Caught Capital One's hand in my pocket

[Mary]

My Dh usually pays the bills so I rarely see them. He's retired and I'm still working so its worked fine for us. I'm the one with the master card, he has visa. All I do is check the statement for any unauthorized charges. We've gotten calls once in a while checking to see if the purchase was valid but other than that very little contact with them. We pay off the balance each month and go on our way. Last year I noticed a charge of over $12. I checked the last few months and there were these small charges of around $1. WTF. So I called them and basically was told that 5 months ago we were late with a payment and so were charged interest on the next 6 months. The only reason I noticed it was the previous month we had purchased appliances and went on our annual holiday. Needless to say I was not happy and asked where that was in their policy. On the back of the statement in tiny print of course. The kicker was that it was listed on every other statement, not even monthly. I know that we are a little lax BUT we are modest spenders and don't really look at the fine print. I thought we would be paying interest on that month not for the next 6. But those are their rules and I made sure that all my friends knew about them. I really pity people who do not have financial management skills and the increaslying predatory practices of the market place. There is an ugly side to competition and the free market. I knew I was in trouble when I had to listen to a "value added" infomercial for an electric toothbrush from my dental hygenist on a portable DVDas we were waiting for the freezing to take effect. She sheepishly told me that the "doctor" was encouraging all their staff to do so. I didn't even change dentists because I think it is the sign of the times.

[ERD50]

Quote:

Originally Posted by Mary There is an ugly side to competition and the free market.

I think it is just the opposite. This is the ugly side of a non-competitive, relatively closed market. In a freer, more competitive market, suppliers can't get away with this junk. Buyers will flock to their competitors. There are too few credit card companies to provide a real competitive market.


Yes, I know, I am "banging the drum" again

-ERD50

[bbbamI]

Quote:

Originally Posted by ERD50 Yes, I know, I am "banging the drum" again -ERD50

Why not just bang a gong....

YouTube - Bang a Gong (Get It On) by T.Rex

[Rich_by_the_Bay]

Quote:

Originally Posted by Want2retire I am traveling to Oregon later this month, and put airline tickets on my debit Mastercard, for example. It functions just like a Mastercard in renting cars, too (as I discovered, much to my chagrin, when I accidently handed the rent-a-car girl my debit card instead of my government credit card when traveling for work a few years ago - - what a mess that was to untangle!).

Just curious: if you use a debit card to rent a car, do you get the insurance coverage that often comes with using a credit card? Any idea? I always turn down the rental agencies' abusive insurance option.

[Texas Proud]

Quote:

Originally Posted by kyounge1956 I think you just agreed with me. I don't have a B of A credit card, I have a Bank of America checking account with a linked Visa logo debit card, and I think of that as doing business with Bank of America, not with Visa. As you say, I am not borrowing money from Visa. I don't get a statement from them. AFAIK, the only thing I get from Visa is their name on my card. Also AFAIK, Bank of America—the savings and checking operation—doesn't encourage people to run into debt or do the other things I object to. But if you've got evidence that they do, it'll be bye-bye B of A, hello credit union or some other bank.

No we do not agree.... you seem to think that a BofA Visa card is doing business with Visa.. it is not... it is doing business of BofA... so in your example.. if you had a BofA CC, or a BofA debit card there is no difference in the company you are doing business with... Visa gets money from the bank for using their logo, from both the CC and debit card.. but that is all....

So you are doing business with that company you hate so much... and BofA does do predatory pricing...

[eridanus]

Has anyone had a CC company send out a 1099 for rewards? Specifically, rewards >$300 annually?

[ERD50]

Quote:

Originally Posted by eridanus Has anyone had a CC company send out a 1099 for rewards? Specifically, rewards >$300 annually?

Interesting, but no. Tax free money - yeah!!!

In the vein of some of those posts trying to calculate the "investment return", I've decided to look at it as just a x% discount on the purchase (plus float invested). So you also would not get a 1099 for buying something priced at $1,000 on a 30% off sale and "saving" $300 either.

-ERD50

[calmloki]

Quote:

Originally Posted by ERD50 Interesting, but no. Tax free money - yeah!!! In the vein of some of those posts trying to calculate the "investment return", I've decided to look at it as just a x% discount on the purchase (plus float invested). So you also would not get a 1099 for buying something priced at $1,000 on a 30% off sale and "saving" $300 either. -ERD50

There you go! In that vein, while Franklin held that a penny saved is a penny earned, a dollar saved now is about the equivalent of $1.35 earned thanks to tax load, so saving trumps earning.

I'm investing heavily in birdseed - it's on sale by the hundred-weight - if I buy a ton I'll save enough to buy a budgie. (citation for that comedy routine?)

[samclem]

Quote:

Originally Posted by eridanus Has anyone had a CC company send out a 1099 for rewards? Specifically, rewards >$300 annually?

Great. Thanks a lot. Congress is scrounging around for every possible way to vacuum up more money and you had to bring this up. I expect you'll get a Medal of Freedom for this contribution.

