I've been thinking pretty seriously lately about applying for my first American Express card after receiving some tempting offers. But with all the bad press the card issuer has been getting over the past few months, I'm starting to wonder: Are American Express cards as valuable as they used to be?
American Express continues to rank highly in customer satisfaction surveys. Until recently, it held the No. 1 spot for credit card customer satisfaction, according to J.D. Power and Associates' annual Credit Card Satisfaction study. In 2014, the card issuer tied for first place with Discover card, which has been nipping at American Express' heels for several years now.
The J.D. Powers and Associates survey looks at how satisfied cardholders are with their credit card terms and rewards, billing and dispute resolution, cardholder perks and more.
But according to new complaint data released by the Consumer Financial Protection Bureau, cardholders' satisfaction with the once vaunted issuer may be starting to slip.
CreditCards.com recently reviewed nearly 14,000 complaints made to the CFPB last year and found that American Express earned more disputes over its handling of complaints than any other card issuer. CreditCards.com also found that American Express had the highest rate of complaints overall than any of the seven biggest issuers, including Capital One, Citi, U.S. Bank and Bank of America.
Meanwhile, the card issuer has been dealing with a number of bad breaks over the past few months, causing analysts to openly fret about its future. The popular warehouse club Costco recently decided to part ways with American Express after failing to come to an agreement over the future of its co-branded credit card -- a major source of American Express' revenue.
The U.S. Justice Department also dealt a blow after winning its antitrust lawsuit against the company. According to comments made by AmEx CEO Kenneth Chenault at Wednesday's investors' conference, the issuer is planning to seek a stay against the February ruling, which found that American Express violated antitrust laws.
If it fails to squash the ruling, American Express will no longer be able to bar merchants from encouraging their customers to use lower cost cards. That, in turn, could threaten American Express' notoriously high transaction fees, which have helped subsidize its generous rewards programs.
One of the downsides of having an American Express card is that it's not as widely accepted as other cards since merchants have to pay significantly higher fees to accept it. Many cardholders have put up with the inconvenience in exchange for the prestige and extra perks of having an American Express card. But if American Express is forced to lower fees in order to compete with other card issuers, will that threaten the sweeter rewards the card issuer is known for?
Already, the benefits of owning an American Express card have started to decline, according to The Associated Press' Ken Sweet. For example, some airlines, such as United and American, have stopped giving VIP lounge access to American Express cardholders.
The card issuer also recently raised interest rates for a number of cardholders who were paying below-market APRs, and currently charges new cardholders a higher APR than comparable cards. For example, according to American Express spokeswoman Elizabeth Crosta, the lowest available rate on a new American Express card is currently 12.99 percent. The national average APR for low interest cards, by contrast, is 11.62 percent.
Annual fees are also going up on some cards, such as the issuers' Gold line, making owning a premium American Express card even pricier.
That said, the pressure on American Express to attract new cardholders could mean that rewards will get better -- at least in the near future -- rather than worse, according to financial services firm Credit Suisse.
In just the past month, American Express announced it will soon offer double the rewards on restaurant purchases and better travel perks for American Gold cardholders, including a $100 travel credit for incidental airline expenses. It also announced last week an innovative loyalty program that allows participants to earn points even when they use a different payment method, such as cash or debit.
And even though American Express' reputation has taken a hit in recent months, it still earns enough high marks from satisfied customers that applying for an American Express card doesn't feel like much of a risk.
I haven't decided yet whether or not I'll apply for a card myself. It's still too early to tell how recent events will influence American Express' offers, so I may just wait a little while and see what comes in the mail.
Wednesday, July 1, 2015
Saving money can still make you struggle
Most millennials start saving for retirement early, but they aren't saving nearly enough.
A March 2015 study by Principal Financial Group found that 63 percent of millennials started saving for retirement at or before age 25, and 83 percent take full advantage of matching contributions offered by employer-sponsored retirement plans. However, less than one-third of survey respondents are saving enough to secure a strong retirement later on.
