Credit cards get you coming and going

May 15 2008 by Ellen Roseman

Not only do most credit cards still charge 18 to 20 per cent interest rates, but they pile on fees for all kinds of transactions. The Financial Consumer Agency of Canada has a bulletin on service fees on credit card transactions that lists more than a dozen.

If you think paying service fees is bad, just think of what happens if you fall behind in making your credit card payments. The FCAC makes sure we understand the impact.

Credit card issuers usually treat fees in the same way as they treat purchases. If you do not pay your balance in full, and on time, you may have to pay interest on these fees. If you are not sure how your credit card issuer handles fees, contact the credit card company or your financial institution.

Complaints about credit cards come in fairly regularly. Here are a few I received recently (below).

29 comments

  1. DdF

    May 15 2008

    Hey Ellen. Here’s a little scenario you may already know about, but I thought I’d email just in case.

    I recently overpaid my CIBC Visa, so that I had a credit on the account of $2.51. (It was overpaid, because I have on occasion paid my bill in full and then found I owed another .25 cents interest or some such thing). Anyway, this time I overpaid it just to make sure.

    A few months passed and I hadn’t used the card, so I figured I’d transfer that money (through electronic banking) from my Visa card to my persaonal CIBC account.

    This month, after having transfered the money, I got a bill from CIBC Visa, charging me $2.50 for a cash advance. Apparently, getting my own money back from CIBC Visa cost me $2.50. So my net on the whole thing was $.01.

    Well, I decided to call Visa and they did say that they would refund my money, out of the goodness of their hearts, this one time, but if I did it again they would charge me. They say it’s a cash advance pure and simple, and they must charge for it. After all, “they did not ask me to overpay my bill.”

    I have in fact overpaid other bills on occasion (not often), and in fact I have been sent a refund cheque.

    Obviously the money is not an issue, but I believe this is really an abuse by CIBC Visa and amounts to their stealing from people. They will say, and did, that it is in their cardholder agreement and blah, blah, blah.

    But ya know what, whether it’s in writing or not, it’s still wrong and it is stealing. I guess I shouldn’t expect more from a bank, though.

  2. DJ

    May 15 2008

    This month, I noticed interest charges for my Scotia Visa Gold card that I always pay by the due date.

    When I called, I was advised it was caused by a change in the billing cycle, which was reduced from 26 days to 21 days.

    I asked why, as the 26 days had always been a significant attraction to Scotiabank’s credit cards and which differentiated it from others. I was told the bank was trying to bring its cycle in line with other cards.

    My response: Isn’t the point to differentiate yourself rather than becoming like the others! If you want to be the same as others, maybe it is time we look at the others for Visa services.

    It seems strange, with low interest rates, that Scotia would make such a move. It can’t be costing them that much for 26 days vs 21 days. It could even be that they make retailers cover the grace period, since retailers aren’t likely paid right away….but I could be wrong in how it works.

    Stats as of Decemeber 20007 show some others are 25 days… see link…

    http://www.fcac-acfc.gc.ca/eng/publications/CreditCardsYou/pdfs/Gold-e.pdf

  3. RF

    May 15 2008

    I am an American Express Air Miles cardholder who was upgraded to the Platinum card on Feb. 11, 2008. Along with that upgrade came a new card and new account number, leaving all the direct billing accounts to be changed. Reminders to do that came with the shiny new card.

    At the end of April, Amex sent a letter to its cardholders, offering 10 bonus Air Miles for every account that Amex switched over to the new card, and a 1-800 line to make it easy in appreciation for “continued loyalty” — this after most folks were forced to do it themselves under threat of using a dead account.

    For those of us who suffered through calling, holding and surfing web pages and listening to voicemail menus, on our own time, when now they are paying 10 Air Miles to do that thing, Amex needs the light of reality in their faces.

    I did call to let them switch one account I missed, and the representative there passed me to customer service. They only wanted to sell me a supplemental card, not listen to what I was saying.

    The rep made no notes of the accounts I had switched on my own time (Esso, Shell, Primus and now 407, since speed passes and those things are connected to the credit card for gas).

    I would like to get some bonus Air Miles for the work I was forced to do that Amex now rewards people for.

  4. MFN

    May 23 2008

    Anybody experience TD’s promotion for a preferred Visa rate based on opt-out of privacy considerations? The rate was unavailable for those who chose not to have their card useage information shared with others. Is this legal?

  5. LB

    May 26 2008

    I saw your article about credit card rebate offers, http://www.thestar.com/comment/columnists/article/429426

    So let me tell you about my Citibank problem. I have a Mastercard credit card with them that rebates 1% of all of my purchases up to $50,000 at the end of each calendar year.

    I spent just over $50,000 in 2007 on the card and received my statement at year-end, stating that I am entitled to $500 cash-back. My account is paid on time and in full at the end of each billing cycle so Citi cannot say that I am in any way delinquent on my account.

    Despite numerous calls to their customer service centre since late February, including a conversation with a supervisor, I have yet to receive my cheque.

    I am preparing to go through the onerous route of filing a statement of claim at the Ontario Small Claims Court, but I still hold out some hope that there may be someone at Citi who if contacted will resolve the situation quickly. I find it difficult to believe that they would not want to retain their customers by providing some basic level of service in a case such as mine.

    I have personally worked in a financial institution (Trimark and subsequently AIM Trimark Investments), where I cancelled and replaced cheques and couriered them out to customers in a timely manner with ease. Why aren’t they capable of resolving what should be a non-problem?

  6. JL

    May 26 2008

    I read your column religiously and love it. I thought I would write in about something a friend told me about, which recently happened to her.

    She and I play the balance transfer game in order to take advantage of low interest rate promotions on our credit cards. Each of us has sufficient cards that we NEVER use a card for purchases when it’s got a balance transfer debt on it.

    In fact, I’m off to the bank later to use a 1.99% (’til November 2008) balance transfer cheque from my Sears MasterCard to transfer $10,000 of debt from my RBC line of credit (currently at 4.75%).

    Anyway, she paid off her CitiBank MasterCard balance recently because her low interest balance transfer promotional period had passed. She was SHOCKED to discover a $227 charge on her next statement.

    She called to complain about this, hoping for a reversal of this charge, and was again SHOCKED to learn the rules and regulations had changed and she had been notified in writing (small print). Her charge was not reversed.

    The supervisor she spoke to mentioned there had been a lot of people calling about this, but because everyone had been notified, no reversals would be made.

    Have you heard other complaints? I was stunned to learn of this, yet I’m certain it’s legal, although immoral, really.

    Earlier today, I paid off my own Capital One MasterCard in full. When I called to get a balance current to today, I made sure I wasn’t going to get charged a penalty for paying it off. I wasn’t, but frankly, I had been carrying this balance for a few years (it was 3.99% for the life of the debt, which has been a pretty good deal, especially when my line of credit rate was over 6%), so maybe a service charge/penalty WOULD, in fact, apply to new debt. I didn’t ask.

    Hope you can help out with researching this topic. Thank you.

  7. bylo

    May 26 2008

    JL says, “She and I play the balance transfer game in order to take advantage of low interest rate promotions on our credit cards.” Presumably they use “the rules and regulations” of that promotion to their advantage.

    But if that is “legal, although immoral, really” then how is CitiBank any different when they play their “game” on unsuspecting customers? After all, “the rules and regulations had changed and she had been notified in writing (small print).”

  8. Karen Marr

    May 30 2008

    I received a new Canadian Tire Option MasterCard Credit Card in the mail yesterday. My old Option CC had not expired. This new Option CC has the new “paypass” technology.

    When calling the Canadian Tire Credit Card Service Department to cancel the “paypass” portion, saying only the regular Credit Card was wanted, I was informed that I had to accept the paypass with the credit card or cancel the card totally.

    Phoned Canadian Tire Financial Services, spoke with Shannon, an Account Supervisor. Explained my concern over not wanting the paypass and asked to just leave my Options Card as was.

    Shannon informed me that this is new technology and within the next four months, all Canadian Tire Option MasterCards will be replaced with the paypass feature. Again I explained I did not want this feature. From Shannon: “We own the credit card and we can do whatever we want”. I hung up.

    How can the customer be forced to accept this change, and the risk along with the card? In their enclosed brochure it states “It’s as safe and secure as all MasterCard cards and with PayPass your card never leaves your hand” — a marketing tactic.

    If someone took my credit card to use, the initial safeguard is the signature match to the back of the card. There is no such security on the paypass. The big corporations are forcing a card on the consumer and making the consumer responsible for the liability.

    Of course, you say, we are not being forced. We can cancel the card. Canadian Tire has thought the process through and knew there would be a reaction from the public. So they have added a bonus to this new card — there will be “Cardmember Exclusive offers”. No card, no exclusive sales. Shopping at Canadian Tire to Canadians is like ice hockey to Canadians, a way of life.

    If the public want the paypass, fine. But the public should not be forced to have this additional service.

    Does the public have to accept this? What is your opinion on this?

    Have spoken with a few financial people and come up with a solution to this Corporate tactic. Keep the new Options card, but forward a registered letter to their financial department stating authorization for credit limit is only $200.

    Consumer has a card for “cardholders exclusive offers,” but credit card company receives very little, if any, interest income.