The Wrong Kind of Customer

Docklands March 2010 096We’ve been very happy and satisfied Visa Gold credit card users for many years. This changed when our bank switched us from Visa to Mastercard in a way that wasn’t obvious to us, so when we noticed, it was too late. Now we’ve got a Mastercard, and we aren’t very happy with it and its seemingly random security system. Other small issues pile up, so I am increasingly unimpressed with the new plastic.

To cut a long story short, I am in the market for new plastic. The requirements are pretty simple:

It’s got to be a Visa card. It needs to support interest-free transactions (or very attractive rates) for 50+ days when paid in full at the due date. It needs reasonable overseas rates, it must support a joint account, and it must have no or very reasonable annual or monthly fees. Support for throw-away numbers (for use online) would be a premium. In other words, I want a decent method of conducting normal daily financial transactions in the 21st century.

You’d think this is easy, but it isn’t. The card companies aren’t interested in a customer like me, as they are not looking for someone who pays his bills. Cards compete with each other in terms of balance transfer cost and credit interest rates.

So far, I’ve got it down to one provider only. They meet some of the requirements, but far from all. I hate signing up to one offer just because of a lack of options though. Grrr.

Suggestions and recommendations are welcome.

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Highway Robbery, At Your Service

DSC_0896A few days ago, I examined options for pre-paid credit cards, the modern day wannabe equivalent of a traveller’s cheque. The idea is simple and not without appeal: you buy a credit card and deposit money into the credit card account. Later, you use it to pay for travel expenses. When the card is lost of stolen, you might have lost the $220 remaining on the card at the time, but your bank account, house and livelihood is not tied into the missing piece of plastic.

Within seconds of highly scientific research, I concluded it’s a scam, a method of luring fools into handing more money than before over to the card provider. Basically, it works like this:

You’d receive a piece of plastic worth pennies, and they provide database infrastructure worth a fraction of a penny per transaction. Then, they receive several levels of assurances from you, including of course the full amount of money which you’d think you might need at some future point in time. They play with your deposit until you need it, and then some. In return, they take absolutely zero risk. Zero, zilch, naught, none.

For the pleasure, they charge an initial fee in the £5..10 range, or a monthly fee in the £3…13 range (some providers charge both, initial and monthly), and a variety of staggering  per-transaction fees. Some even charge for the pleasure of loading your money into their account. [click]

Call me old-fashioned if you like. In my naive little world, I am happy to pay for a good service. The offers under review all seemed like highway robbery to me. I’d consider switching credit cards as soon as someone offers pre-paid cards as a free service to cardholders for use during holidays, or for use with online transactions. You’d think this should be dead cheap for the card companies to provide, and be a real service to boost customer loyalty and attract new customers.

Real service. Looks like I’m on the wrong planet.

 

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Expert Advise

DSCF0200Britain, the Guardian tells me this morning, will also offer [Burma] support for better and stronger governance by training officials on sound public financial management, on the rule of law and strengthening parliamentary democracy, involving a parliamentary exchange programme.

Yeah right.

I think we could do with expert advise on sound public financial management and the strengthening of parliamentary democracy right here at home before touring the world and beating our chest like Tarzan.

Preposterous.

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Every Little Helps

A duck farmer in a rice field, VietnamHere’s another way to help make this world a better place for all: micro financing. I recently stumbled across Kiva’s web site, and am both fascinated and doubtful. Here’s how it works: you or I invest a small sum, $25 upwards, and lend it to someone who asks for a small credit. This could be a farmer in Mali or a collective of women in Cambodia or anyone anywhere, really. Credit takers are poor, can’t afford a large load and would never get it from a corporate bank, so they take out a tiny loan through a micro financing scheme. Maybe $150 for a pair of new goats, or $250 for farming tools, or $500 to rebuild an irrigation drench to the rice fields. People taking out such a micro loan pay back over two years or so, in monthly payments that seem small to us. When you or I get repaid, we can take our money back out of the scheme and buy important things like a new mobile phone, or re-invest and give credit to somebody else.

You and I won’t earn an interest from this. Kiva, for example, finance themselves through different sources, so your $25 actually go through 100%. Well, that’s where the problem starts. While Kiva doesn’t take a cut, a local micro financing organization does. It’s not a corporate bank, but still, a business that reviews and approves (or rejects) applications for credit, and manages the collection of repayments. I understand that someone has to travel to some remote village to see if the applicant really is in need, and if the scheme of buying two new goats makes a good plan.

The part that I don’t get is that they take something in the order of 10% “for the cost of the money” – What? I thought I had just given you my $25, at no extra cost to you?

I like the idea of micro financing. It means helping people to help themselves, and it is much more personal than giving a big organization some money and never knowing what happens to it. If anyone knows more about micro financing schemes and the true cost of the loan to the borrower, please let me know.

Obviously, I don’t want to fund a scheme to feed a local credit shark in disguise.

 

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