This is a guest post from Sammy, a very smart young lady that worked for a credit card company. Sammy worked for American Express and wanted to share some scary facts that she picked up while working…
One of the best jobs I had in college was working for American Express. Now you’re probably thinking it was a really easy job with little work and I made lots of money. Unfortunately that’s not the case. The reason it was my best college job is because it taught me the fundamentals of life before the big plunge into the real world. Now, It was my first year of university and I needed a little extra cash so I started applying for jobs and ended up landing a gig working at an American Express call centre.
Now the first thing that came to my mind was — “hell no!”. I didn’t want to deal with the stress of customers complaining and yelling that their bills were too high or why they were paying interest on their credit cards. Plus what did I know about credit cards? I hadn’t even had my first one yet.
The training was 5 weeks long and pretty much taught me everything I will ever need to know about credit cards. The true test was relaying that information to pissed off customers that didn’t understand how credit cards worked. I decided to write this article on the top questions or complaints that customers had when calling in. Maybe it will prevent you from making a call or two in the future or more importantly, prevent you from making stupid decisions before you have the right information.
Young people just don’t know the truth about credit cards.
Now obviously credit card companies would not be in business if they were simply lending money and getting that same amount back always. The sad truth is that credit card companies make money off you making stupid decision. My first suggestion would be not to get a credit card until you know you can pay the full balance every month and don’t set your limit too high at first.
Credit card companies make money off people not paying off the full balance every month or paying simply the minimum balance. As soon as the total balance is not paid, interest beings to accumulate at whatever rate you have set with your provider on the total balance of your credit card. Now that can begin to add up even if you’re not even using the card at that time. Your past mistakes will come back to haunt you.
So many customer called in saying, “I didn’t use my card all month but still I am being charged interest? What credit card companies don’t like to tell you is that interest begins when you can’t pay. And the cycle begins…
Balance transfers can be HUGE trouble.
Oh man.. I don’t even know where to begin on this topic. This is such a bad thing to have to resort to: paying off a credit card with another credit card or line of credit. This begins to happen when your debt accumulates because you’re only paying the minimum balance and still continuing to shop and before you know it, you’re in massive debt.
So you think to yourself.. Well for now I can pay my Visa with my Mastercard or use my line of credit and when I have the money I’ll pay it back. Well here’s where they catch you again: when you engage in a balance transfer, automatically any money that you pay towards your account simply goes towards the balance transfer while the rest of your accumulating balance on your credit card builds interest.
Which means, until you pay off the entire balance transfer you cannot pay anything towards the rest of your balance on your credit card and it simply builds interest on the entire amount left on the account. So tip here would be: either don’t do balance transfers, or if you do make sure you can pay them off in a very reasonable amount of time so you can start paying off your other balance.
Nobody ever reads the credit card fine print.
There’s a lot that credit card users don’t know when it comes to understanding how your points actually accumulate.
Now we all love the perks of the cash back cards or point cards offered by credit card companies and they really do offer valuable benefits. But the biggest problem is people expect way more than they are actually going to get back because they don’t understand the way points accumulate.
Don’t you love when you read signs and you think there’s a huge discount and then you read those tiny little words… “up to”? Well that’s the case with points and cash back rewards on credit cards. You only start accumulating the maximum percentage or amount of rewards when you are spending the maximum amount. So here’s a simple break-down, (it may not be completely like this on all credit cards, but generally): say you could earn up to 2.5% cash back on all purchases you make, here’s how it works:
- On the first $500 spend you’re earning .5% back on those purchases
- When you spend $1000, you’re earning 1% back on only those purchases
- Boost up to $2000 in spending and you’re earning around 1.5-2%
- And then the full 2.5% on anything $5000 or higher
Make sure you’re aware of this so you’re not surprised when you’re doing calculations on the amount that you spent and adding it up according to the full 2.5%. When it comes to cash back rewards you need to do your research and actually read that fine print.
