seasonal additional cashback bonuses of up to 5%, such as groceries, home improvement, etc. The website is discovercard.com.
I’ve been using them for every possible purchase I make for many years. My husband and I treat the card as a check card. We record every purchase in our actual checking ledger and deduct the amount of purchase immediately from the checking account. If there is no money in the checking account, we don’t use the card. At the end of the month the bill is paid. This is the way we keep track so not to spend more than we have.
On the issue of call center reps: I also agree w/ SlackerJo and L. I think everyone should have to put in 6 months in some sort of customer service. I’ve been a waitress, a cashier and a call center rep. I’m unemployed right now and the thought of going back to work of that type gives me stomach pains. People think you have ESP and they don’t even have the vocabulary to explain what they want. They expect you to know. They think that you are sitting in a room filled with the product you are selling and can actually see each and every item. In my case, I sold farm equipment and parts. Callers actually thought I was sitting in a warehouse full of farm equipment! They also thought I new what it was they needed. Something on their tractor was broken, they needed a part for it and they didn’t know what it was called. But, I was supposed to figure what part it was that they needed.
I think they thought I hopped of my tractor to answer the phone when they called, then ran and got the part, boxed it up and put it on the UPS truck. And Lord forbid, I didn’t know what they wanted. They insisted I was stupid and a man who knew something! We had none of those. I could go on and on. Don’t even get me started on working as a waitress.
I feel the writer of this article was being condescending to the CSR. The Bank Lady probably knew her product, but wasn’t school on products she didn’t sell. I’m not sure the writer was explaining what she meant well enough for the Bank Lady to understand either.
January 10th, 2009 at 10:34 am
> I know that would never happen, but how
> would the CC companies make money?
Transaction costs charged to merchants. This happens now.
January 10th, 2009 at 10:41 am
My Discover card still gives me back 5%; even more if I make certain types of purchases during certain months. For example, during January, February and March, if I purchase any travel, I get extra percentages back.
I usually save them up and get myself a few Borders gift cards.
Mmmmmm. Books.
January 10th, 2009 at 10:45 am
Do people really think that the credit cards would be paying out points of percentage cash back if everyone paid all their bills on time?
I think not. The credit card isn’t there to give you money. It’s to take your money in every possible way and give a few nickles to people who can obsessively track their spending and are financially comfortable enough to pay off their balances.
I didn’t care for the smug tone of this post. Your rewards dollars depend on those locked into the debtor system!
We don’t carry credit card debt and we don’t play the rewards shell game. Credit cards are for internet purchases.
January 10th, 2009 at 11:06 am
Um, you sure you weren’t phoning South Africa?
January 10th, 2009 at 11:09 am
@ ms. Clear–my thoughts exactly. I didn’t care for the smug tone of this post either, rubbed me the wrong way.
January 10th, 2009 at 11:12 am
I miss the days when people that worked in the bank actually knew their product lines and had the ability to educated their customers to be more financially savvy.
The one thing about the 0% cash advance that some cards offer that I personally have been able to do was apply/aprroval for a 19month 0% credit card. pull that cash out and put it into a high yield savings account @ 4.15% and then when the time was up, just pay the creditcard back the remaining (as i used my income to pay off the monthly minimum balance). Its been a good run those 0% cash advance cards offer.
January 10th, 2009 at 11:18 am
@Jermaine–I’ve never seen a card that would let you take a cash advance for 0%. The 0% rate is only for purchases. While you have a good point about what the poster could have done if it was 0% for a cash advance, I’m betting that was not the offer.
January 10th, 2009 at 11:21 am
Really interesting post, Sonia. I use my card (yes - 1 credit card) exactly the same way - for points only. I do not even consider carrying a balance forward.
A few points additonal points about the credit card business model for interest:
- Card providers (the banks, not Visa or MasterCard, who provide the infrastructure) make their money off of the interest earned on balances, with additional revenue coming from yearly card fees
- Points, cash back and other incentives are designed entirely to increase your spending on the card
- Higher spending on cards tends to lead to higher balances carried forward, resulting in increased interest (revenue)
Those of us who do not carry balances and therefore, pay no interest, are non-profitable for the card providers. If we all used cards in this way, fees would increase dramtically, or there would be no credit cards (only bank or debit cards)
Thanks for the post!
