Credit card reform doesn’t suggest consumers can relax and feel protected. Individuals be wary now more than ever. The credit card reform act of 2009 is cutting into some of the a lot more underhanded credit card scams from financial institutions. So now those establishments are trying much harder to sign people up for credit card debt than they ever have. And they’re in search of more interesting and exciting solutions to make money with new fees, shorter grace periods and higher late fees. Credit card users have to read the fine print on applications and read statements carefully when they receive them.
Credit card offers exploding
Credit card companies are as hard to control as noxious weeds. Besides a terrible economy, the credit card reform act of 2009 has credit card company’s trying desperately to sell. According to Synovate Mail Monitor, which tracks direct-mail offers, credit card spiels to U.S. households increased 29 percent during the first quarter of 2010. Some of the companies have doubled their efforts. Some of the largest ones could be considered predatory in the fees they come up with to charge consumers more.
Scams for credit cards
Issuers have numerous creative credit card scams. Many say they price late fees for risk. But a new report from the Center for Responsible Lending shows that late fees have nothing to do with the credit card company’s potential loss. The report described that late fees aren’t pegged to the risk a borrower might default on their credit card debt. Instead, nine of the top 10 characteristics of credit card companies who charge high late fees are other unfair or deceptive practices. One of these is paying a higher interest rate if there is a late fee. Another tactic is to set the payment deadline for early morning on the due date.
Credit card late fees, and more
Credit card late fees are just the tip of the iceberg. USA Today reports that other tricks to view out for contain balance transfer fees, shorter introductory offer periods, and the fine print about annual fees on rewards cards.
Balance-transfer fees: Credit card companies offer percent introductory rates to transfer balances to a new card. But increasingly, they’re charging fees of up to 5% on the amount transferred, with no cap. It could cost $ 1,000 to transfer $ 20,000.
Some of the shorter introductory offers: Some credit card companies offer percent interest for up to 18 months, but a six months has become much a lot more common. The credit card reform bill prohibits any of the credit card companies from offering introductory rates for less than six months. Card holders have to decide if they can pay off the balance before the offer expires. Any late payments will prompt the company to cancel the introductory rate.
Some Annual fees: More rewards cards are coming with annual fees, especially airline credit cards. When using these companies, calculations can be more difficult. A free airline ticket may seem worth the annual fee, but accumulating enough miles to purchase a ticket could take years. No average traveler will get enough points. Some rewards cards will withhold rewards because of a late payment and demand a reinstatement fee to reclaim the rewards.
Every little thing seems to cost a lot more with credit cards
Because of the credit card reform act of 2009, credit card offers are exploding. But a poor economy and credit card debt are a bad mix. Smartmoney.com reports that when the economy is struggling, the value of goods and services falls relative to the value of money. That situation puts individuals with a lot of credit card debt between a rock and a hard place. As the price of everything falls, so does their value. When a product is charged on a credit card, the ultimate price paid for it rises as the product loses value, and that does not contain interest.
More information on this topic
Center for Responsible Lending
responsiblelending.org/credit-cards/research-analysis/a-just-fee-or-just-a-fee.html
USA Today
usatoday.com/money/perfi/columnist/block/2010-06-01-yourmoney01_ST_N.htm
Smartmoney.com
smartmoney.com/Personal-Finance/Debt/carry-credit-card-debt-watch-the-dollar/
