Washington – Now more than ever, it pays to read the fine print.
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That’s the advice advocates are giving credit card customers in the months leading up to February, when the government imposes tough new rules on banks.
Politicians and citizen groups are hearing from customers who have noticed increased interest rates, changes in conditions and extra fees.
“They’re pushing limits and in some cases stepping over the limits,” said Lauren Bowne, a lawyer for the Consumers Union.
Under the Credit CARD act, banks will have a tougher time hiking interest rates on existing balances and will have to give more notice when they do.
The companies requested until February to come into compliance and insist stiffer fees are the only way to deal with a record number of balances going unpaid because of the lousy economy.
Some consumers fear banks are using the extra time to bend the rules and impose increases before the deadline – and some members of Congress are pushing to put the legislation into effect immediately.
“Credit card companies are pulling out all the stops in order to squeeze consumers before the new rules,” Sen. Chuck Schumer (D-New York) said. “Breaking all the rules before they go into effect isn’t exactly what Congress meant by coming into compliance.”
Consumers Union has found several ways companies are confusing consumers:
– Customers’ annual interest rate is jacked up to 29.99%, but the company will credit 10% back if payments are made on time. The catch: The interest rate bounces back up if payments are even a day late, and the bank can end the program at any time.
– Companies offer a variable interest rate that fluctuates like the Wall Street Prime Rate Index. Although the rate rises as much as the index does, banks might limit how far it decreases when the index falls.
Advocates are warning even the most faithful bill payers to scrutinize their mail to look out for any sudden changes – and, as always, to keep spending in check.
What the banks are doing now with the credit cards is nothing short of geneyva.
With new rules of the road in place, the legacy banks will find themselves with nothing BUT bad credit on their books. These new rules are a great opportunity for NEW banks to come on the scene that are not strapped with bad debts. This will create a whole new level of competition.
More conservative banks like CNL or 1st United (FL banks) which never got into the sub-prime mortgage mess, nor the “give everyone a $5000 credit card” game will find themselves in a unique position to lure truly credit-worthy accounts to their banks.
There are many “smaller” banks out there waiting to make their move into the “big game” and this interest nonsense may be what pulls them in.
If nothing else, this should force the marketplace wide open. Unfortunately, those banks that gave away credit cards like it was water (their own fault) may find themselves shrinking… fast.
I just got 100,000 British Airways miles from Chase just for opening a new British Airways Visa account. Do a search, you’ll find the offer. I don’t know how they are planning to make money, if they are giving away the store.
I pulled a fast one on American Express. I went to court a few weeks ago and legally changed my name to “Your Name Here”. Now I can use the credit cards they send in the mail.
hahahah your name here that a good one but isnt that gayneva