Release the Hounds: Our First Credit Card Finance Charge and Bank Fee

by Kevin on August 29, 2008

You’ve heard it time and time again from me: credit cards are not evil. I have admitted that the credit card companies do not necessarily have your best interest in mind. That’s fine with me, they are out for profit. Yet they have set the playing field up in a way that you can easily profit from safe credit card use.

Many of come to this blog and said “But what about the interest? The excessive fees?”. I have always brushed those aside because I wouldn’t be caught dead paying fees.

The Ramsey fans should love this.

My day of reckoning has come.

Actual it came a few months ago, but I’m just getting to write about it. Here’s what happened.

I charge everything I possibly can to our American Express Blue Cash card. This past year I earned $470 in cash back rewards. The year before that was $432 in cash back. Essentially free money for paying for things we would have purchased on a debit card or with cash. The AMEX Blue Cash card also has no annual fee, so really it is free money if you avoid finance charges or any fees.

I don’t send paper checks to pay my bill. I pay it online. A few months ago I set up a payment for the statement balance just like I had every other month. Except this time I apparently used our brick-and-mortar bank that we keep a very low balance in rather than our online checking account.

As you might imagine, it got fairly ugly fairly quickly. AMEX pulled the money out of the bank account, the bank charged me a non-sufficient funds (NSF) fee of $38. AMEX then “returned” the money to get the bank account back into the black — because it was never there in the first place. AMEX then went ahead and charged me something like $65 or $68 in late/finance fees based on the balance I was carrying.

My blood pressure went up a bit that day. I had the money — just in my online checking account. I quickly deleted the old brick-and-mortar connection with AMEX, and setup the payment with the online account.

All seemed well, I just had some fees to deal with. That is until AMEX then pulled the money out of the brick-and-mortar again even though I had the other payment already steup. Apparently if they try to take a payment from you and it fails, they can try an additional two or three times to see if they get payment.

I understand that policy… but I had just setup payment from the other account. I was highly irritated at this point to say the least.

The end result: over $100 in finance charges and bank fees. A huge mess. A bank account in the red. Granted, not on our primary account, but still. I’m the personal finance guy. This looks bad.

What the heck am I going to do and why am I talking about it? Wouldn’t it be better to sweep this under the rug and not tell my readers?

Nah. I think we can all learn from this.

Find out Monday on how I cleaned up the mess. (Subscribe to the RSS feed if you think you might forget to come back.)

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