"Our analysis over the years has found that saving 10 percent of your salary, plus any employer match, over the course of a working career is the key to achieving a more secure retirement," said Jerry Patterson, senior vice president of retirement services at Principal Financial Group.
It's not that millennials don't know they should be saving more -- 74 percent believe they should be saving 10 percent or more of their salary -- they just struggle planning for and prioritizing retirement saving alongside other major expenses such as rent, student loans and credit card debt.
Saving for retirement is a part of young adult's budgets, just not a big one. It's considered a major budget expense for only 10 percent of the millennials surveyed.
"It's tough when you're figuring it out," Jen Mishory, executive director of Young Invincibles advocacy for young adults, said during a PBS NewsHour special. "Do you put that extra $100 toward a student debt payment or do you put it into a retirement account? Those are sort of the tough decisions that young people are facing."
If millennials are to become financially stable both now and later in life, more planning is needed, starting with a reworking of monthly budgets to include both debt repayment and savings.
While many young adults may feel that's easier said than done, it is possible. Taking advantage of an employer's 401(k) match program is a good start, followed by a taking a new look at how money is spent each day, not just at the end of the month when bills are due.
A fall 2014 survey of millennials conducted by Merrill Edge found that 73 percent think about their long-term finances as they pay their bills, but 53 percent don't do the same when making daily purchases. Being consistently mindful of a budget and long-term goals can help correct millennials' financial habits to better fit those plans.
My personal recommendation for millennials who are trying to find a balance between paying debt and saving for retirement is to take it one step at a time. There might be a dozen areas of your budget that can be fine-tuned or maybe you can amp up your savings by slashing your food budget in half, but doing too much, too quickly may not only cause you to fall further behind but lead to budgeting burn out and cause you to give up on your plan altogether.
Take a series of steps to improve your financial health and occasionally indulge in a small reward for good behavior to help reduce the stress and negative emotions associated with following a strict budget.
As a generation we may be behind in saving for our retirement, but it's not too late to start making improvements.
A March 2015 study by Principal Financial Group found that 63 percent of millennials started saving for retirement at or before age 25, and 83 percent take full advantage of matching contributions offered by employer-sponsored retirement plans. However, less than one-third of survey respondents are saving enough to secure a strong retirement later on.
"Our analysis over the years has found that saving 10 percent of your salary, plus any employer match, over the course of a working career is the key to achieving a more secure retirement," said Jerry Patterson, senior vice president of retirement services at Principal Financial Group.
It's not that millennials don't know they should be saving more -- 74 percent believe they should be saving 10 percent or more of their salary -- they just struggle planning for and prioritizing retirement saving alongside other major expenses such as rent, student loans and credit card debt.
Saving for retirement is a part of young adult's budgets, just not a big one. It's considered a major budget expense for only 10 percent of the millennials surveyed.
"It's tough when you're figuring it out," Jen Mishory, executive director of Young Invincibles advocacy for young adults, said during a PBS NewsHour special. "Do you put that extra $100 toward a student debt payment or do you put it into a retirement account? Those are sort of the tough decisions that young people are facing."
If millennials are to become financially stable both now and later in life, more planning is needed, starting with a reworking of monthly budgets to include both debt repayment and savings.
While many young adults may feel that's easier said than done, it is possible. Taking advantage of an employer's 401(k) match program is a good start, followed by a taking a new look at how money is spent each day, not just at the end of the month when bills are due.
A fall 2014 survey of millennials conducted by Merrill Edge found that 73 percent think about their long-term finances as they pay their bills, but 53 percent don't do the same when making daily purchases. Being consistently mindful of a budget and long-term goals can help correct millennials' financial habits to better fit those plans.
My personal recommendation for millennials who are trying to find a balance between paying debt and saving for retirement is to take it one step at a time. There might be a dozen areas of your budget that can be fine-tuned or maybe you can amp up your savings by slashing your food budget in half, but doing too much, too quickly may not only cause you to fall further behind but lead to budgeting burn out and cause you to give up on your plan altogether.
Take a series of steps to improve your financial health and occasionally indulge in a small reward for good behavior to help reduce the stress and negative emotions associated with following a strict budget.
As a generation we may be behind in saving for our retirement, but it's not too late to start making improvements.
Debt and debt and always debt!
While on a walk, I started making a mental list of all the things we could buy and do once our savings account again reached critical mass. Carpet for the rec room concrete floor. A new range top with four working burners. New dishes to go with it. I was already over $5,000.
Then, my dreams got bigger: new furniture, a hot tub and a screened-in porch to house the hot tub. That made another $25,000.
On the practical side, my car -- a reliable Toyota -- has more than 250,000 miles and could last another 250,000 or conk out tomorrow. My husband's car, a less reliable brand I won't name, has 238,000 miles and needs to be replaced, yesterday. Even buying used, that's probably $15,000 per car.
There was also the person we care about who needed money for school and to take care of her mom, but we didn't have enough to give her.
We better start saving even more, I thought.
Then the convenience checks from my credit union arrived in the mail. "We wanted to take a moment and thank you for your valued patronage," said the letter from the card services manager. "Your good credit deserves to be rewarded! That's why we've enclosed these handy checks to make it easy to access the credit you've earned."
Three blank checks. In between the checks, I was encouraged to: Consolidate Bills Now! Imagine the Possibilities! I didn't have any bills to consolidate but I'd already been imagining the possibilities.
"Oh, the places you will go," those checks called out to me. With the instant gratification they promised, I wouldn't need to grow the savings account.
Compared to some convenience checks, the terms weren't too bad. The interest rate is 10.7 percent. There's no cash advance fee. But interest does begin accruing as soon as I use a check.
Sure, we could get a home-equity loan to make those home improvements, but that takes time and paperwork. In some cases, we could put renovations on a credit card and rack up rewards points. But not every contractor takes credit cards -- as we found out when we tried to put a new $15,000 driveway on a credit card and we ended up having to scramble for funds.
Also, I couldn't put a loan or gift to someone else on a credit card. Maybe it was a mind game but the checks felt different, more like easy money. They were right in my hand ready to sign and use.
As the letter said, "The enclosed checks are another convenient way to access your line of credit, for those times when cards are not accepted. Not only are these checks the most convenient way to consolidate your bills, they make a great gift too. Or deposit one into your checking account for instant cash or to pay a private individual. You can even use them to make a down payment on a new car."
The cool thing about the checks, according to the letter? "They work just like regular checks but do not draw from your checking account. Instead, the amount of the checks will simply appear on your credit card statement."
Kind of like magic, huh? "Keep these checks close at hand," the letter urged me. Temptation right at my fingertips.
Finally, my rational mind took control. Even at 10.7 percent interest, those purchases would quickly get even more expensive than the price tags and take years to pay off. I didn't want to burden Karen, version 2020, with the dreams and desires of Karen, version 2015.
After one last longing glance, I took the checks to the shredder. I called my credit union and asked to be taken off the mailing list. Then I starting brainstorming ways to grow our savings to keep up with our dreams.
Then, my dreams got bigger: new furniture, a hot tub and a screened-in porch to house the hot tub. That made another $25,000.
On the practical side, my car -- a reliable Toyota -- has more than 250,000 miles and could last another 250,000 or conk out tomorrow. My husband's car, a less reliable brand I won't name, has 238,000 miles and needs to be replaced, yesterday. Even buying used, that's probably $15,000 per car.
There was also the person we care about who needed money for school and to take care of her mom, but we didn't have enough to give her.
We better start saving even more, I thought.
Then the convenience checks from my credit union arrived in the mail. "We wanted to take a moment and thank you for your valued patronage," said the letter from the card services manager. "Your good credit deserves to be rewarded! That's why we've enclosed these handy checks to make it easy to access the credit you've earned."
Three blank checks. In between the checks, I was encouraged to: Consolidate Bills Now! Imagine the Possibilities! I didn't have any bills to consolidate but I'd already been imagining the possibilities.
"Oh, the places you will go," those checks called out to me. With the instant gratification they promised, I wouldn't need to grow the savings account.
Compared to some convenience checks, the terms weren't too bad. The interest rate is 10.7 percent. There's no cash advance fee. But interest does begin accruing as soon as I use a check.
Sure, we could get a home-equity loan to make those home improvements, but that takes time and paperwork. In some cases, we could put renovations on a credit card and rack up rewards points. But not every contractor takes credit cards -- as we found out when we tried to put a new $15,000 driveway on a credit card and we ended up having to scramble for funds.
Also, I couldn't put a loan or gift to someone else on a credit card. Maybe it was a mind game but the checks felt different, more like easy money. They were right in my hand ready to sign and use.
As the letter said, "The enclosed checks are another convenient way to access your line of credit, for those times when cards are not accepted. Not only are these checks the most convenient way to consolidate your bills, they make a great gift too. Or deposit one into your checking account for instant cash or to pay a private individual. You can even use them to make a down payment on a new car."
The cool thing about the checks, according to the letter? "They work just like regular checks but do not draw from your checking account. Instead, the amount of the checks will simply appear on your credit card statement."
Kind of like magic, huh? "Keep these checks close at hand," the letter urged me. Temptation right at my fingertips.
Finally, my rational mind took control. Even at 10.7 percent interest, those purchases would quickly get even more expensive than the price tags and take years to pay off. I didn't want to burden Karen, version 2020, with the dreams and desires of Karen, version 2015.
After one last longing glance, I took the checks to the shredder. I called my credit union and asked to be taken off the mailing list. Then I starting brainstorming ways to grow our savings to keep up with our dreams.
Paying its credit/debit limit too fast
Paying down debt too quickly can be just as stressful as holding debt in the first place, or so I recently learned.
At the beginning of January I made 3 financial resolutions to tackle this year, one of which was to put my entire tax refund toward my debt. So, when my $625 refund appeared in my bank account during the first week of February I knew what I had to do with it.
When I went to approve two online payments using the refund -- one to pay off a card's balance entirely and one to pay off about half of another -- I hesitated. I had just received a large chunk of extra money in my bank account and it was just about to disappear again. But with my blog post in mind I gritted my teeth and clicked the submit button.
A wave of relief crashed in. I had paid off one card and made a serious dent in another. I felt so good about my actions that when I was paid the following week I paid all my bills for the month -- some well ahead of time -- and put a little extra toward my student loans and another credit card balance.
It wasn't until the following week that I realized my overexcitement about paying down debt had left little to no money in my checking account for things like groceries, a tank of gas or lunch out with friends until my next paycheck. I also didn't enough to put $100 in my savings account, which is something else I really need to start doing regularly.
My relief quickly reverted back into stress.
It's not like I didn't have a way to pay for things--my credit card balances are nearly nonexistent now -- I just didn't have much on my debit card. If I wanted (well, needed) to pay for day-to-day essentials until my next pay check, I'd have to put most of it on one of those credit cards I just paid off, which made me feel really guilty.
I'm always really dependent on my debit card, like many others in my generation. Even though I know you can use a credit card like a debit card and just pay the balance in full every month, the thought of doing that terrifies me.
Relying on my debit card for everyday expenses keeps my spending in check. I can't overspend even if I want to, which is what could happen with a credit card that has a higher limit than my checking account balance. I typically just use my credit cards for small things here and there each month, not regular expenses such as medical co-pays, which is what happened just this past week after a string of doctor appointments.
Yes, I paid for medical care with credit cards. I feel irresponsible just writing that.
But I wasn't being irresponsible; I was trying to make good financial decisions. They just backfired a bit and put me in a position where I needed to use credit cards more often than my debit card and that made me uneasy. If I had stuck to my original plan and just used my tax refund for debt payments, all would've been fine and I wouldn't feel like I took three steps forward only to take two steps back.
Thankfully, I've now reached my next payday and all is well with my checking account balance once again. My bill and debt payments have been submitted -- but not more than what my budget can handle -- and the remaining spending dollars sit in my checking account, where they makes me feel most comfortable.
Moral of the story: Paying down debt is important, but if you do too much, too quickly or act in a way that makes you feel even more financially stressed, you're not really helping yourself out.
I may want my debt gone tomorrow, but I have to be more realistic. Bummer.
When I went to approve two online payments using the refund -- one to pay off a card's balance entirely and one to pay off about half of another -- I hesitated. I had just received a large chunk of extra money in my bank account and it was just about to disappear again. But with my blog post in mind I gritted my teeth and clicked the submit button.
A wave of relief crashed in. I had paid off one card and made a serious dent in another. I felt so good about my actions that when I was paid the following week I paid all my bills for the month -- some well ahead of time -- and put a little extra toward my student loans and another credit card balance.
It wasn't until the following week that I realized my overexcitement about paying down debt had left little to no money in my checking account for things like groceries, a tank of gas or lunch out with friends until my next paycheck. I also didn't enough to put $100 in my savings account, which is something else I really need to start doing regularly.
My relief quickly reverted back into stress.
It's not like I didn't have a way to pay for things--my credit card balances are nearly nonexistent now -- I just didn't have much on my debit card. If I wanted (well, needed) to pay for day-to-day essentials until my next pay check, I'd have to put most of it on one of those credit cards I just paid off, which made me feel really guilty.
I'm always really dependent on my debit card, like many others in my generation. Even though I know you can use a credit card like a debit card and just pay the balance in full every month, the thought of doing that terrifies me.
Relying on my debit card for everyday expenses keeps my spending in check. I can't overspend even if I want to, which is what could happen with a credit card that has a higher limit than my checking account balance. I typically just use my credit cards for small things here and there each month, not regular expenses such as medical co-pays, which is what happened just this past week after a string of doctor appointments.
Yes, I paid for medical care with credit cards. I feel irresponsible just writing that.
But I wasn't being irresponsible; I was trying to make good financial decisions. They just backfired a bit and put me in a position where I needed to use credit cards more often than my debit card and that made me uneasy. If I had stuck to my original plan and just used my tax refund for debt payments, all would've been fine and I wouldn't feel like I took three steps forward only to take two steps back.
Thankfully, I've now reached my next payday and all is well with my checking account balance once again. My bill and debt payments have been submitted -- but not more than what my budget can handle -- and the remaining spending dollars sit in my checking account, where they makes me feel most comfortable.
Moral of the story: Paying down debt is important, but if you do too much, too quickly or act in a way that makes you feel even more financially stressed, you're not really helping yourself out.
I may want my debt gone tomorrow, but I have to be more realistic. Bummer.
WARNING! Stores might be choosing for you
The next time you visit a store, think twice about the direction of your gaze when comparing different products. According to a new study in the Journal of Consumer Research, retailers could influence which products you prefer -- and how much you're willing to pay for them -- simply by placing them higher, or lower, on the shelf.
"Consumers pay attention to different aspects of products, depending on whether they are looking down or up," write study authors Anneleen Van Kerckhove, Maggie Geuens and Iris Vermeir, all of Ghent University in Belgium, in a March 6 news release.
When shoppers look down at a product, for example, they tend to pay closer attention to concrete features, such as price. But when they look up, they're more likely to focus on bigger-picture details such as a product's quality or convenience, the authors found.
As a result, shoppers who compare items on a higher shelf may find costlier products more appealing because they're less focused on the price.
The authors theorize this effect may be due to the unconscious associations people make when they look in a particular direction. For example, "people are used to paying detailed attention when looking down because everything that happens close to them could be important or dangerous," write the authors. As a result, they're primed to focus on more concrete details when comparing different products.
Shoppers tend to associate looking up, by contrast, with looking at things from a longer distance, the authors write, so they tend to focus on more abstract reasons for why an item appeals to them. "Consumers may be so used to taking a broader perspective when looking up that they will also do this when selecting a product from a higher shelf," the authors write in the release.
What it means for you
Where you look could affect what you buy. Don't assume just because you feel drawn to particular item, it's necessarily the best purchase. Retailers routinely use product placement and other cues to subtly influence how you think and what you choose to buy.
For example, previous research has shown that products placed at eye level tend to sell more quickly. So do products priced a penny lower than round numbers. (For example, shirts sold for $9.99 are more appealing than shirts sold for $10.)
The next time you reach for an item on a shelf, think more deeply about where it's placed and what message that conveys. You may find a retailer is trying to nudge you into buying an item more expensive than it's worth.
"Consumers pay attention to different aspects of products, depending on whether they are looking down or up," write study authors Anneleen Van Kerckhove, Maggie Geuens and Iris Vermeir, all of Ghent University in Belgium, in a March 6 news release.
When shoppers look down at a product, for example, they tend to pay closer attention to concrete features, such as price. But when they look up, they're more likely to focus on bigger-picture details such as a product's quality or convenience, the authors found.
As a result, shoppers who compare items on a higher shelf may find costlier products more appealing because they're less focused on the price.
The authors theorize this effect may be due to the unconscious associations people make when they look in a particular direction. For example, "people are used to paying detailed attention when looking down because everything that happens close to them could be important or dangerous," write the authors. As a result, they're primed to focus on more concrete details when comparing different products.
Shoppers tend to associate looking up, by contrast, with looking at things from a longer distance, the authors write, so they tend to focus on more abstract reasons for why an item appeals to them. "Consumers may be so used to taking a broader perspective when looking up that they will also do this when selecting a product from a higher shelf," the authors write in the release.
What it means for you
Where you look could affect what you buy. Don't assume just because you feel drawn to particular item, it's necessarily the best purchase. Retailers routinely use product placement and other cues to subtly influence how you think and what you choose to buy.
For example, previous research has shown that products placed at eye level tend to sell more quickly. So do products priced a penny lower than round numbers. (For example, shirts sold for $9.99 are more appealing than shirts sold for $10.)
The next time you reach for an item on a shelf, think more deeply about where it's placed and what message that conveys. You may find a retailer is trying to nudge you into buying an item more expensive than it's worth.
Know your rights and your power!
Griping to my credit card didn't get me anywhere until I filed a complaint with the U.S. Consumer Financial Protection Bureau.
That got me $400 -- plus the pleasure of seeing a bank implicitly admit it was wrong.
We write about the CFPB a lot, including its consumer complaint service. When I thought my travel card stiffed me on a promised reward, I got a chance to see the complaint process in action.
The consumer protection bureau started hearing gripes about credit cards in December 2011. Since then it has heard more than 45,000 beefs about cards, while also opening its complaint window to grousing about mortgages, debt collection, student loans and other financial sore spots.
Rather than just tallying the complaints, the consumer bureau gets in the middle and mediates. It sends the gripe to the company, confirms that you're a customer, and logs the outcome. If the card relents and fixes your problem, that goes down on its record for all to see. If they stiff you, that, too, becomes public.
My problem started back in May 2014 when I applied for a Travelocity American Express card, backed by Barclaycard US. Rack up 20,000 points and get a $400 statement credit, the promotion urged. Since I use Travelocity anyway, it seemed like a no-brainer -- especially since I would get 10,000 points just for signing up, putting me halfway to the reward.
Nine months later I had 20,000 points, after booking trips big and small through the online travel agent. The $400 credit was not easy to get; it was only available on a single purchase of at least that amount on Travelocity. When I booked a round-trip flight to Ohio that cost $419, I thought I would finally collect the reward.
But on my statement, the transaction I had made with a single click was split into two pieces, one for each leg of the trip. Instead of a $400 credit, my 20,000 points were eligible for only $240.
"Please keep in mind that it is the merchant who submits the charges to your account," Barclaycard customer service explained in written response to my complaint. "We do not have control if the merchant will divide the charges that will be posted."