January 10th, 2009 at 11:47 am
@Ms. Clear:
I have never understood that position. The individuals who make the cash-back business model possible are FREE to pay their bills in full every month, are FREE to not use credit cards at all, are FREE to decide to run up their balances and pay huge interest rates. That is their decision, and you may disagree with what they end up deciding and you are even FREE to offer them advice. But to say that a business model that is currently possible due to the decisions of free people in the market shouldn’t be utilized just makes no sense.
@Shiela:
Actually, Jermaine is correct. If you do a search on google, you will find entire sites devoted to the practice. It’s a rather common way of taking advantage of credit card teaser rates. You have to be careful, though, because often the fine print allows the credit card company to change the 0% interest rate at any time even without a missed payment. If this is the case, you take on the risk of needing to pay off the balance in full immediately in order to protect your investment, and you have to have the liquidity to be able to do that.
That said, I think this practice is WAY off-topic for this site and I would not encourage anyone here to do it.
January 10th, 2009 at 11:49 am
Slackerjo brings up a good point. People are really quick to call a CSR dumb or make some other negative comment. I worked a job like that in college and agree the company requires a lot from you without providing much support. I try to have as much patience as possible with anyone in a customer service role. It’s a thankless job and you deal with all kinds of people who have no problem disrespecting you.
January 10th, 2009 at 11:49 am
This story was hilarious! I often get solicited at stores like Target (I think we all can relate), and they just keep repeating the “10% off your purchase today” line. I always decline, and then they persist. I started saying “I am buying a home right now, and I cannot open any more cards or it might disqualify me from getting my first home.” Am I purchasing my first home? No, but it sure makes them feel guilty–they wouldn’t want to screw that up for someone, would they?
I learned about this trick when I was a dumb 17 year old trying to get people to open a Gap Credit Card so I could make my manager happy. I’ve been on both ends!
January 10th, 2009 at 12:38 pm
I don’t think the post was smug at all. Kinda funny really.
Here is someone that knows how to make credit cards work for her - and that is great. It isn’t her problem that the company doesn’t teach their CSRs what different types of credit cards there. It is true, they focus on the “card of the day” or hour to sell, but just making sure they understand what some general types of credit cards there are is important.
I used to work in a call center for MBNA on outgoing calls hawking credit cards. We had a new card to focus on every morning - sometimes it changed a few hours later. We worked on computers where as soon as the last call was over it called another number.
I think I had pretty decent training there - because at the time everyone in the company, no matter how far up the ladder they were had to get on the phone and sell a few hours a month to keep in touch with the little people.
Call center job sucks, yes. But it isn’t the customer’s fault if the CSR doesn’t know what they are talking about. The author wasn’t rude nor disrespectful at all - and that is what the customer owes the CSR - some politeness and respect (unless of course they give us good reason not to), that’s all.
I don’t call customer service because I want to feel sorry for someone. That is there job (when appropriate) not mine.
January 10th, 2009 at 12:39 pm
cc companies make money off the merchants…even if you pay every bill in full on time, they’d be making lots of money.
We switched to a cc that gives us points as well, because we wanted to get something for our purchases. I was convinced when I sat next to a lady on an airplane on a trip to Israel and she was taking a trip halfway around the world with her credit card rewards (the plane travel part). I came back from that trip determined to get a card that gives me a bonus for using it.
I think the tone of the post is fine. Not everyone has a problem with cc debt. Some people actually don’t LIKE to have the debt and it bothers them until it is paid off monthly. Not everyone is “on the verge” of going bankrupt or being deeply in debt–not even cc users.
January 10th, 2009 at 12:42 pm
@Ms. Clear
You are kidding me right? Just because someone else cannot be responsible for their debt does not obligate others who can not to use them.
I say those that are currently using credit cards in a way that works for them by paying off their balance every month getting points - more power to you! Go for it.
