With rulings against American Express and Discover Card in recent weeks causing a slew of headlines about credit card companies and deceptive practices, customers might be left believing that all credit card companies are crooked, and vowing to steer clear of them, but the fact is, if consumers simply practice some simple cautionary guidelines, they are unlikely to fall prey to unscrupulous marketing practices.
Credit cards are an essential financial tool that no one should be without, but like any tool, they should be used with caution. It’s easy to get in over your head, whether through deceptive marketing calls, misunderstanding offers, or just spending more than you can afford and racking up interest charges.
Deceptive Practices and How to Avoid Them
The heat has been put on credit card issuers by the Consumer Financial Protection Bureau (CFPB), formed in July 2011 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
This week the CFPB, along with the FDIC and other federal agencies, successfully fined American Express for illegal practices over the last nine years, forcing them to pay back about $85 million in fees and rewards to disgruntled customers.
The week before, Discover was ordered to pay out $200 million to cardholders for signing them up for credit protection services that weren’t fully explained by telemarketers who talked fast to get customers to sign up, then got charged monthly fees for the services.
In both cases, customers could have avoided being taken in by marketing schemes, just by following a few tips:
- Don’t answer the phone when your credit card company calls. Yes, you are their customer, and yes, they probably begin the call by asking if everything is all right with your account and whether you have any questions – but that’s just a prelude to a marketing pitch. If you have a question or issue with your credit card, always contact the company yourself. It’s that easy. Be sure to track your balance online or by calling your card’s automated system, read all mailings, sign up for text and email alerts, but when the phone rings unexpectedly, don’t answer it.
- Read the fine print. Yes, it can be a chore to wade through all those terms and conditions, but it’s important to know what you’re signing up for. If a credit card promises you “$500 worth of rewards” it doesn’t necessarily mean they are going to send you a check for $500. If you have trouble understanding the legal mumbo-jumbo on your credit card or an offer you’re considering, email Credit-Land.com, where credit card experts will answer your questions and clarify terms.
- Keep spending to only what you can pay off in full each month. Overspending doesn’t even have to do with deceptive practices by credit card issuers – it’s just something that lots of people do, maybe because they think that low or zero –percent APRs are a good excuse to spend like there’s no tomorrow, or because times are hard. Still, it’s critical to remember that credit cards aren’t free money – they are a tool to help you manage your money. Getting travel rewards, or five percent cash back, is a nice bonus, but it’s not a reason to go crazy making purchases.