Rant: Beware of Misleading Credit Card Offers

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Forgive me, but I really need to rant about shitty customer service. I’ve been burned bad by misinformation from ignorant and/or misleading reps. This time however, it involves our credit card company, Bank of America.

We received one of those offers where we can take a $10,000 loan for 6 months with no APR. Since we needed a short term loan we thought, “Hey, we’ll take that, use part of it, put the rest in the bank, earn interest on it, then pay it back in 6 months.”

Does a six month interest free loan of $10K sound too good to be true? We thought so. So we called customer service and double checked. We ran through various scenarios including asking,

So if we take this loan, and say make $1000 in purchases using our credit card, at the end of the month, if we only pay $1000 towards our credit card bill, we won’t have to pay interest, right?

The reply?

Yep

So we don’t have to pay the entire balance each month which would include this $10K loan, right?

That’s correct.

It’s a good thing we double checked today. It turns out in the fine print, “which we read multiple times”, there was this opaque clause that now makes sense since I know what it means:

By making a balance transfer and/or using these checks, you understand that future payments will be applied to Promotional balances prior to any existing or new regular balances on the account.

So simply put, if we take the loan, and make $1000 in purchases, and then pay $1000 towards our bill, we’ll now have $9000 as an interest free loan and a $1000 balance generating tons of interest.

Now you might say that’s what you get for not reading the small print. Perhaps. But it bothers me that the amount of effort they put forth into making the message clear that this is a “0% Promotional APR for 6 months!!!” dwarfs the effort to make the big catch very clear.

It was obvious to me that they want consumers to take the loan and then not be able to pay it off at the end of 6 months because they want interest paying customers. But I figured we’d be safe if we paid it off in 6 months. Not so. What infuriates me is that we called customer service and they egregiously misinformed us (which is a pattern with some other financial institutions I’ve dealt with).

In any case, we’ve figured out an easy way to take advantage of this offer and get a $10,000 loan free for 6 months. Simply take the loan with no balance on the card and stop using that credit card for 6 months till you pay it back. Use another card. I think it’d be great if thousands, nay millions, of people did just that and sent a big “Fuck You” to B of A. But that’s just me being vindictive. Not to mention I’d have to get a Slashdot sized crowd to read this. ;)

Ok, rant over. Thank you for your patronage.

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10 responses

  1. Avatar for Walt
    Walt March 31st, 2005

    Phil,



    Often with these promotions, you are required to make a minimum number of purchases in order to foil your most recent ploy to take advantage of that offer. I can't say if BofA includes this type of restriction in its fine print, but it is worth looking for it. Also, this looks like a classic "class action" lawsuit type situation. If Blockbuster can be successfully sued for its misleading no late fee policy, the credit card companies should not get away with a misleading no interest policy.

  2. Avatar for Haacked
    Haacked March 31st, 2005

    So Walt, you going to take this case and make us rich? ;)

  3. Avatar for da
    da April 21st, 2005

    I've gotten so tired of receiving credit card solicitations that at first I would simply rip them in half and toss them in the mail. What I do now, is return the postage paid envelope empty. So, now I enjoy receiving this junk mail for each day I have an empty envelope to return, sometimes 3. In this small way I get back at the credit card companies.

  4. Avatar for Haacked
    Haacked April 21st, 2005

    I like it. I think I'll fill the envelopes with confetti.

  5. Avatar for matt
    matt May 23rd, 2005

    BofA got me with a 7.99% that was really 18.7%, apsoluty nothing on the offer said anything but 7.99% WOW that is criminal and sign me up for that class action!

  6. Avatar for Pliskin
    Pliskin June 2nd, 2005

    I can empathise with these comments to a large degree. I would hope and even depend on the Representatives statements over the perplexing jargon that is seen in this fine print of Credit card fine print. I believe it is the jobs of our state and federal representatives to have credit card companies send out information that is "understandable by the normal person." Though I do have some buisness background and a college degree the language is such that, credit cards can change the rules at any time they want and/or make you pay a ton of money without you even realizing that this is infact a contract that you are signing off on. I have paid some attention to the rising trend of financial institutions and credit agencies. The biggest tip off are those asterisks ********** or there numbers that look like ^1 or ^2. These are indicative of "hey would you like to be screwed, come on sucker sign me, i am a liar and a thief?" Indeed I see this used with APR and FREE ****





    Secondly I am going to pick on CitiBank which has terrible customer service, and they give you offers then they decide not to give it to you. For instance they offered me to use my credit card 3 times and I would get a $5 credit to my account. You have probably recieved some sort of offer like this in the mail. Well they never sent me the money I complained opened an investigation, and no word so far. But for these two reasons I am going to pick on them.



    I picked a CitiBank credit card example for the asterisks example.



