Credit Card Advice From An Insider

Wanted to share this interesting post I found at DailyKos.com, courtesy of Lava20.


Who am I? My name is Nicole. I worked for the two largest credit card companies in the world. I worked in various departments, but the most important department I worked for was customer service. This advice is just one friend to another. It is based on my own personal experience with what does and doesn't work.

1. Protest every fee. Overdraft fees. Late fees. Call and ask for the fee to be waived. If you were late. Call. If they tell you no. Ask again. If they tell you no. Ask for a supervisor. Most fees can be waived. The times the bank will not waive a fee is if you are 60 days or more behind. Or if you are always over your credit limit. I promise you. If you are willing to spend the time. That fee will be waived. This works about 85% of the time. I'll be honest here. The only reason that they may not waive the fee is if you are over 30 days late in the last 6 months or over 60 days in the last 12 months. So catch up if you can. Then make that call. You might be part of that 15%.

2. Report your card as lost or stolen. WHAT? Yes. This goes for debit cards also. Once you give out your credit card number, you have no control over who has access to your information. How often? I do this twice a year. If you shop online a great deal, do it more often. I know no one who reads this surfs porn, but if one does do this, you might want to cancel your cards more often. It doesn’t effect your credit report any, if at all. As long as you’re not doing it every week on every card, you’re fine. This is also helpful to prevent id theft.

[Note from Your Credit Mama: If you struggle to pay your minimums or have a hard time keeping your account below the limit, DO NOT DO THIS. If you are late on your payment or over your limit or have an internal "credit score" too low, or bad credit elsewhere, when you call to do this, they will close your account since it was "stolen" but may NOT issue you a new card. Also, many card issuers now routinely issue replacement cards after a certain period of time.]

3. If the bank makes an error, it’s never in your favor. So don’t do any sort of direct authorization to your checking account. For example, you might give your checking account number and routing number so that the minimum payment will be charged every month. Not a good idea. Errors can happen. I have seen many times where the bank has charged the members account for the total credit card balance instead of the minimum balance. This causes the members checking accounts to become overdrawn. The bank may be required to reimburse you for their own credit card fees. But it is completely up to the credit card company if they pay your banks fees (overdraft fees, fees to the store you wrote the check to etc.) Don't risk it. Your best bet here: Use your personal banking account and sign up with your bank to pay bills online.

4. Do not sign up for anything the credit card company wants to auto bill you for. Save yourself the time and headache. Insurance. Fraud protection. This is a billion dollar industry. And normally you will get no benefit from it. In fact, you will most likely spend more time trying to cancel it than any benefit you will receive from it. I have yet to meet the person who saved time or money with a fraud prevention unit that they couldn't do on their own. If you want to, go for it. Good luck. You're going to need it.

5. The only thing that will save you money is time. You must call. Every single time. Program the customer service number to your credit card company into your phone. right now. You don’t have to have your credit card number to call. Have them look your account up by your Social Security Number or name. Call every month to ask for lower interest rates. To have fees waived. To check your balance. To lower your credit limit. For every little thing.

I want to give an example here. Two different accounts. One group of members have high credit limits, pay off their bill in full every month. The other group pays as much as they can every month and has interest fees. Who saves the most? The first. Why? Because they call. They will have us read off every damn purchase. They will have us explain in detail over and over again how the interest is calculated. They will stay on the phone for 30 minutes to get the $50 yearly membership fee waived. And you know what? It works. They get a free service, basically. And bravo. The credit card company expects this. They also count on you, the person reading this right now, to be the person who doesn't do this.

One other thing I would like to bring up with this diary. Sometimes things happen. For example, I’ve seen entire zip codes where card members statements arrive late. Thousands may not receive their statement in enough time to mail the payment. This is strange because it appears that most of these card members all live in the same zip code, or they may all hold Union cards (the highest interest rate and the most revolvers – people who carry balances.) This makes the card member late in sending in a payment. And wouldn’t you know it. Millions of late fees. Most call to have the fees reversed. That’s fine with the credit card company. Because they only really need 10% to not bother.