[Nords]

Quote:

Originally Posted by eridanus Has anyone had a CC company send out a 1099 for rewards? Specifically, rewards >$300 annually?

Boy, I sure hope not. We're over that after a home-improvement contractor let us juggle credit cards on his payments.

When I was doing 1099s for a non-profit few years ago the limit was "over $600". So even if rewards were considered taxable (instead of just a rebate) maybe that limit would apply.

[Bestwifeever]

If the people on this forum were the average consumer (because no one ever carries a balance or would admit to it ), there probably would be no credit card companies and for sure the rewards programs would be cut way back. Unfortunately you need something with the magic MC, Amex, Visa hologram in your wallet today.

But, like W2R, we have also been using cash, online bill payment from our checking accound, debit cards, and God help us even those old fashioned checks! for bills and purchase. Like the pay off the house vs. mortgage question, perhaps it's just an emotional decision but the rewards programs and the float are absolutely meaningless to us from a financial standpoint so why bother. But I understand why people enjoy the game.

[samclem]

Quote:

Originally Posted by eridanus Has anyone had a CC company send out a 1099 for rewards? Specifically, rewards >$300 annually?

Okay, this seems to be the answer (until Congress changes the rules to enhance revenue flow):

Quote:

The IRS states: A rebate received from the party to whom the buyer directly or indirectly paid the purchase price for an item is a reduction in the purchase price of the item; it is not an accession to wealth and is not includible in the buyer's gross income. Rev. Rul. 76-96, 1976-1 C.B. 23; Rev. Rul. 84-41, 1984-1 C.B. 130.

No taxes due--it's a reduction in purchase price.

[Martha]

Quote:

Originally Posted by ERD50 I think it is just the opposite. This is the ugly side of a non-competitive, relatively closed market. In a freer, more competitive market, suppliers can't get away with this junk. Buyers will flock to their competitors. There are too few credit card companies to provide a real competitive market. Yes, I know, I am "banging the drum" again -ERD50

Credit card companies are mostly unregulated as they base themselves in friendly states and can operate nationally. So it isn't a case of having an "unfriendly" regulatory environment.

Changing how interest is calculated is not likely to result in a significant number of new customers or the loss of a significant number of customers. So, competition may be close to irrelevant on this issue. Partly this is because any complicated service is very hard for people to evaluate. You are supposed to work 40 hours a week or more, raise your family, etc. and yet be a good and knowledgeable consumer of all things ranging from cell phone plans, credit cards, health care, and retirement plan options. People get paralyzed by the multitude of decisions and end up not reading the credit card fine print, don't read their mortgages, and they pick one option in a retirement plan and never look again.

[growing_older]

Quote:

So I called them and basically was told that 5 months ago we were late with a payment and so were charged interest on the next 6 months.

This kind of policy or treatment would either be re-credited to my account, or I would leave and take all of my banking related services elsewhere at the earliest opportunity. I doubt I'm all that big of a fish, but I do try to do my banking at the same bank with my credit card, so I like to think I have some leverage or at least can achieve some personal satisfaction if I have to vote with my feet. I have left a bank over poor customer service and nuisance fees. I have left a bank when they moved to double cycle billing and I couldn't get them to grandfather the single cycle billing I had signed up for. OTOH, I have gotten great service in disputing charges and in reversing odd bank "so you are still breathing" fees that show up from time to time. I sometimes think some of the fees are a game - the bank levies them knowing that a certain percentage of folks will just pay - but they are perfectly willing to reverse them for anyone who notices or complains. Ridiculous fee times percentage of folks who will pay makes for new profit center seems to be a way to generate new revenue for the bank that they are willing to experiment with.

[Martha]

Quote:

Originally Posted by growing_older This kind of policy or treatment would either be re-credited to my account, or I would leave and take all of my banking related services elsewhere at the earliest opportunity. I doubt I'm all that big of a fish, but I do try to do my banking at the same bank with my credit card, so I like to think I have some leverage or at least can achieve some personal satisfaction if I have to vote with my feet. I have left a bank over poor customer service and nuisance fees. I have left a bank when they moved to double cycle billing and I couldn't get them to grandfather the single cycle billing I had signed up for. OTOH, I have gotten great service in disputing charges and in reversing odd bank "so you are still breathing" fees that show up from time to time. I sometimes think some of the fees are a game - the bank levies them knowing that a certain percentage of folks will just pay - but they are perfectly willing to reverse them for anyone who notices or complains. Ridiculous fee times percentage of folks who will pay makes for new profit center seems to be a way to generate new revenue for the bank that they are willing to experiment with.

But they may not even want to keep you. You probably pay off your card in full most of the time and you are crabby when they try to squeeze extras out of you.

[ziggy29]

Quote:

Originally Posted by Bestwifeever But, like W2R, we have also been using cash, online bill payment from our checking accound, debit cards, and God help us even those old fashioned checks! for bills and purchase. Like the pay off the house vs. mortgage question, perhaps it's just an emotional decision but the rewards programs and the float are absolutely meaningless to us from a financial standpoint so why bother. But I understand why people enjoy the game.

