Finance

Do you ignore those fine print notices that credit card issuers send out from time to time?  They are often accompanied by a letter that says there will be a “change in terms,” but it leaves the details to the fine print enclosure.

“Change in terms” is bank speak for a price increase or change that is not in your financial best interest. If they were lowering your rates or easing any terms, they would boast about that in the letter.

Many [but not all] Chase credit cardholders just received an “IMPORTANT NOTICE OF CHANGE IN TERMS AND RIGHT TO OPT OUT” in the mail. For those who did not take the time to read it, here is the bad news and the good news:

*MOUSE PRINT: Your default interest rate is going up to 32.24%. But… you don’t have to pay it if you send them a letter by November 23 opting out of the change.

[The default interest rate refers to the penalty APR that will be used to calculate your finance charges if you pay late, are delinquent, or speak ill of the credit card company to your friends.] 

This notice is unlike similar notices in that your account will not be closed if you reject the changes. But like similar notices, they don’t tell you what the current terms are, so you can’t compare old with new.

It does appear, however, that in additional to raising the default interest rate, they are adding terms of when the default rate will be triggered. (For example, a default late in the month will be treated as if you defaulted on the first day of the billing period.)

Another change that is not obvious because the prior terms are not restated is the apparent lifting of the cap on balance transfer fees. In the past, on some Chase cards, the maximum fee  you could be charged was $75. Soon it will be unlimited.

Since most people have ignored this notice, they don’t realize the once in a blue moon opportunity they have been given to opt out of certain of the new provisions (APRs and default rules). Their silence will constitute acceptance of these terms, including the new 32.24% default interest rate. All that because they didn’t take the time to read the mouse print.

Wow. Where most accounts today earn only a few percentage points of interest, this bank is offering a rate from yesteryear: 10.38%.

Are you going to make a killing with this interest rate?  Don’t bank on it.

For one, you have to visit a particular branch of West Gate Bank in Lincoln, Nebraska.

What else?

*MOUSE PRINT: “Minimum and maximum amount of $500 only.”

So how much money are we talking about really earning here? Six months’ worth of interest on $500 is approximately $25.95 (maybe a bit less). At their regular rate of interest (4%), you would earn about $10. So despite the attention grabbing headline of 10.38% interest, this offer is worth less than $16 in extra earnings.

 

Everyone has heard of credit cards that earn rewards. Now Washington Mutual is introducing a debit card that earns cash rewards with every purchase.But exactly how much do you get back?

*MOUSE PRINT: “Free Gold Debit MasterCard® with Rewards—get a $.03 reward for each debit purchase transaction up to $250 per year**  **Applies to purchases made by phone, online, in person or by mail. If your account is open and in good standing on your anniversary date, you’ll receive a $.03 reward for each Debit MasterCard purchase transaction made within the last year up to a $250 reward.” [Washington Mutual website, May 16, 2006]

Thinking it must have been a typo, I read the disclosure to mean that you got back three percent (not three cents) for every purchase using their debit card. How generous!  To double-check, I called WaMu’s customer service department. They explained that with every purchase you indeed would get back three cents.

MrConsumer asked: “Now let me get this straight, if I buy a $1000 refrigerator, you are going to give me back three cents?”

Customer service representative: “Yes.”

How generous, and what a great incentive to switch to WaMu. In order to receive the advertised maximum rebate of $250 per year, one would have to make 8333 separate purchases. A snap.