Did you just say 10%? Yes. That’s all they need really. It doesn’t cost them anything if you never call. In fact, they can save here too. What would a smart bank do?: on the days the late mailed statement arrives, make sure that is the day that most of your customer service representatives are off. That way people will have to wait longer to get through to a live agent. Many don’t want to spend their Saturdays waiting for a customer service rep to answer. So they hang up. BINGO that 10% just went to 12% now. Millions. So again. Read #1.

One neat trick credit card companies use is to shorten the amount of time you have to send in a payment. This varies by bank. Normally you want 25 days. I've seen as short as 20. Call. Ask them for a longer length of time to send you bill in. Even if you don't need it. Why have the bank earn interest on the money if you can?

One final word of advice. Try not to sign up for auto anything. Again, it is so very difficult to get things auto-billed to stop. The company might be great, but unless you are getting a huge discount, I wouldn’t take the risk. If you do insist on auto-billing make sure you do #2! And if you do have things auto billed...make sure it is to a debit or credit card. That way you can easily report it lost/stolen when your friendly everyday auto insurance company decides to raise your premiums and change from monthly to biannual.

Okay. I saved the best for last. Guess what will work more than all the other things listed her combined? BE NICE!!! W T F?!?! Yes, calling with a bitchy attitudes actually inspires a customer service representative to do the least they can for you. Now, I may be taking the 100th call for the day about the statement arriving late, and all 99 of them have been royal jerks...then I get lucky number 100...who has read this diary and might start off the conversation like this, "Thank you so much for taking my call, I really hate to call with this, but do you think you can help me out with this late fee..." Throw in the customer service representative's name, no matter how horrid, tell them you love that name...

That Visit to the Marriage Counselor May Hurt Your Credit Score

Same with a visit to a massage parlor, bar, tire and re-treading shop or billiard hall. Discrimination against consumers based on purchasing behavior is the heart of the issue in a lawsuit filed by the Federal Trade Commission against Atlanta-based card issuer CompuCredit Visa.

According to a report in Business Week,

The allegations, in part, focus on CompuCredit's Aspire Visa, a subprime credit card for risky borrowers. The FTC claims that CompuCredit didn't properly disclose that it monitored spending and cut credit lines if consumers used their cards at certain places. Among them: tire and retreading shops, massage parlors, bars, billiard halls, and marriage counseling offices.

"The company touted that cardholders could use their credit cards anywhere," says J. Reilly Dolan, assistant director for financial practices at the FTC. "What they didn't say was that you could be punished for specific kinds of purchases."

The algorithms for determining credit scores – and there are many different versions – are highly guarded. Your Credit Mama has outlined the basics of the FICO scoring model, which is based on things like debt utilization, on-time payments, etc. But it appears from this lawsuit that there are many undisclosed variables that can have a negative impact on your financial profile. If you've always suspected that purchasing behavior – not just payment history – influences your credit score, this case may prove you right.

The Federal Deposit Insurance Corp. is also seeking $200 million in penalties from CompuCredit in the matter.

First, Thieves Steal Identities. Now They Steal Homes.

The Chicago Tribune recently investigated an FBI report on new identity theft tactics being used by thieves to "steal" your home.

The report warns of several ways in which people have been conned out of their homes. While thieves generally target vacation homes or empty homes, the FBI has investigated sales of occupied houses. By law, as the rightful owner, you won't lose your house as long as you have proof that you are the legitimate owner. But it's likely to cause an enormous expenditure of time and money.

Among the cases being investigated by the FBI:

• Con artists "stole" an occupied house and sold it to someone so enamored of the great price is getting that he's satisfied with online photos.
• Thieves posed as the rightful owner and took out home equity lines of credit against the property, draining it slowly so it wouldn't be detected.
• Thieves deposited proceeds from an illegal loan into a business account to get under the lender's radar.
• Cons changed the title of a house to his name and sold the house.

All of the schemes involved using the owner's personal information to create fake IDs and Social Security cards so that the thief can file the papers to complete and/or transfer the property.

"In one case prosecuted by the feds, the ID thieves used the name-change mechanism offered to people who are getting married or divorced to obtain false driver's licenses, which they used to get Social Security numbers," the Tribune reported. In most cases, though, business records are the main source of private information theft.