    " *The APR for balances transferred is 0%. Provided you keep your CitiBusiness® Card Account and Citibank Card Accounts in good standing, this rate will be in effect for 12 months from account opening. Thereafter, the balance transfer APR will revert to the APR then in effect for purchases. Purchase APR: the U.S. Prime Rate plus 4.99% (10.99% APR as of May 6, 2005). Cash Advance APR: 20.99%. If you fail to keep your CitiBusiness® Card Account or Citibank Card Accounts in good standing, the Default Rate equals the U.S. Prime Rate plus up to 23.99% (29.99% APR as of May 6, 2005). Min. Finance Charge: $0.50. For each purchase made in a foreign currency, we add an additional FINANCE CHARGE of 3.0% of the amount of the purchase after its conversion into U.S. dollars. This foreign currency transaction fee will be added to the appropriate purchase balance with the foreign currency purchase. The foreign currency transaction fee may cause the annual percentage rate on the billing statement on which the purchase made in a foreign currency first appears to exceed the nominal annual percentage rate. Transaction Fee for Cash Advances: 3% of the amount of each cash advance, $5 minimum. Transaction Fee for Balance Transfers: 3% of the amount of each balance transfer, $5 minimum, $50 maximum. However, there is no balance transfer transaction fee on balances you transfer in response to this offer. There is no annual fee."



    Of course this is just one I picked randomly and there are of couse many more complicated ones while this is in say size 6 font the free stuff is in say 22 font.





    Solution: To the credit card companies, Show me in clear non- technical jargon what I will have to pay in any and every circumstance and make it short.



    Due to the fact that I am not a politician I cannot change these rules nor an influencial part of the financial districts. All these are true but actions must be made or the 'little man" will be taken advantage of by those that wish to profit.

  7. Avatar for Bubba
    Bubba June 3rd, 2005

    I'm afraid I've never seen a credit card that didn't say that all payments made would go to the lower interest rate loan first. It's been that way since I actually worked for a credit card back in 1990. Same with cash advance vs purchase - cash adv usually has a higher 2nd rate than purchases, and all payments go to pay off purchases before cash advances. Only way to get rid of a cash advance rate is to pay the card off in full.



    I got one for you though that a credit card company tried to pull on me this year. I signed up for an Advanta card in 1/03. When I opened it, I was told the card was X% above prime (forget the exact). Used it normal till about 7/04, when I finally gave in and took them up on their millionth balance transfer offer. Don't you know, same month as I transfer in $1000's (went to like $9500 bal) with the promise of 0% interest for 6 months, my old balance (~$4000) gets shot up to 20%! It was 8-9% since the day I opened it, and now they were trying to take me for 20% after I paid them $50 to consolidate my cards!



    I tried for 3 months to get this reduced back where it was. I got every excuse in the book, including that I had missed a payment by a day somewhere. It was all BS, and I called them on it. That's when they came up with an excuse that they had sent me a letter saying I had 10 days to close the card or I accepted 20% interest from then on! They never sent me this letter, and they claimed it was too bad I didn't get it, but they wouldn't reduce the interest.

    I stopped paying them and sent them a letter saying they breached our agreement. They called every day trying to collect, refusing to drop the 20% interest. I still didn't pay. They never reported me to the credit bureau, so I couldn't sue them (no damages). Then at 7 months past due, they offered to "forgive" half the balance if I would just pay it and go away (they had paid collectors to call daily for 6 months, and would have had to pay even more for outside continued collection or lawyers). I walked away MAKING $4000 off of them without needing to go to court or hiring a lawyer, and they can't put it on my credit report.



    MORAL: they MUST inform you properly if they change your rate (on the statement). If they ever claim they sent it seperate, you can fight them. Never say to them you'll never pay. Tell them you won't pay until they fix their breech of contract. It's not refusal to pay, which they can sue you for.... it's your legal right to freeze the agreement when they change terms without both sides consent.

  8. Avatar for Vern
    Vern November 25th, 2006

    Advanta Business Card is the worst. they fail to disclose on their web site which touts cash-back of 5% on all computer purchases and gasoline purchases that this is a tiered benefit card and that kind of a rebate does not apply until you charge more than $125,000 in a year. Only if you read the fine print on the disclosure statement that they must by law send you, do they disclose that it is tiered. It took me a year to tumble to the fact that I was receiving only about 1/4% on my purchases and a phone call to customer service to discover this. A pox on their house. My revenge is to quit using their card except about once every 3 months and then for a $5 purchase which costs them more to process than they get from me. The moral is to read the fine print and do business with those whose advertising truly represents how they do business.
    Vern

  9. Avatar for WhiteMarket
    WhiteMarket December 5th, 2006

    I tried to get a credit card from Chase once. I dicided to send online credit card application at http://www.bestcreditoffers... I’m strongly against getting into any kind of debt, but recently I learned that a person needs to have a credit history in this country to survive. Being without one, I opted for a secured credit card. Here’s how the entire thing went:
    1. I sent in the application. I’ve had a premium account (min. balance of $10,000) with Chase for 2 years at that point.
    2. Two weeks later I get back a request to send a copy of my driver’s license; I do so the same day.
    3. Two weeks later I get a request to send a copy of my social security card; I do so the same day.
    4. Two weeks later I get a rejection and my check back (for a secured CC you need to send the money in advance).
    5. A week later I get accepted, but the letter states that because I didn’t send any money in advance I cannot get a card, and I should apply again.
    The next day I closed my Chase account. I wouldn’t want to trust my money to a bank that’s got such a mess in their paperwork.

  10. Avatar for Hardy
    Hardy July 12th, 2007

    I've made formal complaints to the NC attorney general and the Comptroller of the Currency regarding Bank of America's carefully hidden 3% fee for balance transfers.
    Does anyone know of an existing class action lawsuit?