After reading about the great credit card debate, one of my friends wrote me about some hijinks her credit card company have been pulling on her:
Generally all of my due dates have been around the 19th of the month, but in December one of my cards moved to the 13th. Then this month, the due date was the 11th – a whole week earlier than my original due dates.
Of course I am a normal American who only gets paid 2x a month, so if the payment due date suddenly gets moved to before I get paid, then I’m in trouble! I called the company and they waived my fees and changed my due date. But when I asked them to please explain why my due dates were changing so rapidly, he looked into it and found that the company had changed its policy a few months ago.
Previously they had a 25 day billing cycle, and had now moved to a 20 day billing cycle! I told him that was persecutory because I don’t even have 3 weeks to receive the bill and pay it! He gave me another department to talk to about changing the billing cycle, but I told him that if it doesn’t change that I will no longer use the account.
Why do credit card companies pull this kind of thing? Obviously it makes them more money on interest and late fees, but it also loses them customers.
One money myth to explain this is that good customers who pay their bills on time (and who carry no balance or a very small one) make the credit card company lose.
True, they’re not as profitable as people who are constantly accruing lots of interest or don’t pay their bills on time and get lots of late fees. But for every purchase you make with a credit card, the company gets to take something like 3%.
So suppose that I’m one of those people who does all their monthly spending on the credit cards (for rewards purposes) and then pays it off at the end of the month. If my monthly spending is around $2000, then the credit card company makes $60 off me each month. Which comes to $720 each year.
Not great, but they’re getting money from the account nonetheless.
The company may be getting even more from my friend if she carries a balance. Why risk her business? Their loss, I suppose, and her gain–since she also asked me which of Dave Ramsey’s books I’d recommend…and we all know where that leads.
Edit: It was Bank of America that did this, btw, my friend updated me on that.
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