The Experian Experience

The other day I got a letter from the credit service Experian. They were writing to tell me that there may have been an unauthorized disclosure of my personal information.  On September 15, 2015 they discovered that an unauthorized party had accessed Experian servers. They immediately began to investigate what had happened. They also took additional security measures.

About a week later Experian notified the company maintain information for that a breach had taken place. The information the hackers got was essentially all of my information. No credit card or banking information was obtained. But everything else was.

The letter went on to say that they apologized for the incident. Then this line I found particularly amusing: We recognize that this issue can be frustrating, and we are taking steps to protect you and your personal information. Frustrating is not a word I would use to describe. Alarming because it happened. 

 

And just how reliable are the steps they are taking to protect you and your personal information. Seems to me that the cats out of the bag on that one. The horse has left the barn. Insert any other cliche you might like. The damage has been done. That Experian is sincerely apologizing for what happened doesn’t mitigate in any way shape or form that it happened.

My information is out there for anyone to use. Who needs any credit card information when they have all of my other pertinent information. They can use that to open as many credit card accounts they want.

I was a little pissed. Until I really read the letter more carefully.

The company that Experian said I had an account with I don’t have an account with at all.

It then occurred to me that maybe I’d open someone else’s mail. I made sure I found the envelope the letter had come in just in case I had to put it back in the mail. And it turns out I had opened some else’s mail. But well only sort of. It had another name but my address. I had to look at the address for a while and think yeah that’s my address. The had the zip plus four on the address as well.

I thought a little while as to what I should actually do at this point. Clearly Experian had gotten their information wrong. (Makes you really have faith in what they do. They can’t keep the information they have secure and they can’t seem to properly notify people that their information has been hacked.)

I decided I should call up Experian and let them know what happened.

First and foremost it took a really really long time to actual get a real human being to talk to. I did finally get someone. I explained what had happened. His response was oh then just throw the letter out. I asked him again and he said the same thing.

I was surprised to say the least. I had other things to do so I just hung up. 

 

But as I thought about it more; it made me angry. Experian had no interest in trying to find the person whose name appeared on the letter I received. It raised so many question. How was my addressed obtained in the first place? How many other people received letters the same way? The response certainly belies the tone of the letter that Experian is somehow concerned about the fact that sensitive personal information has been breached. 

 

I put a fraud alert on my credit that will alert merchants that my information might have been hacked. If you do it with one of the credit bureaus the information is passed on to the other two. Needless to say I did not go through Experian to this. 

In the future I will certainly think long and hard about doing any sort of business with Experian.

The Strange World of Credit Cards and Credit Scores

Recently Discover has started including your credit score on the bills it sends you. Mine went up 6 points from one month to the next.

I’ve always found trying to figure out how your credit score is calculated as clear as mud. Too many credit cards can bring down your score. Because the more cards you have the higher your total purchasing power is. The more temptation to spend, spend, spend. Running up your debt that’s not a good thing.

The obvious thing to learn from that is that you should cancel cards you don’t use. But that could be a bad thing. Cards that you’ve had for a long time you should keep because that shows a long term credit history.

Also by canceling a card it actually increases the over all percentage of your debt. For example let’s say you have $2,500 in credit card debt. The total credit line you have on all your cards is $10,000. That means the percentage of your debt to the combined credit line is 25%. Let’s say you have a card that you don’t use with a credit limit of $5,000. It has a really high interest rate so you cancel it. Your total credit line for all your cards is $5,000. Suddenly your debt to the combined credit line is 50%. So it means your score will take a hit. Because if you just use percentages it looks like you’ve doubled your debt.

In other words just about no matter what you do, you end up hurting your credit score. Probably the best thing to do if you have a card with a high rate is having something charged to it on a regular basis. Put your Netflix account on it. Or use it to charge gas. Each month you make sure the balance is paid off.

I use my Sears card for that. I got it when my refrigerator died. I got no interest if I paid off the balance in a year. I did it way before that. Of course I now have this card with a ridiculous interest rate of 25%. Why would you keep a balance on this card. But I can keep the account active by having my gym membership on it. And I make sure I pay it off each month.

The other thing I find interesting is the number of balance transfer offers I get. Not only through the mail but e-mail offers as well. Sears is really after me to do a balance transfer. I never respond to those. I have used other offers. Usually you get a year with no interest. There’s also the transfer fee which can vary anywhere from 2-5% of the amount you transfer.

What’s the idea behind it? The banks want to hook you into using that card and running up charges. The idea is you won’t pay off the balance in time and the credit card company starts charging you interest on that balance. The way payments are applied helps that become a reality. The minimum payment is usually applied to the balance with the lowest interest which of course would be the balance transfer. The rest is then applied to the balance with the highest interest charge i.e. the things you are charging. This way it takes a long time for the amount of the transfer to go down. In all likelihood it won’t be paid off in the time you were given to do so.

Best thing to do is divide the amount of transfer by how many weeks you get the zero interest for. That gives you how much you need to pay each week to have the transfer paid off in the time. Then you set up a weekly payment in that amount. When the bill comes each month, you pay the minimum plus whatever interest is charged on the account.

The goal is to beat the credit companies at their own game. Pay the transfer off and the only thing they get from you is the transfer fee. It's not exactly free money but it is really cheap money.

It Pays to Discover — Well Maybe Not So Much

I'm sure you've noticed all those ads on TV for credit cards. I'm going to talk about a few things abut those ads.

One of them is Discover which promises a certain percentage of cash back on each purchase. They also offer specials where you get a higher percentage of cash back on a specific item you purchase. Recently it was 5 percent back on gas. I think this ran for a couple of months. Usually the offers of cash back aren't that. Mostly they run 1 or 2 percent.

Not bad considering how expensive gas can be.

The interesting thing is how and when you are able to use the cash back you've accumulated. If you want to use your cash back for buying something from a merchant, you only have to earn $25 before you can start spending. But if you want it in actually cash say to make a payment on your card you have to wait until you earn $50 to use it.

Now if you were getting 5 percent back on most of your purchases, you'd get to that $50 threshold rather quickly. But that's not the case. In most cases you're only getting the 1-2 percent back. So it's going to take a little while to get there. Several thousand dollars of charging items to get there in fact.

You'll also notice that that fact isn't mentioned in any of the ads.

The other thing that bugs me about the ads is all the benefits they advertise with the card. Like Discover has this late payment forgiveness. Capitol One has a miles program with no black out dates. The only problem is that these are all for new customers. If you are an existing customer you're out of luck. You don't get these offers.

How is that exactly fair?

It reminds me of one time when I cancelled a credit card. They came back with all sorts of offers for me. A lower interest rate being the chief among them. This was because I was such a good customer. I said well if I was such a great customer I shouldn't have had to threaten to quit to get the lower interest rate. I just should have gotten it because I was a good customer. They didn't have a come back on that one. I then added this makes me want to cancel the card even more.

It seems to me the smart thing to do would be to allow people to upgrade to those new cards. Maybe once year sort of like getting a new phone.

Until all that discovering is not all it's cracked up to be.

My Credit Card Company Does Me a “Favor”

Yes, that’s right my credit card company did me a favor. It decided all on its own that it was going to change the number of my card. I got a letter from them in early to mid July stating that they were going to offer me all sorts of great new perks. Along with that would be a change in the number. After listing all the wonderful things this would do was this statement that I’d need to go to all the places that I might have the card listed for automatic billing and change the number.

Thank you so much for that. Now I get to remember all the places I use the credit card. This is not a bad as the last time a credit card company pulled this on me. The last time I’d set up all my magazine subscriptions to be renewed automatically. That way I didn’t get those constant renewal reminders that start a week after you’ve renew your subscription.

The fun part is that I have another credit card that is doing the exact same thing. Some time later this month I’ll be getting a new card with a new number. I’ll have to remember where I use this one. But they’ll be all those great new benefits that I don’t need and won’t use. Thanks so much for the “favor.”

Credit Card Legislation Passes

The Senate today passed legislation on credit cards.

Finally maybe the consumer will get some relief from all of the crap put out by the credit card companies. You still got the line from them and the American Banker's Association that this will make it harder on consumers.

There was also this comment:

Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, an industry group, said most interest rate changes are a result of actions by consumers. "A small number of Americans have seen an increase in their interest rate due to the increase in riskiness in the economy," he said.

All I can say to this is what of load of crap. My actions had nothing to do with the increase in my rates. This was done solely so Bank of America could make more money.

This bozo then added this:

Any changes in terms over the next months, he said, will not be based on the credit card legislation. "Increases in interest rates and fees aren't premeditated," he said. "They are the result of market forces and contract terms."

Yeah right. They have nine months to implement the new rules which don't allow rates to be raised by whim. I'm sure no one's interest rate will be raised during this time. I guess I have to ask is how dumb do they think we really are.

And to get an idea of just how bi-partisan this is the Senate bill passed 90-5. You can read about it here.

The smartest thing for people to start to do is join a credit union. They have very reasonable rates on cards. I was able to join the NIH Credit Union because I'm an alumni of GW. I'm looking into possibly refinancing with them. And I'm also looking into getting a credit card. One where the interest rate would never go up and there are no fees on balance transfers.

I hope tomorrow to get some more information on the loan. I'm not entirely sure if this will work but at the very least I plan on getting the credit card.

Credit Card Relief

Last week the house passed legislation to rein in the practices of the credit card companies.

This should have been done a long time ago. Consumers have been complaining about these practices for years but, as long as the Republicans had anything to say about it, this legislation went no where. But now even Republicans are on board. It passed by an overwhelming 357-70 vote.

There was the usual reaction from the banking industry:

Edward Yingling, president and CEO of the American Bankers Association, said the group "strongly believes that any additional legislative efforts should strive to achieve the right balance between enhancing consumer protection, and ensuring that credit remains available to consumers and small businesses at a reasonable cost."

"We continue to believe that more work needs to be done to achieve that balance," he said.

Once again raising rates at a whim to whatever the card company wants to is the idea of achieving a "balance" between the consumer and the card company. I don't think so. The actions taken would restrict the ability of the card companies from doing that.

I'm still pissed at Bank of America for what they did. I will say that the one card I canceled from them is just about paid off. The other one I'll keep because I've had it for so long and the credit limit is so high. But I'm starting to look into getting a card from the credit union I joined a couple of weeks ago. Once I have that the only reason I'll use the Bank of America card is in an emergency.

I think I can best sum up my feelings about Bank of America this was: the only way I'd ever do business with them ever is if someone had a gun to my head and threatened to shoot.

Bank of America Ad

Last Thursday in the Post, Bank of America had a full page ad on the back of the front section. The headline said:

How do we intend to lead the lending industry? By example. The ad was directed toward the housing market. It said in part:

following responsible home lending practices to the forefront on four industry. To help customers make clear and informed decisions, so they can choose the home loan that’s right for them. In addition, through the U.S. Treasury Department’s Making Home Affordable, we’re actively working to bring relief to homeowners who’ve lost equity in their homes, are unable to refinance because of decreasing home values, or are having difficulty making their mortgages payments.

The price for this is the reassessing of the interest rates (that’s the term Bank of America uses “reassessing”) they are charging credit card holders. I still maintain one of the reasons for this “reassessing” what normal people call raising the interest rate is to be ahead of any Congressional regulation on the subject. It’s also a nice way to make a whole lot of money.

You notice there was no full page add saying to credit card customers if you are a customer in good standing, have always paid you bill on time and never gone over your limit our reward to you is to increase your rate by at least 50%. In a couple of reports I saw on the news the rate increase was even higher than that. There should be some sort of protection for consumers from this especially in difficult economic times. There is no logical reason except to make money that Bank of America would raise rates like this. Hopefully there will be hearing in Congress on this and some much needed daylight will be shed on this practice.

I for one don’t plan to stop talking about it anytime soon.

The Real Reason My Rate Went Up

The real reason the rate on my credit cards went up so much was not because of the economy but because of legislation that is before Congress. At the end of March a Senate Committee passed:

By a 12-11 vote, the Senate Banking Committee narrowly approved a bill aimed at cleaning up unfair and deceptive practices by credit card companies criticized for surprising customers with fees and unilaterally changing terms.

Unilaterally changing terms. That sounds familiar some how doesn't it.

Here's a excerpt from a column by Allan Sloan in the Post:

Fix credit card rules. Some banks can change the interest rate on credit card balances for pretty much any reason, including if a borrower misses one payment, even if it's for something like a utility bill. So instead of being on the hook for, say, 12 percent interest (which is bad enough), borrowers may suddenly find themselves paying an obscene 29.9 percent. Regulators are trying to deal with aspects of this problem, but Congress could eliminate it overnight through legislation.

The banks' policies are disclosed in the all-but-unreadable notices they send their credit card customers. That makes it legal. But it's wrong. It's especially wrong now, when so many people are struggling to pay their bills and are likely to fall into the missed-payment, higher-rate trap that would make their lives even more difficult.

The "reason" from Bank of America for raising the rate was the economy. Well raising the rate is not going to improve things for people; it will only make it worse. But then again hiking the rate of the credit card and introducing all sorts of fees is a great way for a bank to make up let's say bad investments.

But the banks are going to get some extra time to implement the new policies. Read about it here.

From this article comes one of the more ridiculous things said about this issue:

The American Bankers Association trade group, which represents the biggest credit card companies, have warned that more rules could make it more difficult to price a customer's risk level and therefore reduce the availability of credit.

"We still believe it is an open question whether any further legislation is necessary," said Ken Clayton, senior vice president for card policy at the ABA.

Wow there's a surprise the lobbying group for banks opposing legislation to regulate their industry. I think the legislation proposed by Congress is more than reasonable. It's about time banks begin to realize they don't get to call all the shots.

Bank of America Stupidity

I got one of those periodic statements from my credit card company. You know the ones that say there's been a change in the condition of the account. As it said at the bottom of the envelope:

Important Customer Notices and Other Changes to Your Bank of America Credit Card Account

I have to say I don't always read these things as closely as I should. But I did open this one. Actually I have two because I have two accounts with Bank of America. Inside it said that they were raising my interest rate. They were raising it 50%. That's right 50%.

I think to myself we've given this Bank billions of dollars. We've been screwed by them once and now their customers are getting screwed again.

The one account I won't cancel because the credit limit is incredibly high and I've also have it since 1994. Two very good reason not to cancel the account.

The other one I have through AAA. It was canceled as fast as I could get through to an operator. So I ask why exactly the rate is being raised. Oh it's the economy. I said back that seems to be rather counter intuitive to me. Let's make it harder for people to pay back they money they owe.

I had sizable tax returns. I was going to divide them up between the two accounts. But now it's going to the AAA account. The goal is to pay it off as quickly as possible. I also think I'm going to be writing to Bank of America (I don't expect any sort of response but it will make me feel better). But I'll also be writing to AAA saying they should partner with another bank in issuing a credit card in its name.

I must say I have to scratch my head at this one. How does this help Bank of America? Just another example of how banks are totally out of touch with what is going on.