It occurred to me as a programmed payments in one month in advance into Quicken software that the credit card issuers are fighting the last war. The reason I am programming my payments one month in advance is that I have about 15 minutes from the time I receive my bill to write a check, plop it in an express mail envelope, then race after the mail carrier to send it back the same day to avoid a late fee.

The late fees were rolling in bulking up bottom lines at Chase and others. The reason they implemented these fees was that interest rates were low so they jerked customers on late fees to raise revenues. The interest rate far exceeds the paycheck loan rates. $40 on a one-day late $400 payment is 128 quadrillion percent annual interest.

But now they are faced with an anxious set of commercial paper buyers and collateralized debt obligation buyers demanding to know the credit quality of the borrowers. Well, it sucks. Because it has become impossible to pay a credit card bill on time without a flow of quantum entangled photons becoming disentangled selectively at the instant you get your bill so you can pay it faster than the speed of light. Credit card issuers, do you feel that petard? It's going to get hoisted a lot higher.

Not just Credit Cards... I had Direct Energy for about a year. I couldn't pay them no matter how hard I tried. They didn't allow direct electronic payment; although to function in the Texas Market they already have the ANSI X.12 protocol for banking transactions to handle B2B.

So, I sent checks through web banking, which knows to really just mail them. Twice, I ended up with debt collectors calling me for payment, even though I had an electronic copy of the cancelled check that showed the date their bank cash the check. They would go find out... but never call back (even to say they corrected the problem). Of course, they didn't withdraw the late fee. I started looking for a new provider, but it didn't take long for them to try it again.

When I finally dropped them, they immediately sent my last bill to collectors. No phone call, no remittance, just collectors.

So not just Credit Card companies...

I got irritated enough that I eventually just set up automatic payments substantially above my expected 'minimum payment' for _twice_ a month. "We received your payment on the 20 th, and it was due on the 18 th... You owe late fee X and rate increase Y.... Oh, what? You paid on the 5 th? Hrrm."

Sam, just a quibble. It's not the petard that gets "hoisted." The petard is the hoister, not the hoistee (and it's not "hoisted," either.)

By the way, Sam, I pay most of my credit card bills on the web. Most banks have on-line banking.

Here's a petard link with an extra space for the censor: http://www.bartle by.com/59/4/hoistbyoneso.html"

(pi-TAHRD) To be caught in one’s own trap... A “petard” was an explosive device used in medieval warfare. To be hoisted, or lifted, by a petard literally means to be blown up.

Actually I was trying to compare a petard hoisting to a wedgie and the "it" that is getting hoisted by the petard is also being handed to the banking industry on a platter. I was revealed trying for a pun on being hoisted by ones own leotard.

To say it another way, "Pleasures mine."

Yeah, since I've moved to Florida, I've managed to get the electric cut off -- twice. Because I didn't get a bill. I'm behind one bill and they cut the electric off? And then it takes them 10 hours to turn it on?? In Florida???

Same thing with water. I got a phone call that they were going to cut the water off. Again, because I'm one day late on payment? Evidently that was a programming error, when I walked in and paid the bill and complained about threatening to get my water cut off. They said I shouldn't have gotten the call, and I told them that if I got a call, a wrench turner sure was going to turn me off tomorrow because the computer said so. Late fees used to go in effect 10 days after the meter was read, not billed! That's since been fixed also.

Reminds me, I haven't seen the credit card statement for this month. :( It's probably due the 7th. At least I usually have my statement 10 days before it's due. The card isn't the same institution as the checking in my case. Oh well. Let's see what I can find on line.

edit: on line is a bad word???

Hey, it's a free market, isn't it? Just get another credit card company.

And better yet, find one that will let you adjust terms and conditions at your own discretion.

Over here our rather lenient bankruptcy laws (i.e no indentured servitude like you have in the states) keep most of the credit card companies honest.

> $40 on a one-day late $400 payment is 128 quadrillion percent annual interest

The math doesn't seem right there.

Maybe I'm being a little simplistic here, but 365 * 400 / 40 = 3650% annual interest.

> Over here our rather lenient bankruptcy laws (i.e no indentured servitude like you have in the states) keep most of the credit card companies honest.

I wonder if the above poster actually knows US bankruptcy law. I'll bet no, that their "facts" are actually claims made by opponents to the most recent changes.

And, if the poster is from the UK, the above will be especially ironic, as UK law bankruptcy (at least at the corporate level), doesn't allow companies to shed debt and try again. (UK biz folk complain that US law allows this because they find it unfair that a "failed" company gets to try to work things out without the debt that pushed them into trouble. They think that it's unfair because shedding debt gives said company an advantage over competitors.)

The math was right for compound interest:

((1+40/400)^365-1)*100 = 128,000,000,000,000,000%

Charlie and roystgnr: Oops, I left out the minus 1. It's 127,999,999,999,999,899%. Don't forget that 2008 is a leap year. APR's actually to the 365.25 power.

Adrasteia: Where are you?

Reb: I am just a customer price taker. But the market is rapidly consolidated to BofA and Chase which have gobbled up FirstUSA, MBNA, and Fleet and many others. Many have retrenched. Juniper/Barclays seems to be the most skittish. We'll see who steps up. BofA is expanding to "go for the jugular". I'm a small sample, but it seems like Chase and BofA are retrenching.

It makes life a little more interesting, but this is why I don't have a credit card any more. No more ripoffs for me, at least not from this.

This may or may not be coincidental, but at at least two Chase branches in my area, the Substitute Payment forms are no longer among the Depost, Withdrawal and other forms. You have to actually ask a teller for one. Of course, these are useable for a number of their services and accounts, but my only need for them is to make extra payments on a major card I have through Chase, rather than wait for the next statement, espically to cover a purchase (typically via the Internet) for which I had the cash, but a credit card was a necessity. Heaven forbid my balance might not stay up for the entire billing period...

But at least, being on a local bank, I can still pay the statement in person, too. Another card, on an out-of-town bank sometimes puts me (and more often others I know) in that same Postal race.

A few years ago (early 90's), Citibank (IIRC) was dinged several $$million by the Feds for sitting on payments so as to collect late fees.

One consumer advocate on radio (CH) actually sent payments by certified mail and sure enough, the receipt said received the 25th, the due date was the 27th , and the bank showed received the 28th on the next statement....one day late and $35 LATER.

I guess theft is okay if you're big enough and you only do it $30 at a time (though you do it 100,000 times).

Sitting on payments is fraud at the Federal level.

They all do it and I notice it really took off when the Republicans got control of Congress.