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
SEARCH FOR RECENT ARTICLES
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.
loading....
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.
loading....
@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.
loading....
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!
loading....
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
loading....
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…
loading....