Friday, October 19, 2007

Excessive charges

I received a letter from a credit card company. It announced the "administration fee" for the following:

1. Late payment - $40
2. No money in the bank account for GIRO deduction - $50

These fees are in additional to the high rate of interest levied on the overdue balances.

These fees are excessive. I do not mind paying a fee that covers the additional cost to the company due to the oversight. But it is morally wrong for them to impose an excessive fee to increase their profit.

At one time, only the Government had the right to impose fines. Now, it seems that businesses feel that they have the same right!

I called the credit card company and cancelled the card immediately.

3 comments:

Thomas Phua's Blog said...

Many youngsters do not know the impact of such fees and the interest charged.

They just swipe the card and when bills come, they thought they can live of future earnings.

Then the reality of such fees set in.

Late fee plus interest, and it roll over the next month with compound interest and it goes on until they find themselves trapped.

Some were bankrupted by the bank for this.

This is the pitfall of not knowing how to control one's lifestyle and not living practically.

It is never good to live on credit.

This is perhaps a legalised loan shark. Legalised Ah Long.

- Thomas Phua

hongjun said...

When using credit card, we must make it a point in keeping the receipt for expense tracking. When you see yourself making more frequent visit to restaurants, then this is a sign of over-using of credit cards!

If you are not disciplined, I would suggest you set a rule on yourself - Use credit cards on necessity items (like groceries) but cash on luxury items (like restaurants).

hongjun

Anonymous said...

The bank did the right thing by informing customers early and proper disclosures.

Consumers also have their own responsibility in managing their own cash flow. What the banks did was to create convenience for consumers so that they do not have to carry large amounts of cash and at some places, enjoy discounts and rebates.

If they did not set up the framework, consumers would still be carrying large bundles of cash with them all the time.

If you are expecting everything to come without cost, then you have to carry your own bank with you all the time.

Banks do not owe consumers a living. If consumers make use of their services, please expect to pay.

I have never been late in my credit card payment - even with banks where I do not have a GIRO arrangement. Why? It is simple - I make sure honour the rules, and am not tardy nor procrastinate my payment.

Perhaps consumers can consider practicing not delaying payment and avoid unnecessary penalties.

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