by Tricia
I was alerted by a reader to a sneaky thing that a credit card company is doing to her:
“Currently [my] card has a balance of $5889.05 and usually has a minimum payment of $64 per month. I have an interest rate of 1% on this balance until next year. The finance charge last month was $4.87, I think this is a pretty good deal as it is at the moment. My statement arrived yesterday and because of my excellent payment history I have qualified for a special reduced minimum payment for this month. The exact offer is:
“Reduced payment offer: Regular payments will resume next month. Finance charges will continue to accrue. Paying only the reduced payment amount may not be enough to pay off your finance charges. Please remember to pay late fees.”
I thought it strange for a credit card company to appreciate my timely payments by asking for less money this month. I called. The friendly associate said that I could use that “extra” money toward a vacation! Wow a $49 vacation. Lucky me (note sarcasm). I think it is interesting because I think they are giving me a nudge to succumb to an impulse purchase which is how I got my debt in the first place. Temporary gratification now costs finance charges later! I know better and of course will not take advantage of the reduced minimum payment this month as I feel if I do, I would be the one taken advantage of.”
Wow. Not only they are letting her pay a reduced payment they are also charging finance charges during the reduced minimum payment time AND encouraging her to take a vacation!
I think this reader hit the nail on the head with saying that if she took advantage of the offer she would be the one being taken advantage of. Â If you receive an offer from your credit card like she did – follow her example and don’t take them up on it
Funny, I got the same message on my visa bill this month. I always pay this card off monthly – so I found the offer strange as well. Perhaps our credit companies are hurting for money.
Nah! – Scammers!!!
I used to get offers like this all the time from one of my credit card companies, though I can’t recall exactly who it was offhand. Actually, it was a better deal than this – no payment for the month (oh, but the finance charges continue to accrue, of course. in microprint.).
They probably still occassionally offer the chance up, but it’s been awhile since I’ve read through all the junk in my paper statements (outside of verifying that nothing that wasn’t posted online shows up).
I think credit card companies do this so that you have a higher balance at the end of the introductory (low interest rate) period. Thus, they get more money eventually.
I accept these offers and rather than using the money I save for a ‘$49 vacation’, I increse my payment to a higher-interest-rate credit card that month.
I got the same message a few weeks ago. Seems like the love using these tactics!