In most of these intractable "financial controversies" there is a tradeoff between financial security/certainty and potential for bigger gains doing something that makes people nervous.

In those situations, I think it would be nice if we could accept that different people have different personal "comfort zones" and place different values on the tradeoff between financial security and financial potential and leave it at that. Wishful thinking, I know...

[ERD50]

Quote:

Originally Posted by Martha Changing how interest is calculated is not likely to result in a significant number of new customers or the loss of a significant number of customers. So, competition may be close to irrelevant on this issue. Partly this is because any complicated service is very hard for people to evaluate. You are supposed to work 40 hours a week or more, raise your family, etc. and yet be a good and knowledgeable consumer of all things ranging from cell phone plans, credit cards, health care, and retirement plan options. People get paralyzed by the multitude of decisions and end up not reading the credit card fine print, don't read their mortgages, and they pick one option in a retirement plan and never look again.

It might seem that way, but I really do not think it is coincidence that in the areas where there really is competition, a lot of that fine print and confusion seems to magically disappear (the invisible hand?). Because no one will put up with it when there is a choice. And a competitor realizes that keeping things simple is attractive to customers.

At the grocery store, stuff is $X/pound or package. Pretty simple. Same at the gas pump, and I avoid the places with the fine print " with car wash purchase", because I have a choice.

Quote:

Originally Posted by Bestwifeever ... perhaps it's just an emotional decision but the rewards programs and the float are absolutely meaningless to us from a financial standpoint so why bother.

How is it meaningless from a financial standpoint? The thousands of dollars of rewards I have received over the years is very real. I really do get those $. I don't understand "meaningless"?

The float is harder to quantify precisely, but there is no doubt "real" value to that too.


-ERD50

[ziggy29]

Quote:

Originally Posted by ERD50 How is it meaningless from a financial standpoint? The thousands of dollars of rewards I have received over the years is very real. I really do get those $. I don't understand "meaningless"?

Translation: TO THEM the amount of money involved is insignificant compared to the peace of mind and financial freedom they feel in not playing the game.

Again, this is just one of those things where different people put a different value on financial peace and freedom. Some people are willing to sacrifice more "potential return" in exchange for avoiding risks they don't *need* to take to meet their financial goals.

To me? I'll take the 2% cash back into my Schwab account. But I'm just one person and I'm not going to "project" my point of view on the sense of security (and what they consider unnecessary risk-taking) that others may have.

[Bestwifeever]

Quote:

Originally Posted by ziggy29 In most of these intractable "financial controversies" there is a tradeoff between financial security/certainty and potential for bigger gains doing something that makes people nervous. In those situations, I think it would be nice if we could accept that different people have different personal "comfort zones" and place different values on the tradeoff between financial security and financial potential and leave it at that. Wishful thinking, I know...

(my bolding)--completely agree, Ziggy; our decisions are all made based on our individual criteria and mindsets and best to respect that others' needs and wants often differ.

[Martha]

Quote:

Originally Posted by ERD50 It might seem that way, but I really do not think it is coincidence that in the areas where there really is competition, a lot of that fine print and confusion seems to magically disappear (the invisible hand?). Because no one will put up with it when there is a choice. And a competitor realizes that keeping things simple is attractive to customers. At the grocery store, stuff is $X/pound or package. Pretty simple. Same at the gas pump, and I avoid the places with the fine print " with car wash purchase", because I have a choice. -ERD50

Did the fine print disappear? No, it never appeared. The question is why. Part of the reason is the difference between goods and services. You can buy a cd player for cash, no fine print to speak of. Buy the extended warranty and you are buried in fine print.

I know next to nothing about economics but I do know that even Adam Smith did not believe that free markets by themselves would lead to the best results. Credit cards are a good example. There was no government interference with credit card companies to speak of and yet you arguably ended up with an oligopoly.

From the wiki on the "invisible hand:"
The theory of the Invisible Hand states that if each consumer is allowed to choose freely what to buy and each producer is allowed to choose freely what to sell and how to produce it, the market will settle on a product distribution and prices that are beneficial to all the individual members of a community, and hence to the community as a whole. "

You could argue that this theory did not didn't lead to the best results in the credit card example. Consumers were allowed to choose freely what credit card service they wanted and anyone could start up a credit card company. But we ended up with mostly meaningless choices and sharp practices. Or, you could say that it worked perfectly. We got exactly what we want. Easy credit for just about anyone but the price is paying through your nose if you make one mistake. And for the players, they get cash back.


Transparency is close to meaningless without simplicity. Arguably, credit card terms are totally transparent but they are not simple. So why doesn't someone come into the market offering simple terms? When people ignore the terms anyway I question the ability for them to compete. Especially with services, it is easy for time to bring more and more complexity as perceived problems arise and are addressed. The problem of a complicated world is not insignificant.