Now I’m sure there are tons of topics I didn’t cover but the majority of the year I spent working at American Express these were the stresses that customers had. As soon as they had the right information they began to make better decisions and avoided getting into these cycles of debt. Now you can too!
Here’s the best advice I can give you out of this entire article: read you entire credit card agreement. That’s you’re binding contract with the company, don’t you want to know what ride you’re in for?
15 thoughts on “What I Learned Working For a Credit Card Company”
I wish there was some kind of required education course before people could get credit cards. I remember getting my first one at 18 – all I knew was I could buy stuff now and pay for it later! Thankfully I’m out of credit card debt now, but I spent a lot of years paying A LOT of interest before I figured out how to use them responsibly.
Thanks for sharing your experience. I enjoyed reading!
Very cool! Sounds like a great experience to have early on. Yes, I admit that I only skim the credit card agreement now, but I know what to look for (fees, etc.). Plus, I also pay off my bill each month, so I don’t have to worry about interest rates. It’s the best way to go like you said.
It’s information like this that should be included in curriculum at schools. Young people (myself included, once upon a time) just don’t understand that the companies aren’t out for the users best good. It’s all about profit, and making the shareholders happy. Thanks for sharing.
I have to admit, I’ve never actually sat down and read any of my credit card agreements. I need to, and thanks for the sound advice about spending, too. Great article!
Great article! And…. I must confess, I have never read ANY credit card agreement.
Pretty cool experience – I’ve got one for you. How mad was American Express when people would do the BT for something like 24 months interest free and pay it off on time, while collecting interest on the balance? Was it not enough of an issue to care?
I see companies now have BT fees and percentage charges to discourage the practice, but ‘App-O-Rama’ used to be a pretty popular game, haha.
I just sat down and pulled out my credit card terms and conditions sheet. Holy wow. Its 6 pages with really tiny print. No wonder people just glance over it.
My brother just got his first credit card, so i am sending this to him to study.
There should definitively be some kind of course offered either in high school or outside of high school that teaches the benefits and the obvious downfalls of credit cards. The foremost and most important lesson should be that credit card companies are a business and they need to make money too! It was a great experience seeing others’ mistakes first-hand, for sure. 🙂
Great advice. I tell people all the time that working at minimum wage jobs as a kid teach you way more than any school can. You learn from your co-workers, and your customers life long lessons.
In many ways a credit card is like a license, unlike a license you had to pass a test to show you know how to drive. In many ways, credit cards are probably more dangerous than driving.
I’ve had the same credit card for 15 years and have had the same credit limit. I never tried to do anything talked about here (balance transfers). Also, my card doesn’t earn any points or rewards.
Used correctly, a credit card is a wonderful financial tool. Just keep within the limits of prudent credit use and don’t get caught up in any of the traps mentioned here.
@ Vincent You’re absolutely correct that credit cards are a valuable asset to have if used properly.Nowadays, without credit you cant do anything at all. But just to clarify Amex offers both charge AND credit cards so they do make money off of customer not paying the entire balance. Plus, on the topic of charge cards, if the balance is not paid in full you are charged automatically at a rate of 30% the first month on the entire balance. If you do not pay the full balance after 2 months, i’m pretty sure the interest rate significantly increases. So they make money off both credit and charge cards if you;re irresponsible. The biggest tip is to be responsible with your cards and not spend more than you can afford or make.
You are right, no one ever reads the fine print, but unfortunately the devil is in the details. I think it should be requirement in school, high school, that everyone needs to take and pass a basic legal document comprehension course. If you are old enough to buy a car and take out a loan or get a credit card you need to know how to read and understand the basics of a legal agreement.
It’s nice to get a different view from someone on the inside looking out. This article confirms that we need to be vigilant when it comes to credit cards. Reading the fine print is so critical.
Great insight into credit cards from the inside. Your points about balance transfers are so good.