For those of us (like myself) that is working hard to pay down credit card debt and eventually close most of the cards after they are paid - that is our fault. Why punish the responsible for those that had things get out of control?
January 10th, 2009 at 12:56 pm
Thanks, Sherry. I realize that people who came out of debt often have the biggest time with using them (sort of like anyone who deeply mired in anything–you have strongest feelings about them/it). CC are a tool. Computers are a tool. The internet is a tool. TV should be a tool. We either control them/it or it controls us.
January 10th, 2009 at 1:01 pm
@Becky you are so right. For myself, it was figuring out who is suppose to be the master - me or the cards?
I can only speak for myself, but once I realized that I was living in crisis mode all the time - I was allowing my finances to control me, not the other way around. And for several years I would tell myself “well the average American has this kind of debt so I guess it is okay.”
Then I finally woke up and realized that measuring my health and sanity by the “average american” was foolish and I had to act - not wait for the rest of the “average americans” to raise the bar for me.
January 10th, 2009 at 1:29 pm
@Sherry
The rewards system depends on other being in debt. So to act like you got your special cash back bonus all by your super special self is misguided in the extreme.
You got the cash back bonus because other people are constantly getting in over their heads.
Is that morally questionable? To me, yes, but I don’t care what other people do. I only commented because of the tone of the post, which was quite self-congratulatory.
January 10th, 2009 at 1:56 pm
@Ms. Clear:
The fact that you can use a credit card depends on people being in debt. If you want to take the moral high ground, let’s at least be honest with ourselves and admit that credit cards wouldn’t exist at all if people weren’t getting in debt. Banks wouldn’t exist either if people weren’t getting into debt, so you should probably liquidate your savings account and stop stealing savings account interest, which is really just part of debt interest being paid by people who are “in over their heads”.
Does this sound at all silly to you???
January 10th, 2009 at 3:03 pm
IMO bank interest is different. The bank loans out the money they take in and earns money back. It’s not the same thing.
But regardless, I have no problem with rewards programs for credit cards if other people want to use them, I just choose not to.
The only thing I object to is acting like some brilliant action got your those cash back bonuses. Because it didn’t. End of story.
January 10th, 2009 at 5:30 pm
@ slackerjo: True, I wouldn’t last til lunch at a call-center job, because I wouldn’t take a call-center job. I believe in treating people as you would like them to treat you. I don’t want to be hustled over the phone, and so I wouldn’t hustle other people over the phone. If out of desperation I took such a job, I would expect to get abuse from my unwilling targets, and I would consider it richly earned.
IMHO, the author’s post was not smug or self-congratulatory. It reflected, hilariously, on the poor training the no doubt underpaid phone solicitor (let’s face it: phone solicitation is what this person is doing) received from her employer and, ultimately, from the US educational system. Ignorance and obtuseness as well as pathos are at the heart of slapstick…and this episode is bursting with slapstick.
So ridiculous it almost makes up for the annoyance factor!
January 10th, 2009 at 6:15 pm
Don’t credit card companies get a percentage of charges from the businesses? Saying that all the rewards are paid off others debts is kind of misleading by those posting comments.
Look, credit cards aren’t in the business to give you free money. They are not a charity, they are a business that offers a service. If you can’t handle the responsibility of paying your debts, then don’t get a card.
I just find it amusing that the call lasted that long. I would have hung up almost immediately.
January 10th, 2009 at 8:36 pm
The only reason your cards pay you money is because the vast majority of people using that card are racking up short-term debt and paying high interest rates.
If everyone used the card like you do, the offer would not be available. The offer is simply a marketing tool to get sheep to switch cards thinking they will spend less, when in reality, unless they pay off their purchases immediately, they will end up in the red.
And who expects companies to educate their customers? Do you receive a 20 minute presentation on environmental damages caused by 4WD vehicles at the Hummer showroom? Does Coca Cola provide a leaflet outlining healthy diets with each can of soda? Personal choice (and responsibility) is what makes our society so great - Choose your own Adventure!
