When is a credit card not a consumer credit card?
People who hate financial institutions who depend on misdirection and bury the terms and conditions in the footnotes are often justified in believing that financial institutions, be they banks or brokerages, have a vested interest in your welfare and success.
The answer to the title question: when is a credit card not a credit card …
When it is a “professional credit card” that is not subject to the recently-passed consumer credit card protections:
(Excerpt)What your credit card company has to tell you:
Some good sources of information: |
Warning: Professional Cards …
We posted a warning that many financial institutions are creating so called “professional cards” aimed at professional individuals and small businesses that may not be subject to the laws that apply to ordinary consumer credit cards. Or, in other words, the financial institutions are free to abuse you with:
(1) imposing interest rates with little or no warning and without the necessity of supplying a reason for the change. The simple act of making a purchase or paying your bill reaffirms your commitment to the institution’s unilateral agreement.
(2) imposing up to a 30% interest rate should you fall behind on your payments for more than 60 days. Considering the needs of small businesses, it is likely that many will consider this usurious rate acceptable rather than the alternative: going out of business. A fact which has not escaped the attention of the financial institutions as they design their credit card programs. Truth-be-told, they really don’t care either way. Yes, they would prefer a continuing payment stream – but the reality is that they still obtain transaction fees from the merchants and may be making money by securitizing your credit card debt and selling it to third parties who will assume the risk of defaults.
(3) telling you up-front that they will do everything in their power to milk your account for interest and fees. Specifically arranging payment algorithms so that your lower cost credit amounts are paid before the higher cost credit amounts – thus maximizing their return on their investment. This is analogous to a bank that is arranging to pay off your largest checks first, thus guaranteeing that the multiplicity of smaller unpaid checks will generate a larger number of “non-sufficient funds” fees.
Here is the real language from a prominent disclosure …
|
Rates, fees, and terms may change: We reserve the right to change the Account terms (including the APRs) at any time for any reason. Any APRs for this offer are not guaranteed; APRs may change to higher APRs, fixed APRs may change to variable APRs, or variable APRs may change to fixed APRs. Any changes will be in accordance with your Business Card Agreement. If your payment is over 60 days late, we may apply a default rate of up to 29.99% (the Prime Rate plus up to 26.99%, but not more than 29.99%) to your Account. Prime Rate: Variable APRs are based on the 3.25% Prime Rate as of 2/22/2010. TERMS & CONDITIONS Authorization: When you ("you", "your" means the owner, officer, or partner of the company with the authority to bind the company to the terms & conditions of this offer and the Business Card Agreement, and who is agreeing to the terms on their own behalf and that of the company) respond to this credit card offer from [bank deleted], you agree to the following:
Rates, fees, and terms may change: We have the right to change the account terms (including the APRs) in accordance with your Business Card Agreement. |
Bottom line …
In spite of all those smiling faces warmly welcoming you into the family, the truth is much more dramatic.
You are a number to be tracked by computer to maximize your value to the bank.
You will not see those friendly smiling faces as you face problems, you will, in all likelihood, be dealing with a stressed call center employee whose job is conditioned on extracting money from troubled people, denying that the bank has made significant and serious errors and is actually incentivized to push you to ignore your other obligations in favor of the bank.
Financial institutions and their regulatory agencies on the local, state and federal level believe that disclosure is tantamount to a rattlesnake warning. They have warned you about the terms and conditions and, in good faith – perhaps believing adverse circumstances will not occur – accepted by the accountholder.
In the final analysis, money is a commodity and is fungible – that is there is absolutely no difference in the money used to satisfy your obligations. And since it is a commodity, it is beneficial for you to obtain credit at the best rates, terms and conditions – ignoring the happy talk.
Perhaps the best advice that can be given comes from the Better Business Bureau: “Investigate Before You Invest.”
Take care of yourself and your family first.
-- steve
“Nullius in verba”-- take nobody's word for it!
"Acta non verba" -- actions not words
“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw
“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”
“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS "The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius “A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell “Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar “Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS