Why doesn't this credit card "scam" get any attention?

[Riprorin]

I think at least there should be an easier way of paying off the interest without having to contatc the CC company and stop using the card until the interest charge clears.

 

[kranky]

I am first in line to bash banks, but I can't fault them for what happened. Almost every card charges interest from the date of withdrawal on a cash advance. And the bank has no way of knowing you used the wrong card.

I'm not saying you're stupid for what you did - it was an accident, for sure. But as hard as I try I can't see where there is any hint of scam at all. I don't understand what you think should have happened instead. When banks used to give a grace period on cash advances, the "hot dealers" would charge up their limit in cash, deposit it in the bank to get the interest, then rotate the balance around all the cards they had. That was the equivalent of a interest-free loan for as much as the credit limit would give you. Once that started happening, the banks shut down that loophole. And that meant interest had to accrue from the date of the cash advance.

 

[Mill]

Originally posted by: RossMAN
How is this a SCAM? I work for one of the top 10 credit card issuers in the USA.

It's HUMAN ERROR or a misunderstanding on your part, whether you agree with me or not:
1) It's YOUR fault that you used a cc instead of an ATM/debit/check card at the ATM.
2) Your credit card agreement clearly states that cash advances (which you did) accrue interest immediately instead of the usual 25 day grace period for regular purchases.

 

[Oakenfold]

You screwed up, why does the CC company have to pay for your mistake?

Originally posted by: RossMAN
How is this a SCAM? I work for one of the top 10 credit card issuers in the USA.

It's HUMAN ERROR or a misunderstanding on your part, whether you agree with me or not:
1) It's YOUR fault that you used a cc instead of an ATM/debit/check card at the ATM.
2) Your credit card agreement clearly states that cash advances (which you did) accrue interest immediately instead of the usual 25 day grace period for regular purchases.

Rossman nailed it SOLID

No telling how many cash advances I do in a given day for members at my credit union.
To prevent this I suggest that you
A. CHANGE YOUR PIN NUMBER FOR YOUR CC so it is something different from your ATM card. This will prevent you from using your CC as an ATM card.

There's no one to be mad at but yourself here, you made a mistake, get over it and move on.

 

[Riprorin]

Originally posted by: kranky
I am first in line to bash banks, but I can't fault them for what happened. Almost every card charges interest from the date of withdrawal on a cash advance. And the bank has no way of knowing you used the wrong card.

I'm not saying you're stupid for what you did - it was an accident, for sure. But as hard as I try I can't see where there is any hint of scam at all. I don't understand what you think should have happened instead. When banks used to give a grace period on cash advances, the "hot dealers" would charge up their limit in cash, deposit it in the bank to get the interest, then rotate the balance around all the cards they had. That was the equivalent of a interest-free loan for as much as the credit limit would give you. Once that started happening, the banks shut down that loophole. And that meant interest had to accrue from the date of the cash advance.

Fine, I screwed up and I'm willing to pay the consequences.

But, I pay my balance off every billing statement and I've gotten interest charges for three consecutive months after the cash advance.

The only way, as far as I can tell, to pay off the loan completely is to call the CC company, get the balance, pay it off, and then not use my card until the interest charges clear. I'm not even convinced that this is foolproof.

How is this right?

 

[kranky]

Now I understand. If you are saying that by paying your balance in full on the following statement, you should have been done with the interest charges, I agree.

RossMAN, since we all agree interest will be charged from the transaction date on a cash advance, what do you have to do to end it? I've never taken a cash advance on a CC.

 

[Devistater]

Originally posted by: kranky
Now I understand. If you are saying that by paying your balance in full on the following statement, you should have been done with the interest charges, I agree.

RossMAN, since we all agree interest will be charged from the transaction date on a cash advance, what do you have to do to end it? I've never taken a cash advance on a CC.

I think the easiest is to call them on the day the bill hits your place, ask what the new balance that you owe is, and pay them some extra dollars than that. Or if you have online features, check your balance online.

For instance, say your bill says $450, and you call them and they say the current balance on your account is $475. I'd send them a $500 check. Any extra you pay is put towards your next months bill.

Maybe there's a way to get them to put your payment towards paying off the cash advance FIRST then the rest of the stuff, but I doubt it. The policy is probably to pay the cash advance last with the money you send them so they can keep making money off the interest.

Yeah it sucks, but I dont think there's anyway to get out of it. Personally I'd think about changing your pin (you mentioned they were both the same). Maybe reversing your normal pin numbers on the credit card one so you dont make the same mistake again. Then it would still be easy to remember, but if you put the wrong card in and tried your normal pin you'd realize the problem.

 

[Riprorin]

Yup, changing the PIN is a good idea.

I overpaid the amount on my balance by $30 and it still didn't erase the interest.

So far, I've paid about $12 in interest for a $120 cash advance in mid-February.

 

[RossMAN]

Originally posted by: kranky
Now I understand. If you are saying that by paying your balance in full on the following statement, you should have been done with the interest charges, I agree.

RossMAN, since we all agree interest will be charged from the transaction date on a cash advance, what do you have to do to end it? I've never taken a cash advance on a CC.

I don't quite understand your question.

First you have to ask your credit card company how are your payments applied first, there are 4 types of charges as I see it:
1) Fees, late fees, annual fees and over the limit fees
2) Cash advances
3) Regular purchases
4) Balance transfers

Let's assume the only charges you have on your cc are from cash advances of $200.

