Credit card, banking secrets your bank is keeping

bank-creditor-secrets

While you may feel as if you're a prisoner to your bank and creditors, you hold more sway than you realize. There are handfuls of ways they can pull favours for you - it's just a matter of knowing when to simply ask for a break.

"People generally feel like they're not well-educated about finances and that any question might be a stupid question, but when it comes to your money, questions are good," says Pat White, executive director of Credit Counselling Canada. "If you don't ask, you don't know."

"So many things are negotiable. Most consumers don't take advantage," says Richard Moxley, author of The Nine Rules of Credit and spokesman for eCredit Fix, which helps consumers learn about improving their credit score.

Here are six secrets creditors and banks don't want you to know about your accounts.

1. Some parts of your credit card terms can change. 
Interest rates are negotiable, Moxley says, and annual fees can be waived and due dates can be moved to better suit your payday. These changes aren't guaranteed, but if you're in good standing or you have a strong case, such as a death in the family or a personal emergency, changes can be made in your favour.

Decide what you're asking for, rehearse your case and visit your bank or call your creditor.

White has her clients negotiate a new due date that best suits them - sometimes it just aligns better with paying other bills and your payday.

2. You could lose your credit history by upgrading your card.
When you upgrade your credit card, you may be unintentionally bidding farewell to your old card and all of the good credit history that comes with it. Since your payment history accounts for the largest portion of your credit score, you don't want to lose your good track record.

"It depends on the bank, but a lot of times it will show up as a closed account, and the new card will be a brand new account," White says. "You have to be careful about that."

Your banker may not be aware of this detail and is focused instead on selling a certain amount of these cards (and maybe getting an incentive to do so). Check, and double-check, before you sign off on closing a long-standing account.

3. You can walk away after snagging a deal.
While it isn't ideal for financial institutions, you can get a sign-up bonus and then close the account. This applies to snagging iPads, bonus points, waived fees and other rewards that come with opening a bank account or credit card.

Just pay attention to the caveats: credit cards are making it trickier to garner a bonus by, say, making two purchases, while banks may charge you a fee for the outstanding amount on a contract called "exit costs," Moxley says.

If a bank's most expensive account is $27 per month and you close it with three months left in your 12-month contract, they could charge you $81, for example.

"It's all a game, and you have to follow the rules by reading the fine print, talking to the rep and knowing what you're signing up for," Moxley says.

Keep an eye on your credit score, too. Don't gain notoriety for opening and closing accounts, as it could hurt your credit score.

4. Working with multiple banks could work in your favour.
Try to spread the wealth when it comes to your chequing and saving accounts, credit cards and other accounts tied to banks and creditors. This will safeguard access to your money should your accounts be frozen at one bank, but it also gives you some leverage when you're asking your financial institutions for some pull.

"Play one bank off another instead of keeping all business with one bank," Moxley says. "You will have a stronger negotiating power."

He says if you have five products with a single bank, the bank tends to get "complacent" and you'll notice attractive offers decrease.

Comparison shop, too. Check out promotions from competitors when it comes to credit card interest rates, savings rates and even mortgages.

"It's an easy way to get a better deal," Moxley says.

5. Your contract can change at any time
While you may be signing on the dotted line for your credit card's terms and conditions, note that the agreement can change in a handful of ways.

Your credit limit can dip lower, your interest rate can take a hike and your account can be closed or handed off - all without your consent.

In some cases, it could be a consequence for being late with a payment, skipping a payment or maxing out your card. You also could be given introductory rates that are taken away once you slip up.

But in other cases, there is no rhyme or reason.

6. Merchant and convenience fees are capped.
Paying by credit card has many perks, but they come at a price. Make sure you aren't paying excessive merchant and convenience fees. Businesses are supposed to abide by limits set in their merchant agreements, but not all of them do.

There are no limitations on surcharges for debit card purchases in person, which is why the local convenience store is allowed to charge you 25 cents for purchases that are less than $5.

But with credit cards, merchants have to tell you upfront that they're charging a convenience fee.

While some longtime credit users might consider these secrets old news, newer customers or those who don't carefully read their credit card agreements might not be aware of them. They aren't advertised in big bold letters on your bank's door, so be sure you read any document relating to your credit card thoroughly, and don't be afraid to ask.

See related: 4 reasons you should be using more than one bank, Don't let card issuer's changes throw you for a loop, Are issuers clamping down on churning?
Published March 7, 2017

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