My reply might have been a little snarky. The merchant was Barclaycard's partner Travelocity, whose name was emblazoned on the card, I pointed out. It seemed awfully convenient for the card issuer to duck responsibility for its partner's action, especially when that action slashed the value of my points.
Feeling I was in the right, I went to the consumer bureau's complaint portal and filed my protest, attaching statements that showed my point total. In two weeks I got a call from the president's office at Barclaycard. I was all set to launch into my argument, but there was no need. The representative -- it wasn't Barclays Group Chief Executive Antony Jenkins himself -- said she could see that I made a single transaction to book the trip. A $400 credit posted to my account the next day.
The squeaky wheel gets the grease all right, but the lessons from the episode go further than that. Clearly, squeaking to the consumer regulator was more effective than the bank, although complaining to customer service was a logical first step.
Beyond that, companies' complaint records with the CFPB may be a useful thing to consider when you're thinking about a new card. After all, promises of bonus points or other lures aren't worth much if the card tricks you out of them. In CreditCards.com's analysis of CFPB complaint data, Barclaycard has one of the lowest complaint rates, and one of better records of fixing disputes. With other, tougher cards, my protest might have hit a brick wall.
The consumer bureau wants to make its complaint database more useful by adding consumers' stories to the bare data now available. The idea draws applause from consumer advocates and opposition from the banking lobby.
For me, the dispute was also a lesson about the real costs of chasing rewards. The $400 credit amounts to about 7.5 percent payback of my card spending. Now that my sign-up bonus is used up, I can expect about 3 percent back in the future. If, that is, I book every flight, hotel room and rental car through Travelocity. This turns a card that should be a convenience into a burden. Sometimes on a road trip, you just want to pull into a hotel, pull out your card and sleep.
Then after months of loyalty, you have to push the company to keep its promise? For me, being a reward seeker wasn't worth the hassle.
We write about the CFPB a lot, including its consumer complaint service. When I thought my travel card stiffed me on a promised reward, I got a chance to see the complaint process in action.
The consumer protection bureau started hearing gripes about credit cards in December 2011. Since then it has heard more than 45,000 beefs about cards, while also opening its complaint window to grousing about mortgages, debt collection, student loans and other financial sore spots.
Rather than just tallying the complaints, the consumer bureau gets in the middle and mediates. It sends the gripe to the company, confirms that you're a customer, and logs the outcome. If the card relents and fixes your problem, that goes down on its record for all to see. If they stiff you, that, too, becomes public.
My problem started back in May 2014 when I applied for a Travelocity American Express card, backed by Barclaycard US. Rack up 20,000 points and get a $400 statement credit, the promotion urged. Since I use Travelocity anyway, it seemed like a no-brainer -- especially since I would get 10,000 points just for signing up, putting me halfway to the reward.
Nine months later I had 20,000 points, after booking trips big and small through the online travel agent. The $400 credit was not easy to get; it was only available on a single purchase of at least that amount on Travelocity. When I booked a round-trip flight to Ohio that cost $419, I thought I would finally collect the reward.
But on my statement, the transaction I had made with a single click was split into two pieces, one for each leg of the trip. Instead of a $400 credit, my 20,000 points were eligible for only $240.
"Please keep in mind that it is the merchant who submits the charges to your account," Barclaycard customer service explained in written response to my complaint. "We do not have control if the merchant will divide the charges that will be posted."
My reply might have been a little snarky. The merchant was Barclaycard's partner Travelocity, whose name was emblazoned on the card, I pointed out. It seemed awfully convenient for the card issuer to duck responsibility for its partner's action, especially when that action slashed the value of my points.
Feeling I was in the right, I went to the consumer bureau's complaint portal and filed my protest, attaching statements that showed my point total. In two weeks I got a call from the president's office at Barclaycard. I was all set to launch into my argument, but there was no need. The representative -- it wasn't Barclays Group Chief Executive Antony Jenkins himself -- said she could see that I made a single transaction to book the trip. A $400 credit posted to my account the next day.