5/10/2003 cash advance of $200 from an ATM
5/20/2003 10 days of interest have accrued

Obviously if you mail off a payment it will not arrive and be applied on 5/20/2003 so the only two possible solutions I can think of are:
1) Payment over the phone with a live CSR, they debit your checking account over the phone there is usually a $10 fee for this service.
2) Online banking, for instance ... CitiBank will apply your payment the SAME DAY if you pay it before 1:00 PM EDT.

 

[Devistater]

Originally posted by: RossMAN

Originally posted by: kranky
RossMAN, since we all agree interest will be charged from the transaction date on a cash advance, what do you have to do to end it? I've never taken a cash advance on a CC.

I don't quite understand your question.
Obviously if you mail off a payment it will not arrive and be applied on 5/20/2003 so the only two possible solutions I can think of are:
1) Payment over the phone with a live CSR, they debit your checking account over the phone there is usually a $10 fee for this service.
2) Online banking, for instance ... CitiBank will apply your payment the SAME DAY if you pay it before 1:00 PM EDT.

Rossman, I think this is what he's asking about. How to conquer the balance change between when you mail it off, and they process and get it.

I dunno why debiting your checking account would be an extra fee those, those EFT (electronic fund transfers) are usually free aren't they? Between banks I mean? (example is paypal EFT to put funds into your paypal account, there's no surcharge there). Of course its probably just a way for the card company to get a few bucks off of you 🙂

BTW, am I correct in assuming that if the payment was short, they would apply the money to a regular credit card charge FIRST, and leave the cash advance and interest to be the unpaid part?

 

[Whisper]

Yep, cash advances are always paid off last, not first...largely because they have the higher interest rates, and as such the CC company makes more off of them than a regular debt. That's all in the fine print of the card user agreement, though.

 

[RossMAN]

Originally posted by: Devistater

Originally posted by: RossMAN

Originally posted by: kranky
RossMAN, since we all agree interest will be charged from the transaction date on a cash advance, what do you have to do to end it? I've never taken a cash advance on a CC.

I don't quite understand your question.
Obviously if you mail off a payment it will not arrive and be applied on 5/20/2003 so the only two possible solutions I can think of are:
1) Payment over the phone with a live CSR, they debit your checking account over the phone there is usually a $10 fee for this service.
2) Online banking, for instance ... CitiBank will apply your payment the SAME DAY if you pay it before 1:00 PM EDT.

Rossman, I think this is what he's asking about. How to conquer the balance change between when you mail it off, and they process and get it.

I dunno why debiting your checking account would be an extra fee those, those EFT (electronic fund transfers) are usually free aren't they? Between banks I mean? (example is paypal EFT to put funds into your paypal account, there's no surcharge there). Of course its probably just a way for the card company to get a few bucks off of you 🙂

BTW, am I correct in assuming that if the payment was short, they would apply the money to a regular credit card charge FIRST, and leave the cash advance and interest to be the unpaid part?

EFT/ACH transactions are free however those are automatic re-occuring monthly transactions.

Unfortunately with cash advances EFT/ACH doesn't work unless you 1) do a phone payment which most banks will charge a $10 fee or 2) do it online like CitiBank.

 

[Riprorin]

Originally posted by: Whisper
Yep, cash advances are always paid off last, not first...largely because they have the higher interest rates, and as such the CC company makes more off of them than a regular debt. That's all in the fine print of the card user agreement, though.

I'm not disputing that it's in the fine print.

The question is, is this practice "right".

My personal opionion is that the practice is wrong and banks shouldn't be allowed to calculate interest in this way.

 

[Devistater]

Originally posted by: Riprorin

Originally posted by: Whisper
Yep, cash advances are always paid off last, not first...largely because they have the higher interest rates, and as such the CC company makes more off of them than a regular debt. That's all in the fine print of the card user agreement, though.

I'm not disputing that it's in the fine print.

The question is, is this practice "right".

My personal opionion is that the practice is wrong and banks shouldn't be allowed to calculate interest in this way.

I would contend that it IS permissible. Credit card companies have to pay extra to allow you to get cash from credit, so they pass that cost on. People have to pay for that priviledge. As for the order of paying off the resulting charges, that's pretty standard. If its THAT big of a deal to you, you could always try to call around and find a company that doesn't do it, and applies your check towards the cash advance first. There might be a couple out there. Personally, I ALWAYS read the fine print on things like a credit card agreement, and I read the stuff they send me all the time. So I generally know whats going to happen if I do stuff like cash advance, which is why I dont 🙂

Finally, companies are in the business to make money. Yeah it might be a bit greedy, but its life and its the free market. Companies will tend to make more money from paying down the cash advance last, so thats what they do. This particular practice doesn't strike me as something that should be against the law or regulations or anything especially since they tell you about it in advance. However, if you have a very strong opinion otherwise, you are welcome to lobby congress to try and pass one.

Oh, I thought of another alternative. I imagine you could call the credit company and tell them to disallow future cash advances from your card. I think they'd probably do that for you. Personally, like I suggested earlier, I'd change the pin to the reverse of what it is now so you won't accidently do it, and you'd still have it for emergencies.

 

[Riprorin]

Guess we'll have to agree to disagree.

There's no way it should be this difficult to pay off the interest charges. Why should you have to stop using your CC until the interest is paid off? How practical is that? The practice for caluclating interest on advances is is complete and utter nonsense.

Banks should not be able to get away with this crap.