Finance

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“If Your Credit Card Expires, We’ll Charge it Anyway”

et bookTo entice people to sign up for an annual subscription to their Entertainment coupon books, the company recently offered an enticement: pay just $10.50 for the 2012 book (and agree to buy the 2013 book, and those printed in subsequent years, for $5 off when they become available).

Like a book club, they say they will give you advance notice before the new book is shipped and give you an opportunity to cancel. That’s fair and reasonable.

To prevent some clever consumer from just cancelling the future editions in order to snag a bargain on this year’s book, they buried in the fine print, this bit of protection for themselves:

*MOUSE PRINT:

6. If you cancel prior to receiving your first book through the Annual Renewal program (2013 Edition) your credit card will be charged a $5 cancellation fee.

That also seems fair, and the consumer is still getting a bargain price on the 2012 book.

What seems to cross the line, however, is this:

*MOUSE PRINT:

5. If your Credit Card reaches its expiration date, your failure to cancel after receipt of our notification will constitute your authorization for us to continue billing your card.

What? They are going to send you the book, knowing that your credit card has expired, and deem this fine print provision to be your authorization to engage in this questionable practice?

Somehow, I don’t think that Visa and MasterCard would look kindly on a company that deliberately puts charges on a card it knows is no longer valid.

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Suze Orman: Advisor or Pitchman?

Financial counselor Suze Orman just came out with her own prepaid debit card called the Approved Card.

It is a MasterCard that you can use in retail stores to make purchases, but only up to the amount you have deposited onto the card. It is promoted as an easier, smarter way to be debt-free. Upfront she touts that it costs “only $3 a month if you use it how I tell you to.”

The card’s homepage goes on to tout nine benefits of the card including “free Transunion credit score, reports, and monitoring”, “safer than cash”, and “teach your teens financial responsibility.”

A closer look at the fee structure reveals some costly provisions besides the $3 monthly maintenance fee.

*MOUSE PRINT:

CARD PURCHASE FEE — $3
ATM WITHDRAWAL FEE — $2 (if you do not have direct deposit)
OVER-THE-COUNTER CASH WITHDRAWAL — $2

While these fees are less than other competing prepaid cards, this whole genre of card is set up to cost you money rather than save you money.

Making a deposit via direct deposit or transferring money from your checking account electronically to the car is free. (But would someone really put their entire paycheck or social security check onto a prepaid card every month? And if you already have a checking account, might not a regular debit card or ATM card be offered by your bank for free?

*MOUSE PRINT:

Conspicuously missing from their fee list is the cost to deposit money onto your card at an ATM or in person at a store.

Apparently you can only add money at locations that support either Moneygram or Western Union payments. The cost, they say, is typically $3.00 – $4.95. Whatta deal.

Here is another surprise.

*MOUSE PRINT:

If you only read the headlines about the free TransUnion credit score, report and credit monitoring benefit, you may miss the fact that the service is only free for the first year. After that, if you want to keep it, it is $143.40 a year.

Lastly, Suze proudly proclaims:

*MOUSE PRINT:

As she admits in smaller print, debit card purchase information is not part of anyone’s credit report and does not affect your credit score. She merely has a desire to see whether providing card use and purchase behavior to Trans Union will be considered in the future as a predictor of creditworthiness. Put another way, Suze has put a clever spin on the fact that she is sharing your purchase history with an outside company.

Prepaid cards have become popular as moneymakers for issuers particularly since they fall through the cracks of federal reform legislation that covers conventional credit and debit cards. If you must have a prepaid card for some reason, a better choice is the virtually fee-free American Express prepaid card. There is no monthly maintenance fee. In fact the only stated fee is $2 for ATM withdrawals after your first free one each month. Depositing money at a retail location incurs the same approximately $4.95 charge as does the Approved Card.