Interview With An Insider, Part 2

Welcome to part two of my interview with a credit card industry insider. The Insider agreed to speak with me on the condition of anonymity.

Part one can be read here:

JSteele: Do you have any advice on dealing with your credit card company.

Insider: Hint – when faxing to your credit card company – put your name, contact information, acct # on every page and # it page x of y pages – that may help keep it clear for the reps. Don’t just fax in your statement, circle a charge and write, “not mine” on it. There are thousands of pages being faxed in every day and these machines are not next to someone’s desk – they are off in the middle of the floor – and they may not be checked for hours.

CSRs are trained to not offer waiving an annual fee (or any other fees). If a cardholder “requests” this service, the CSRs can do it, but they cannot offer it. So if you want your annual fee (or any other fee) waived, you need to specifically request that the CSR do so – don’t hint around that they should “do something for you”. Tell them what you want. If they don’t do it, ask for their supervisor.

Hint – treat your CSR with courtesy – yelling at CSRs, calling them “dopes” or threatening them is no way to have your problem solved. They will become defensive and refuse to help you. They are not paid well – they get 2 weeks of training which cannot teach them everything they need to know about every single possible situation. Turnover in that job is very high – it’s horribly stressful. A little kindness and compassion goes a very long way.

JSteele: What is your take on the new rules? Do you think they will affect reward offerings? What rules do you think are missing?

Insider: I have really only briefly read over the new rules and I think they’re great (from a personal perspective – industry wide I’m sure they will make plenty of waves). I am curious what a “reasonable” amount of time to make payments will be – will that be 10 days, 20 days, more?

I am sure that the banks will find a way to keep profits high – after all – it is a business and they need to be profitable – but it would be nice if the rules were clearly spelled out for a cardholder when they applied for and got a card, and the rules were not then changed on the cardholder when you are in debt up to your credit line.

I don’t know if reward offerings will be affected that much. I could see them charging a higher fee for participating in a reward product, but these products are money makers and I don’t see that potential going away.

One thing I thought I had heard of them doing, but I haven’t seen anything definite about it, was that there would be clearly printed on the statement how long it would take you to pay off your balance if you made minimum payments. Some people are still just shocked to figure out that it can take them years to pay off their balance. Of course they don’t stop charging either – they make minimum payments, and then charge that amount right back on the card in the next month. It’s a never ending cycle.

A credit card is a tremendous convenience and comes with some benefits that don’t come with cash (extended warranty, rewards points, cash back) but the cards needs to be used responsibly. The agreements that come with the cards spell out a lot of the rules but hardly anyone reads them – they toss them and start charging. When they find themselves in trouble, they want to blame the bank for upping their interest rate – but they agreed to these terms when they accepted the credit card.

I think people need to be better educated about credit cards – and banks need to play a bit more fairly with their cardholders.

JSteele: In my experience, there seems to be three kinds of credit card customers, 1. the “deadbeats” that I described (like myself) who always pay their balance in full, on time. 2. The trapped revolvers, who you described, who often pay the minimum, and sometimes late fees and over the limit fees. 3. A small number of people in between who occasionally carry a balance, but pay it off in a few months. Would you say this is accurate? Do you know what the approximate percentage of each is among Americans? Do you think these are lifetime habits, or are a significant number of people move between groups?

Insider: I would believe that the 3 groups are basically lifetime habits, with some minor switching around on people’s part when their situation changes. FYI – I don’t carry a balance, but if we are out of work, I will have to carry a balance to make ends meet.

My interview concludes with Part 3 tomorrow.