A "red flag" rider to the Fair and Accurate Credit Transaction Act of 2003 was recently passed by Congress. This rider, which takes effect Nov. 1, 2008, requires any business that handles personal documents to develop a program to prevent ID theft. That includes financial institutions and creditors.

The guidelines say institutions should be on the lookout for actions such as:

• ID theft alerts from fraud detection services, customers, law enforcement agencies and others
• a credit bureau's notice of credit freeze provided to an institution along with the institution's requested consumer credit report
• an increase in credit report inquiries or other unusual patterns on a credit report
  the appearance of doctored or forged documents
• inconsistent information
• identifying information associated with known fraudulent activity
• use of a single Social Security Number or other identifying number used to open accounts under different names
• applicants failing to provide all required identifying information
• information supplied that is not consistent with existing information on file
• a new revolving credit account used in a manner commonly associated with fraud patterns
• an account used in a manner not consistent with established patterns of activity on the account
• mail sent to the customer's on file address repeatedly returned as undeliverable.

Sigh. Yet another good reason to check your credit report regularly.

WaMu Suspends $6 Billion in HELOCs

As banks look for ways to stop the bleeding and reduce their losses, WaMu has decided to tighten its purse strings by joining Bank of America, Countrywide, JPMorgan Chase and others in reducing or suspending home equity lines of credit (HELOC).

The amount of money that WaMu has eliminated is about $6 billion. The company cites those customers with declining home values and poor payment histories as primary targets for a HELOC reduction or suspension.

If you have had your home equity line of credit suspended or reduced, you will want to keep an eye on your credit score. That's because this type of action can increase your debt utilization ratio and drop your score significantly.

For example:

If you had a $25,000 credit line and you have used $10,000, your debt ratio is:

$10,000 (debt) ÷ $25,000 (total available credit) = 40%

But if the bank suspends your account to your existing balance, your debt ratio is maxed out:

$10,000 (debt) ÷ $10,000 (total available credit) = 100%

Since 30% of your credit score is your debt ratio, going from 40% to 100% debt ratio will not only decrease your financial flexibility but also your credit score.

There's No Substitute for Checking Your Bank Accounts

Fraud alerts can only do so much to protect you.

A recent identity theft victim discovered that fraud alerts -- while very helpful in guarding against thieves who try to obtain credit in the victim's name -- don't protect the victim 100% against financial losses.

Meet Patrick Grant. Patrick is a professor at the University of Virginia. According to a story in The Richmond-Times Dispatch, Patrick knew something was amiss when he found three letters in his mailbox that stated they would not raise his credit limit -- because he had never requested it. According to the report:

"Identity thieves in New York had opened a checking and savings account in Grant's name, aided by his Social Security number and a fake New York driver's license with his name on it. Using an online banking feature of the fraudulent checking account, the thieves hijacked Grant's existing Bank of America credit-card account... They drained Grant's credit-card account by authorizing cash-advance payments, which they then withdrew from an ATM. Over the course of nine or 10 days, the thieves obtained $22,000 with Grant's credit card."

While Patrick is not positive how his identity was stolen -- his information had been compromised several times in university-related data breaches -- the first thing he did was purchase credit monitoring and place fraud alerts on his credit file. But the thieves didn't try to use his identity to open new lines of credit. Instead, they just tapped into his existing credit accounts.

In November 2007, the Federal Trade Commission reported that 3.7 percent of all American adults -- or 8.3 million people -- had their identity stolen in 2005. These thefts totaled an estimated $15.6 billion in losses. And the numbers are increasing.

It's a good reason to keep a close eye on what's going on with your bank accounts.

Ain't Nothin' Like the Real Thing… But You Should Still Do It

Hey Credit Mama, is that Free TransUnion Score that I can get through the settlement my REAL credit score? --Eric

Well Eric, the short answer is "no." The score you will get if you take advantage of the TransUnion settlement (which provides most Americans with free credit monitoring services and unlimited access to their credit scores for a limited period of time) is TransUnion's proprietary "personal credit score."

