Credit Card Scams

Banks are by nature greedy money grubbers. Since their inception, bankers have looked for ways to separate their customer's money from their customers. Bankers have never willing to extract reasonable fees. Rather, they have concocted an amazing range of underhanded, nefarious, and even illegal techniques to harvest money from the people they appear to be working for.  The latest, and perhaps the most clever, is the Credit Card. Cleverly disguised as a fee on the seller, credit card companies have devised a variety of methods to bilk their customers.

Credit card companies have created a litany of fees and charges. Everyone should be aware of the basic method of getting people hooked on credit so that they spend more than they can afford. This creates a recurring source of revenue to the bank for interest on a balance the bank hopes the customer can never pay off. This revenue stream provides billions of dollars annually to credit card issuing banks. 

However, the banks are not happy this bountiful harvest. There is an even larger group of customers who pay their bills promptly and never incur interest charges. Credit card companies see these frugal folks as an additional source of revenue. All the banks have to do is bend the rules, cheat, and skirt the law to create additional income.

Here are some of the latest techniques and the banks who I have personally experienced use them:

  1. Late Fees
    1. Circumventing Billing Laws - Citi Bank
    2. Late posting Scams
      1. Narrow posting window - Citi Bank
      2. Electronic posting delays - Citi Bank
  2. The missing bill - Chase
  1. Over Draft Fees

Late fees are legally allowed to be charged if a customer fails to pay their balance in the established time limit. The idea behind this is that the bank deserves a fee for extending credit. This fee replaces interest. Note that the fee always far exceeds the legal interest limits. Banks thus skirt state usury laws.

Banks are not satisfied with  the18% or even 24% interest rates provided by late feed. They have devised several ways to increase the number of customers paying these fees.

The first approach I encountered was created by Citi Bank. Citi Bank is located less than 50 miles from my home. Their billing location is a small town in New England. Federal law establishes the minimum time between billing and payment deadline. Citi bank relied on the extraordinary US postal processing and transient time created by their clever billing method. Instead of the ordinary three weeks or so between receipt of my bill and payment deadline, I often had a week or less. Perfectly legal but perfectly dishonest.

The next set of methods I discovered Citi Bank  using are related to payment posting. Citi bank devised two clever methods of creating late payment fees for conscientious customers: Narrow posting windows and Electronic posting delays.

The Narrow Posting Window is a nifty play whereby the bank only posts your payment between the hours of, say, 10AM and 4PM. If they open your payment envelope at any other time your payment is held over until the next day. This increases the chance that your payment will be late. Not late because you sent it late but late because the bank says so. They get to chose when they post it so they get to say if it is late. Guess what? It will be as late as possible.

Electronic posting was the savvy customer's response to this scam. These high tech  customers started using electronic payment to bypass the banks one armed letter openers. This method worked for a while. Then Citi bank applied the old Narrow Posting Window to electronic funds transfer. They simply didn't post an electronic payment until they felt like it.

This method may not be legal. Here is how it works. You initiate an electronic funds transfer. Your bank processes this request in seconds. The funds leave your account. You no longer have access to this money because it is not in your account. The funds arrive at th Credit Card's bank in milliseconds. The Credit Card company now starts accumulating interest on these funds. They can disperse these funds at their discretion. THEY HAVE YOUR MONEY! However, they simply don't post the funds to your account. This could take seconds. Instead they only 'run' this process at specific times. Times designed to create as many late fees as possible. This should be illegal. It isn't. You lose.

And now for the latest Credit Card scam. Thanks to Chase for coming up with this clever method. The Credit Card bank simply fails to send you a bill. Wow! Isn't that easy? They even save money on paper and postage. You don't get the bill. You don't know you own them. You don't know how much to pay. Next month you do get a bill. A nice bill with a late fee or even an "over draft" fee. Pretty smart. Just how can you prove they didn't send you a bill. 

You can outwit the Credit Card companies. Cancel all your credit cards. Use checks. Pay with cash. Simplify your life and keep more of your money.

The above information is based on my personal experiences and is my opinion. Your mileage may vary.