January 10th, 2009 at 10:30 pm
I usually just go with a “no thank you” but maybe that’s just me
January 11th, 2009 at 5:44 am
As far as I know CC get 3% of each purchase. They make money from the merchants…even if I pay every bill off each month. If the cc pays me back 1%, they’ve still made 2%. Not bad for the cc company. That’s not being dependent on others’ debts.
It’s not a moral issue to use a cc and get rewards when you use them.
January 11th, 2009 at 5:56 am
Charge cards require balances to be paid in full each month and American Express existed that way for years.
While credit card companies do make money off of balances revolved by consumers, and fees that they might be charged, if everyone always paid the bill in full before the due date, credit card companies would still be profitable, due to the fees they charge to BUSINESSES. If you have a business and you wish to allow your customers to pay with a credit card, you will need to set up a merchant account.
Businesses are charged significant fees to open and maintain their merchant account. These fees are usually based on their sales volume: the higher the volume, the lower the percentage, but the higher the actual fee amount. Also, every transaction carries both a flat authorization fee (maybe $.10) as well as a percentage, which depends on how the transaction is processed. Swiping a card results in lower fees than typing in the number (or use of special cards, including rewards cards), which is lower than the Card Not Present (CNP) transactions used in telephone and online transactions.
Merchants also pay fees to receive statements, whenever they “settle” their terminal (sending all transactions made during the day to the processor) and whenever chargebacks occur. There are additional annual fees, early termination fees, and minimum fees!
Credit card companies are also usually part of banks, which make money in a variety of other ways, including business and consumer (non-credit card) loans, fees (again, mainly to businesses: there are few free business checking accounts), and investments (which are often loans).
If everyone paid they credit card bill in full each month, the card company would have LESS money, for sure, but they would still exist, and rewards cards could still exist, as merchants fees will keep them viable.
January 11th, 2009 at 10:26 am
This was a fantastic post with just the right tone — a voice with something to say. Let’s not forget having a passionate opinion is what makes a good blog.
I do often feel stymied with what might be going on in the heads of some customer service reps. That’s not a judgment call, just a wonderment call. Same with check-out clerks. I don’t believe many understand the implications behind the product they are selling. I felt the same way when I worked ‘jobs’ verse getting involved in a career.
January 11th, 2009 at 1:08 pm
Credit card companies aren’t in business to lose money. An educated consumer (in theory) won’t pay late charges, overlimit fees, interest charges etc. and will actually cost them money. Can’t have to much of that going on now can we?
January 11th, 2009 at 3:34 pm
I did think the experience was unbelievable and funny in a dark-comedy-sort-of-way. I think it’s sad that parents and banks and schools or whomever don’t teach people about credit cards. I honestly don’t believe the customer service lady understood that credit cards could be paid off every month and that the customer could make money from that interaction. The fact that she was selling this product only underlined this fact to me even more strongly! I’m thankful that sites like this are helping people to understand that they can pay off their cards and not have to search for the lowest rate for their balance.
January 11th, 2009 at 3:38 pm
On CSRs:
I have worked as a CSR in a call center. I am not dumb; I graduated in the top ten percent of my class and am currently an honors student in college. But you know…when I was 16 (and working in a call center), I did not know anything about credit cards. I did not have my first credit card until college. So the fact that this employee did not know about all of a credit card’s features is not surprising. Sad, yes. The problem lies within the employers. I have taken calls for a variety of clients (having 10 different calls for 10 different companies was not uncommon - all in the same day); the amount of information they give us is extremely LIMITED! I absolutely hate sounding like an idiot at my job. However, it often could not be helped. I took calls for FEMA and received maybe a few pages for my training materials. I was a teenager talking about insurance, something I knew nothing about! Those calls were brutal. I learned more as I went on, but truly, the first day of new calls is one of the most terrifying experiences I can name.
January 11th, 2009 at 7:31 pm
My understanding is that Visa or Mastercard (both public companies) set up the process and charge merchants a 3% fee for the convenience of charging customers like that. This is also why they charge 3% for cash advances - they like that steady income.
