FIRST USA NAILS good customers.....

In the San Francisco Chronicle today - FIRST USA REDUCED the 25 grace period to 20 days FOR their BEST CUSTOMERS - that pay off the balance each month.

Apparently, they DID NOT DISCLOSE to customers -
this investigator called them.

FIRST USA is hoping for LATE CHARGES.

www.sfgate.com


Sounds like the old FLEET MGMT has a new source of revenue - which DOES NOT NEED TO BE DISCLOSED.

Chumps.

grrrr - dogman

 

HERE IS THE STORY!!!!

Here is the actual story - hmmm - doesn't First USA use the 2 tier interest method?

ARE YOU AFFECTED?????

aarrfff - dogman

Allen Kanner, a Berkeley psychologist, always paid his credit-card bill on time.

That, apparently, was a mistake.

Kanner noticed on a recent bill that the due date for his payment had changed. It was normally around the 20th of the month. Now it was the 15th.

The next bill was the same. And the next.

"I assumed there was some sort of error," Kanner told me. "I figured it was a computer thing, that five days had mistakenly been shaved from my grace period."

So he called the card company, First USA, the nation's largest issuer of Visa cards, and explained the situation. He asked to have his five days restored.

"The person who answered the phone said that because I'd been paying my bills promptly for a long time, they'd reduced my grace period from 25 to 20 days," Kanner said.

He asked if he was being penalized for being financially prudent.

"The woman couldn't really offer an explanation," Kanner said. "But she did say that because I was paying my bills regularly, they weren't making any money off me."

I called First USA to see if this was indeed the case, whether bill-paying customers were being given less time to hand over their cash than those willing to run up sky-high interest charges.

What do you know? It's true.

"We appreciate customers who pay their balances every month," insisted David Webster, a First USA spokesman. "And some customers like to carry a balance. We have different programs for different customers."

In other words, First USA is punishing people like Kanner for paying their bills in a timely manner.

"I wouldn't say that," Webster replied. "We have millions of customers. It makes sense that we'd have a number of different programs and strategies."

Yes, but some customers are being given 25 days to make payments, and others have just 20 days. How is that fair?

"I'm not going to get into the details of our strategies," Webster said.

He doesn't have to. The strategy for all credit card companies is to boost profit by encouraging customers to get deeper and deeper into debt.

According to the Federal Reserve, America's total debt -- including personal, business and government IOUs -- has soared to almost $20 trillion. The nation's debt grew at twice the rate in the second quarter of this year that it did in the first.

While some credit-card users, like Kanner, pay their bills regularly, most are carrying balances from month to month, and about half make only the minimum monthly payment required. Americans have almost $700 billion in credit- card debt rolling over from month to month.

The average U.S. household is saddled with $8,500 in credit-card debt, according to market researcher CardWeb.com. That's up from $8,367 last year.

Stephen Brobeck, executive director of the Consumer Federation of America in Washington, said an increasing number of card issuers are quietly narrowing customers' payment windows.

"The whole idea is to force the consumer to make late payments," he said. "It is the companies' goal financially to get as many customers as possible to carry balances."

First USA, with 53 million Visa cards in circulation, is in a state of transition. The company was acquired by Bank One Corp. in 1997 and will gradually fade into history as Bank One proceeds with plans to replace all First USA cards with Bank One plastic.

First USA's Webster said customers are informed in the fine print when they sign up for a credit card that they will have between 20 and 25 days to pay their bills without racking up huge interest charges.

Annual credit card interest rates, once you get past the come-and-get-it introductory charges, averaged 14.7 percent Thursday.

Webster said it's up to First USA whether a customer receives a grace period of 20 or 25 days, and that different customers qualify for different intervals.

"If people are getting less than they were before, it's still a good value for customers," he said.

Consumer activists say cardholders need to be vigilant for any changes in their bills that could lead to higher charges.

"My generic advice is to always pay your bills as soon as possible," the Consumer Federation's Brobeck said.

He and other activists also encourage consumers to resist the myriad come- ons mailed out by credit-card companies and to limit themselves to just one or two pieces of plastic.

The federation estimates that a staggering 5 billion solicitations were sent out by credit-card companies in the 12 months that ended March 31. More than 1 billion were mailed in the first quarter of 2002 alone.

Perhaps not coincidentally, a record 400,686 bankruptcies were filed in the second quarter of this year, placing the country on track to break last year's total of 1.49 million.

Kanner said that while he can understand how companies like First USA are eager to make money, it's surprising that they would treat customers with seeming disdain.

"When they changed the grace period without telling me, I found it a disservice to a customer in good standing," he said. "It's evidence that this was all very underhanded."

So how has Kanner responded? Will he cancel his First USA card, which he uses to accrue airline miles?

Kanner has decided not to budge.

"The best revenge," he said, "will be for me to stay with them and continue paying off my credit card in a timely fashion."

 

QUOTE OF THE WEEK.....

My last post here - but is this the quote of the week or what????

FROM FIRST USA SPOKESPERSON:

"If people are getting less than they were before, it's still a good value for customers," he said.


aarrfff - dogman

 

Re: QUOTE OF THE WEEK.....

arf arf yup arf
but at Harrahs - free

aarrfff - dogman