Credit card “fraud”
It’s not clear who’s worse, the people filling out credit card applications after stealing your identity or the credit card companies themselves. At least there is some chance the identity thieves will go to jail after taking over your credit, while the credit card companies enrich themselves legally with hidden fees and exorbitant interest rates. My wife and I signed up for American Express Blue Cash, thinking that we’d be making 5% back on some of our purchases, and intially we did, but not for long.
We noticed that the credit limit was pretty low, around $2000, so we kept our purchases carefully below this amount. Much to our surprise, we were docked $35 for going over our limit fee, which ate away our cash back. How did this happen? Well it turns out that for some purchases where you give your card in advance, like paying for gas, the company you are purchasing from will ask for more credit than it thinks you might use just to make sure you have enough. After the purchase is done, it then scales back the amount of credit to the amount of your purchase. In our case, this pushed the card over the limit even though we never used the credit that was over the limit. American Express told us tough luck, and we promptly cancelled the card. We didn’t bother to stick around to find out if the interest rate rose because it hit the limit, like many credit cards.
After this lesson, we stuck to getting our cards from our federal credit union, which gives us much more flexible terms and a much better interest rate.
