Information Center – News and Articles about Credit Cards
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Retailers Force You to Spend More on Your Credit Card Deal?
Credit card holders, following financial experts' helpful advice, do their best to cut down their expenses to improve their credit history and be able to apply for better card deals. Credit issuers, meanwhile, bend over backwards to make you spend more to charge you higher rates and fees. And it will be like this as long as the two sides' interests keep colliding. But who is going to win this battle of interests? Let's try to figure it out.
Say, you are going through some hard times with your finances. You try to get out of debts, for instance. So, you practice self-denial in nearly everything, spend as little as you can on your credit card and buy mostly just essential goods. You have planned out your balances pay offs months forward and intend to make only minimum monthly payments on some of your plastics. And nothing seems to overshadow your perfect scheme. But...
What would you say having heard from a merchant that you cannot use your plastic at his or her store unless you spend some certain amount of money on your card? Something like, "Are you kidding me?" Yes, I agree. This kind of phrase would, probably, make me mad.
However, some card owners have experienced this. You can meet retailers that impose restrictions on the amount of money you are to spend at their store making credit card purchases. They set the lower limit of the sum you are to pay to be allowed to use your credit card. Other merchants introduce milder sanctions against their customers. They charge insignificant fees for small purchases. And some retailers persuade their clients into paying in cash for inexpensive goods.
The reason for that are high fees that merchants have to pay for money transactions. So, in order to cover extra expenses they set those credit card minimum purchases.
N.B. What you should know like the Lord's Prayer is that none of the above-mentioned restrictions and policies is legal. Top US credit card companies, Visa and MasterCard have officially announced that such abusive practices are forbidden by law. These actions could nearly be called extortion. But merchants pretend to be unaware of any official decisions and keep using their old tricks.
But in this situation you should fight for your consumer rights as you have the law and credit card issuers on your side. Actually, at the point of encouraging you to spend more on your plastic, card issuers did not go far from retailers.
They offer you different reward cards with considerably higher rates and fees. Offering you incentive programs, again, they make you spend more to earn reward points, air miles and so on. The difference is banks do it on a legal basis, and spending more money you get discounts and other bonuses in return.
And be careful when you shop online. You can come across minimum charges in the World Wide Web as well. This kind of online extra fees is also illicit.
So, during your next shopping spree check the amount of money charged for small purchases on your credit card. And look out for other retailers' tricks that could make you pay more. Remember, they do not have a right to charge you for your demands and their level, no matter how high or how low it is.
Most credit tips say that the sooner you pay off your credit card balance - the less money you will lose on interest. On-time payments will favorably bound back on your credit score and payment history. This kind of advice is what we all are used to hear and read on the Web, in financial magazines, in tips columns. But does this financial behavior model really have a positive effect on your FICO score and credit report?
How can it be questioned, you ask? A perfectly disciplined plastic owner that pays off his or her balance before a lender could say Jack Robinson. Is not it any creditor's dream? No, it is not always so. Let's find out why a lender would want a different behavior model from a borrower and when this kind of paying down debts can weigh heavily against a cardholder.
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There are a number of embarrassing situations that are just a nightmare for cardholder. Feel no wallet in your pocket just before the cash register? See some unauthorized charges in your credit report? Loose you wallet with all your plastics in it? Very soon we are going to have no fear of these things, thanks to amazing technical progress.
Indivos Corp. which majors in computer hardware and software development has been working on an electronic system for making payments over a number of years. The thing about this system is that it enables transactions to be made by scanning customers' fingertips. A number of retailers have already expressed interest in testing the new system.
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Active credit card use is a sign of a society with well-developed market relationships. More and more people get involved in buying goods and services with plastics. Using virtual funds to make real purchases is very convenient. But this extended buying power has led Americans to a dangerous trend. Over 40% of American households, according to the USA Federal Reserve statistics, spend more money than they make.
In the average, every American of these 40% spends $1.2 per every $1 he or she earns. Plastics have changed people's spending habits. These plastic devices allow and encourage people to spend more and more money. Around 18% of all purchases made by Americans involve credit card use. About 24% of the purchases are made with other types of plastics.
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If you are determined to eliminate your credit card debts and you have good credit, getting a balance transfer card is a good idea. You can shift your credit card balances with high interest rate to a card with much lower rate or 0% APR at all. But there is one thing that can reduce your profit from this kind of a deal. It is balance transfer fee.
Most balance transfer cards come with a fee for a transfer. Not long ago you could easily find a plastic for balance transfers with no fee. However, due to the credit card market crisis and economy slowdown, lenders have pulled these deals from the market. And now it is rather hard for a customer to find a balance transfer card that comes with no fee. But there are some ways to negotiate a better balance transfer deal.
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