The squeaky wheel gets the grease all right, but the lessons from the episode go further than that. Clearly, squeaking to the consumer regulator was more effective than the bank, although complaining to customer service was a logical first step.
Beyond that, companies' complaint records with the CFPB may be a useful thing to consider when you're thinking about a new card. After all, promises of bonus points or other lures aren't worth much if the card tricks you out of them. In CreditCards.com's analysis of CFPB complaint data, Barclaycard has one of the lowest complaint rates, and one of better records of fixing disputes. With other, tougher cards, my protest might have hit a brick wall.
The consumer bureau wants to make its complaint database more useful by adding consumers' stories to the bare data now available. The idea draws applause from consumer advocates and opposition from the banking lobby.
For me, the dispute was also a lesson about the real costs of chasing rewards. The $400 credit amounts to about 7.5 percent payback of my card spending. Now that my sign-up bonus is used up, I can expect about 3 percent back in the future. If, that is, I book every flight, hotel room and rental car through Travelocity. This turns a card that should be a convenience into a burden. Sometimes on a road trip, you just want to pull into a hotel, pull out your card and sleep.
Then after months of loyalty, you have to push the company to keep its promise? For me, being a reward seeker wasn't worth the hassle.
Genoeconomics studies how genes influence money habits
Struggling to rein in credit card debt or not saving enough for retirement? Don't just blame yourself for your money troubles. The genes you inherited from your parents may also be at fault.
According to a growing body of research in a field of science called genoeconomics, the size of your bank account -- and the amount of credit card debt you carry -- may be partially determined by your genes.
For example, in a new paper published this month in the Journal of Political Economy, economists Henrik Cronqvist and Stephan Siegel argue that differences in people's genes could explain why some people are more likely to save money rather than spend it. "We find that genetic differences explain about 33 percent of the variation in savings behavior across individuals," write Cronqvist and Siegel, who analyzed the savings behavior of identical and fraternal twins.
The money lessons imparted by your parents may also influence how likely you are to spend or save, the researchers found -- at least when you're young. (Over time, your parents' influence tends to wear off.)
Environmental factors, such as your family's wealth, also matter. But certain personality traits -- such as your ability to resist temptation -- appear to play an especially big role in determining the kinds of choices you'll make as an adult. And those traits tend to be strongly influenced by your genes. "Each individual is born with a genetic predisposition to a specific savings behavior, an effect that is found not to disappear later in life," write the authors.
Previous research has also linked genetics to income, investments and even debt. For example, aFebruary 2014 study linked a specific gene -- Monoamine oxidase A (MAOA) -- to higher levels of credit card debt.
Researchers stress, however, that the growing field of genoeconomics, which studies the association between genes and economic outcomes, is still young and the results from various studies are not definitive.
According to a growing body of research in a field of science called genoeconomics, the size of your bank account -- and the amount of credit card debt you carry -- may be partially determined by your genes.
For example, in a new paper published this month in the Journal of Political Economy, economists Henrik Cronqvist and Stephan Siegel argue that differences in people's genes could explain why some people are more likely to save money rather than spend it. "We find that genetic differences explain about 33 percent of the variation in savings behavior across individuals," write Cronqvist and Siegel, who analyzed the savings behavior of identical and fraternal twins.
The money lessons imparted by your parents may also influence how likely you are to spend or save, the researchers found -- at least when you're young. (Over time, your parents' influence tends to wear off.)
Environmental factors, such as your family's wealth, also matter. But certain personality traits -- such as your ability to resist temptation -- appear to play an especially big role in determining the kinds of choices you'll make as an adult. And those traits tend to be strongly influenced by your genes. "Each individual is born with a genetic predisposition to a specific savings behavior, an effect that is found not to disappear later in life," write the authors.
Previous research has also linked genetics to income, investments and even debt. For example, aFebruary 2014 study linked a specific gene -- Monoamine oxidase A (MAOA) -- to higher levels of credit card debt.
Researchers stress, however, that the growing field of genoeconomics, which studies the association between genes and economic outcomes, is still young and the results from various studies are not definitive.
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