As you know from my previous posts and webinars, credit scores are like wines – there are different varietals for different purposes. TransUnion's score is NOT the same score that lenders will see and use to evaluate you for loans.

But there IS a value to the settlement offer. That is, in an age where identity theft is one of fastest growing crimes in the world and that three-digit score means everything, you should know what is in your credit file in order to correct errors (and nearly eight out of 10 credit reports contain errors). It will also give you an opportunity to see how your actions (such as paying down debt or removing inaccurate, negative information) are impacting your score over a period of time.

In addition, it is believed that should enough people take advantage of TransUnion's offer, the monitoring services offered by the other credit bureaus (Experian, of FreeCreditReport.com fame, and Equifax) will be devalued. One of the biggest complaints by consumer advocates was the unwillingness of credit bureaus to include a credit score with the free credit report that they are legally mandated to provide each American every year. Given that credit scores impact interest rates on any type of loan you can get, insurance rates, and even job offers, it is practically a necessity to know what your score is. So far, selling credit scores and monitoring services has been a huge moneymaker for the bureaus – to the tune of $150 million for Equifax alone, an increase of 22 percent in 2007.

According to an article on msnbc.com, consumer advocate Ken McEldowney of Consumer Action "thinks if consumers who sign up for the free offer get an appetite to see their scores for free, perhaps people will no longer be willing to pay for them. The TransUnion settlement will obviously hurt that firm's ability to sell its credit monitoring product, which retails for about $10 a month. But McEldowney thinks it will also hurt sales of similar products by Equifax and Experian, too."

So spread the word… and start checking the http://www.listclassaction.com/ Web site on June 16, 2008.

Encore! TransUnion Class Action Settlement #2

The beleaguered credit reporting giant TransUnion has agreed to another settlement, this time to end litigation* that alleges they violated the Credit Repair Organizations Act (CROA) when they marketed and sold their credit score and credit repair products.

If at anytime between Dec. 1, 1999, and April 16, 2007, you used credit monitoring services provided by TransUnion or TrueLink, you are entitled to receive three months of credit monitoring services for free from TransUnion. This will give you unlimited access to your credit report and credit score.

To qualify, you will need to submit an authentication form by July 22, 2008. The form, which can be printed and mailed or filed electronically, is available at www.townessettlement.com/claim.php3.


*Townes v. TransUnion, LLC and TrueLink, Inc.

Get Your No-Strings-Attached Credit Score Thanks to TransUnion Settlement

If you had any type of loan account between January 1987 and May 28, 2008, you are entitled to learn your credit score – free of charge – and get at least six months of a monitoring service from credit reporting giant TransUnion. The monitoring service would provide e-mail notification of late payment reports or accounts opened in your name – red flags that would indicate identity theft.

More than 160 million Americans are expected to benefit from the proposed settlement – the largest class action settlement in U.S. history, according to Peter Chapman, editor of the Class Action Reporter.

Under the settlement (which is expected to be officially approved in September), consumers would be able to select one of two options:

• A basic service would provide free credit monitoring for six months. It normally retails for $59.75, according to the settlement. Those who select this service can also apply for a cash payment, which would be paid out of any remaining money in the $75-million fund after two years. (Although Your Credit Mama seriously doubts that there will be any money left in the kitty.)
• An enhanced service would provide nine months of free monitoring, plus use of a "mortgage simulator" that lets consumers see whether improving their credit score would affect their mortgage rates and how much they could save if it did. This option also includes access to one's insurance score, which is used by some insurers to set rates. The settlement values this option at $115.50.

BONUS: there are NO strings attached. A credit card number would not be required to sign up for either service. After the free service ends, TransUnion could not charge for an extension unless it was requested by the consumer.

The lawsuits came about because TransUnion – through a subsidiary company – sold consumers' private credit data to retailers and lenders that wanted to market to select types of customers. Federal law prohibits the sale of credit data except under certain circumstances – such as when the consumer applies for a loan.

You can register your claim beginning June 16 by visiting www.listclassaction.com or calling 866-416-3470. (As of today, the Web site is not up yet.)