Credit card company - Credit card bill is not enough. Credit card fees, credit limit.
Huge Loopholes in the Credit Card Bill
For years, Americans have complained to their Congressional representatives about high fees and unexpected interest rate increases. In an unusual move, Congress has voted against banks which give them large special interest campaign contributions and passed legislation that will offer some modest protections to consumers.
The recent credit card bill which was passed by Congress and signed by the President offers some measures that will greatly aid consumers, but it also leaves glaring loopholes that banks can (and probably will) take advantage of consumers by raising fees and interest rates.
New Credit Card Restrictions
First the good news. Banks will be somewhat more restricted on when they can raise rates on existing balances. Interest rates must remain the same for at least one year. Introductory “teaser” rates such as 0% balance transfers must last at least six months.
If you go over your credit limit, your credit card company cannot charge you a fee unless you agree to be charged. If your credit card company is late in applying your payment, they cannot charge you a late fee. Hidden fees, such as fees for paying your bill by telephone are no longer permitted. Universal default is no longer permitted. This means that a bank cannot raise your rates if you are late on a payment with a different lender.
And credit cannot be issued to persons under the age of 21 without a bank verifying their ability to pay or getting parental permission. This last measure will help protect college students who are inundated with offers for student credit cards.
Payments made at a local bank must be credited to your account the same day. And early-in-the-day payment deadlines are banned. Credit card statements must be issued at least 21 days before the bill is due, an increase from the previous 14-day requirement. A fair disclosure provision stipulates that banks must inform you how long it will take to pay off your bill if you only make minimum payments.
Huge Loopholes With Credit Card Fees
But it is the loopholes that will give banks other opportunities to take advantage of their customers. There is no cap on credit card interest rates. Currently, banks charge up to 35.99% interest on credit cards. Look for interest rates to increase over time.
Credit card fees should be “reasonable and proportional”. Regulators will determine this, but look for banks to find excuses to raise the price on fees. For years consumer advocacy groups have pointed out that the actual cost to banks for late payments is just a few dollars – the banks are making huge profits off your mistakes. Currently, late fees of $39 are common. Look for banks to find reasons to increase penalty fees.
Do you have a dispute with your card company? It will still go to arbitration rather than to court. Arbitration tends to favor credit card companies.
Banks are still free to institute new fees which will boost their revenue..
Finally, the credit card law will not take effect until next year, so in the meantime…more of the same.
For more information on how to choose the right credit card, see our Ultimate Free Credit Card Guide.