From retroactive rate increases to charging customers for
making payments, we reveal what consumers hate most about
banks.
Retroactive rate increases
When you make a purchase on your credit card, you're entering an agreement with your bank to borrow an amount of money at an agreed interest rate, right?
Wrong. Your bank can change the interest rate at any time. That means you'll pay the higher rate on any unpaid purchases you made while the rate was low.
Consumers can (rightfully) feel that retroactive rate increases are unfair, but credit card contracts permit banks to alter the terms of the agreement, particularly the interest rate, at any time.
Try to choose a card with a low interest rate to begin with, and if the bank increases the rate, shop around for a cheaper deal or a good balance transfer offer.
Applying fees, then charging an over limit fee
It can be frustrating when your bank applies fees or interest charges to your account which push you over your credit limit. To add insult to injury, some banks will then charge an over limit fee!
Check your contract agreement. Most major banks will not charge an over limit fee for the first month if the exception was caused by their fees.
You should also try to have a buffer of available credit and avoid fees for late payment and cash advances.
Balance transfers which revert to the cash rate
Balance transfers can be an enticing offer, particularly when you have a large outstanding balance.
But what happens when the offer expires and you still haven't repaid the transferred amount?
Chances are, the balance will revert to the normal interest rate, but on some cards it reverts to the cash rate (typically around 20%).
Always check the terms of a balance transfer offer before you apply. If the balance reverts to the cash rate, shop around for a better deal.
Fees for payment
Not content to just fine you for paying late, some banks will charge you a fee for paying at all, or for paying by a certain method (e.g. BPay, Australia Post, over the phone etc).
The move is often intended to encourage the use of a particular payment method (such as direct debit).
If the bank charges fees for payment, they need to be outlined in the product disclosure or fee statement issued by the bank on its website. If you can't find the fee information (some banks are very good at hiding it), call their customer service line and request the information in writing.
Reducing the interest free period for good payment
Money magazine reported the case of a Citibank customer who was penalized for paying their balance in full each month. The customer received a letter informing her that "customers who pay their card in full by the due date for 10 out of 12 consecutive months may have the maximum interest-free period reduced from 55 days to 44 days".
Citibank confirmed the policy in a statement to Money. "The decision was made by Citibank to bring the product into alignment with other products offered by competitors in the market"
