Over the last week, we've received numerous phone calls from Kohl's, the department store we occasionally shop at.  We last received a call last December when my wife's account was overdue.  But we know we're current on the account, so we did not answer the phone.  We figured it must be a telemarketing campaign, especially since they never left a message.  Finally, curiosity got the best of my wife, and she answered the phone last night.  Well, it seems they were just reminding us that this month's bill is due in a few days, and they offered the service of paying over the phone.  My wife found out there is a $10 charge for pay-by-phone, so she declined and let them know she'd pay over the web in a day or two.

 This is the second time I've seen this practice in recent months.  The other time was Discover Card calling me to offer the same service.  I agreed at that time, and only realized after the fact that I was charged $10 for the privilege of paying my bill over the phone.  I see now that this appears to be a new revenue tactic for credit card companies.  They have figured out that they can use massive call centers to bug millions of customers approaching a payment due date, and many of them will pay the $10 fee for the convenience.  While this does provide a small convenience, and has the more important benefit of helping avoid a late payment, the $10 fee can really add up.  In my wife's case, the bill is $200, so a $10 fee amounts to a 5% charge.  That's a huge fee on a percentage basis!  Imagine she paid only the minimum payment month after month, stretching the payments out over a year or so.  Using the phone service, that would mean an additional $120 in fees to pay off a $200 bill, resulting in an annual percentage rate including fees of well over 120%!  My wife plans to pay the bill in full, but many consumers do stretch out payments, and so are susceptible to this latest tactic by the credit card companies.

 My recommendation for anyone  recieving such a call is to simply thank the agent for the reminder, and promptly pay the bill using a different, and hopefully free, method, such as the internet or even through the mail.

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