The Credit Card industry is at it again… figuring ways to rip you off… used to be called “nickel and diming”, we’re way past nickels and dimes at this point.

If this doesn’t make you want to go cardless… meaning being a cash only person it should cause you to restrict your use (or what you use them for) of cards for daily use dramatically and the “inconvenience” of going to the bank and getting cash to carry with you will be more than offset by the savings.

Here’s what I got informed of and while this “shouldn’t” impact most of the people here… meaning you should be paying off your credit cards monthly… I just got another letter from a Credit Card company informing me of changes to the account and changes in fees.

The interest rate doesn’t matter… again I pay it off every month… but they’ve moved it to a 13.15% variable.

What staggered me was the interest rate increase for Cash Advances to a staggering 26.99% variable… I guess its a good thing I don’t stop at ATM’s and take out $50 now and then on a credit card… there is NO Grace Period on Cash Advance Interest.

But what really PO’d me was some new “Transaction Fee Finance Charges” that are added in addition to the 27% interest rate as well as a New Definition for a “Foreign Transaction Fee”.

Under the “Transaction Fee Finance Charges” category not only do you pay the 27% from day one (No Grace Period) they attach a fee of 4% OR a Fee Minimum of $10… yep, you read it right… TEN DOLLAR MINIMUM FEE (in addition to outside network ATM surcharges I might add!).

So how’s this sound… go to grocery store… buy $50 worth of groceries… use Credit Card so you can get Rewards Points… remember you need $20 to feed the parking meter this week… and when the automatic prompt asks you say Yes.

WHAMMO… $10 Fee for getting $20 back from the grocery clerk… and you don’t even see it until you get your statement and not even then, if you’re like most Americans and never look at it.

Do that five or six times a month.

The above fee is going to apply to (parenthesis are mine):

  • ATM Cash Advances (anytime you get cash back anywhere)
  • Balance Transfers (those envelopes clogging your mailbox)
  • Bank Cash Advances
  • Cash Equivalents (Moneys Orders, Certified Checks and {IMPORTANT see below!!!} Foreign Currency Conversions)
  • Check Cash Advances (read: Overdraft Protection)
  • Direct Deposit Cash Advances (one of those cloggy envelopes made out to yourself or you initiate when the “Customer Service” rep on the phone talks you into it when all you wanted was a balance total)
  • Wire Transfer Purchases

The following though may pose the greatest risk to your wallet… and I know for myself that it will make the difference between a quick transaction using a credit card and using Snail Mail to send a check.

This is the New Definition of a “Foreign Transaction”

Under the old terms there is a 3% fee for transactions from overseas that is in addition to any other fees… DON’T YOU EVER TAKE A CASH ADVANCE OVERSEAS NOW!!!!… the new fees above are added to it as well.

The new “Definition” is:

“Foreign Transaction” means any transaction made in a foreign currency, and any transaction made in U.S. Dollars if the transaction is made or processed outside of the United States. Foreign Transactions include, for example, online purchases from foreign merchants.

So you’re surfing the net and what should appear but that Italian Scarf you always wanted for half off its $1000 price tag at the Italian store in New York… WOW!! $500!! you can afford that… slap it on the card before its gone… got you’re email confirmation and all!

Credit card bill arrives… GASP… smelling salts quick!

Italian Scarf Corp, Rome Italy = $500

Darn… even though the price was in dollars since online sales are processed at the home office in Rome it was processed outside the U.S. we incur a:

“Foreign Transaction Fee” (3%) = $15

Well Italian Scarf Doesn’t want Dollars they want Euros from the credit card company so you incur a:

“Transaction Fee Finance Charge” (4% or Min. $10) = $20

OH!.. and don’t forget the Currency Conversion Fee from Dollars to Euros!!! Probably at least another 5% = $25

And what do you mean Interest AT 26.99% from day one! I pay my bill off every month!

Oops… since this transaction was processed outside the United States and involved a “Cash Equivalents” transaction (Dollars to Euros) if falls under the “Cash Advance” rules not the Purchases rules.

The “bargain” scarf ain’t no bargain… but if you’d called them they could have put it aside (just about every online retailer will do this as there are still lots of people without credit card access) while you sent a check in the mail and really paid only $500.

The Byzantine rules they are putting in place are going to start reversing the trend towards a cashless society… but you know that may not be a bad thing.

You spend within your means and won’t get into the mess we are in now.

And if people start wising up the use of ATM’s for easy access to cash might start to drop along with the exorbitant ATM fees so many of the banks and merchants have come to rely on.

So how will you handle it if you start getting letters like I got?

Stop using the Cards and carry more Cash on you?

Pay a LOT more attention to the payment process on Online Merchants?

Even take the extra step if you’re unsure by calling them and finding out where your payment will be processed?

Actually decide it isn’t worth the hassles and save your money to begin with?

Photo credit: stock.xchng.