The banks (or other lender) charges the interest rate on money lent. Thus a B of A Visa pays Visa 3% of your transaction (from the merchant), and pays B of A 15% (for example) interest on any balance you don’t pay off, month to month.
As to the original topic, I didn’t feel the way most people did. I have traveled a bit, and was reminded of an amusing anecdote (I’ve always wanted to say that!!!): I had to ask three times for a trash can in Australia, finally holding up the offending piece of trash before the clerk said, “Oh, you mean the rubbish bin!” I thought the CSR was trained to use the term ‘points’ and was initially lost because the poster didn’t use the right terminology. No stupidity on anybody’s part - just a miscommunication, and the CSR trying to stick to her script.
January 11th, 2009 at 8:17 pm
I can’t imagine paying interest on my credit card bills…I wont carry a balance! And I use my card for everything, because in my mind, I’m getting a 1-3% savings off of my purchase.
January 12th, 2009 at 1:51 am
Tee hee. Several times people have asked me the interest rate on my cards, and the look they give me when I say “I don’t know” is so much fun!
January 12th, 2009 at 5:00 am
@Flippy O (#15): The credit card companies don’t care whether or not you pay your bill off each month. That’s the bank’s concern. The credit card companies only provide the infrastructure. They take their 2% or 3% from the merchant at each transaction. Everything after that (interest rate, card terms, rewards, etc.) is up to the bank.
@15 Minutes (#4): If everyone were indeed disciplined enough to pay their cards off every month, then there’d be no such thing as “rewards” cards. The only reason banks can continue to offer rewards cards is precisely BECAUSE most people aren’t disciplined enough to use them to their advantage. Think about it, the banks aren’t in the business of giving money away. If the charging/paying patterns of their customers shifted, then the banks would simply change the terms of their cards to ensure that they remain a profitable product for themselves.
January 12th, 2009 at 7:36 am
Kevin,
The bank gets the largest cut of the transaction fee. Visa charges 0.095% of each transaction, whereas the issuing bank may charge 1.5% plus 25 cents per transaction, so it’s getting over 15 times more than Visa. Which makes sense since they’re taking essentially all of the risk.
January 12th, 2009 at 9:42 am
I really enjoyed the smug tone of this post. I get over $400 a year in cash back rewards from my credit card company and have never paid a service charge. If that makes me sound smug, then so be it.
January 12th, 2009 at 10:22 am
@jeadly:
I agree. It really doesn’t make sense to do anything but (a) whatever makes sense for you personally, and (b) advocate to others what would make sense to them. Should you not buy a stock because it means someone else is selling it? Should you not have a savings account because it means you are enabling the bank to lend money to people and put them in debt?
It really is quite silly. Allowing people to make decisions other than you would make is exactly what a free society means.
January 12th, 2009 at 10:59 am
I’m in the same boat… my credit cards probably have an astronomical rate, but it doesn’t matter because I pay off the balance, and get a big fat refund check several times a year.
Although I have to say you’re more patient than I am– when customer service reps ask if they can tell me about a new product, I politely decline. No sense in wasting 5 more minutes if you don’t have to!
January 13th, 2009 at 7:02 am
I too think banks should be educating their customers, but what’s the incentive? If your credit is not as good, they get to charge you more fees and a higher interest rate anytime you borrow money.
We do use credit cards for everything. We have also not carried a balance that did not have a 0% apr for about 5 years. We receive hotel points and airline miles to offset the cost of taking vacations. For instance, we were able to get two tickets to Europe from DFW for $140 (the amount paid was for taxes).
Interesting post!
-HIB
February 8th, 2009 at 8:36 pm
ACTUALLY…. that could’ve been a profitable situation. Sometimes they’ll let you get the $15,000 transferred to your checking account as a “balance transfer”. If you put that $15,000 of 0% apr money to work for the full year in a FDIC insured 3% savings account (like etrade), that would yield a free $450. Even after the balance transfer fee which might be $75, it’s still a free $375. Of course, it will ding your FICO score for a while…