Visa MasterCard Discovery

Money making techniques adopted by credit card companies

[Monday, November 29th, 2010]

The credit card companies, such as American Express, Citibank, VISA, Master Cards, lure the customers to possess the credit cards without disclosing the hidden charges. Though one finds it a very convenient way of buying the things required on instalments and also availing the benefit of having cash through ATMs, consumers do not realise that the service charges and the interest charged will be very exorbitant. If a credit card holder actually works out the principle amount, interest and the service charges he makes to the company, he will arrive at a mind boggling figure he would have made by the time the payment is completely made. A research conducted recently has revealed that the profit earned by these credit companies is to the extent of $35 billion dollars. Whenever the consumer uses the credit card he will have to pay a service charge of 2% of the purchase price. At times the discount offered on purchases against cash is also reduced when the credit card is used.

Many credit corporations are under the scanner of federal government for their unethical practice of amassing wealth at the cost of merchants and consumers. After an investigation for over a period of two years, the federal government has taken legal action against American Express, Master Card and VISA for their unfair and unethical business practices.

Though the Master Card and VISA Card have agreed to amend the regulations about the transaction fee which requires to be approved by the U.S. District Court for the implementation of new guidelines, the American Express is defending the argument that the consumers are not penalised whenever purchases are made against credit cards instead of cash.

Many credit card corporations also indulge in unethical practices, like, discreetly enhancing the interest rate, changing the billing dates without proper notice, purposely mailing the monthly statements belatedly thereby making the card holder to cough up not only the increased interest rate and service charges but also penalty for late payment. Some of the credit card companies are also in the habit of using manual force in an attempt to collect the payment from the card holders and the charges incurred in this regard, in turn, is levied on the consumers.

If the amended regulations are brought into implementation, it lifts the restrictions on use of one particular and allows the card holder the choice of using one card over another.

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