Tuesday, May 15, 2007

Out of the pot and into the fire

I read a fun little post about SST Card Services over at the Consumerist. They are reporting that people are complaining about deceptive, fraudulent, incompetent, or outright crooked practices that SST is running.
I feel for the people who are stuck with credit card like that.
Oddly I performed a little experiment with a credit card from Providian. Which, at the time was considered to be one of the worst predatory lenders.
In college I thought I'd see for myself how bad these guys were. I responded to a 0% Aria credit card ad online. This was a card that our friends at Providian ran. I named it my ghetto card because it was a colorfully ugly card with sparkles.
I was meticulous about my use with the card. I never spent more than I could cover and I always sent in a payment in full within a couple of days of receiving my bill. To mix things up I took out one cash advance.
Here are my observations:
The 0% that they advertised was the 0% that they'd charge you for the initial grace period. This is a standard feature of just about every credit card. After that the APR shot up to something like 19.9%. What they really should have advertised is 19.9%
19.9% is really high.
The limit was incredibly low. I'd like to say it was $500. It may have been less. My other credit cards had limits of $20000 and $5000 at the time. After 4 months of diligently paying off my balance they raised my limit to $750. They offered me one of the most absurdly terrible deals ever, which was an additional $250 in credit for $50. They were going to charge me money for the privilege of charging me money.
When I took out a single cash advance I sent in sufficient funds to cover the entire bill before the statement came. I was surprised at the acrobatic bookkeeping that they used to keep that cash advance interest rate, good old 29.9% going. Somehow my payment would not seem to get processed until I made a regular purchase at the lower rate.
Their customer service was horrible. I used to work as a trade journalist. I had to call people behind phone trees all the time. I like to think that I'm very good at navigating these things. Theirs was a true labyrinth. I don't think I was ever able to get a human on the phone when I called them. Even the old don't push any buttons trick didn't do anything.
Their web site was no better, it was all about setting up another account.
On the plus side I did receive a check from a class action lawsuit.
I decided to close the account after I graduated and the account had been paid off in full for a few months--I overpaid the final statement by $25 to avoid the double cycle billing or trailing interest pitfalls.
With a $-15 balance I set out to cancel my account. I tried calling their customer service. No luck there. I eventually called the corporate office of the parent company Providian. Luckily for me, they are a public company and I was able to get their corporate contact information through a finance resource, e.g., http://finance.google.com. I then worked their phones until I was able to get the executive customer service for the card. I think they were glad to get rid of me because they didn't put up much of a fight.
What were my conclusions.
Well, I was a responsible credit card user. I was kind of hoping that they would have charged me a late fee, after all I was paying off my balance the day that the bill arrived, but that never happened.
I can only imagine a person using their card less responsibly. If they miss a payment or let their balance exceed their limit I'm sure Providian would have hit them with the default rate at the first opportunity. With that said I did play by their rules and didn't get hurt too much. I did pay the cash advance interest rate when I don't think I should have, otherwise I can't say they took undue advantage of me.
That is the best that I can say of them. On the downside their customer service was horrible. I can only imagine how difficult it would be to try to dispute a charge or to get an explanation from them.

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