If credit cards could talk: "Reforms, what reforms?"
Filed under: Credit cards
I know everyone is going to be shocked to hear this, but according to Business Week's recent article, "Dodging Credit Card Reform," the credit card industry is trying to find loopholes in the new regulations that took effect in August and will again in February. You could knock me over a feather.Next thing I know you'll tell me that Jon and Kate are getting a divorce, or that professional wrestling is just entertainment. Credit cards are trying to exploit their customers? I think I need to sit down.
Here's the deal, if you're not aware. Last month, two of the reforms from The Credit Card Accountability, Responsibility & Disclosure Act of 2009 took effect.
From now on, if a creditor is going to increase your annual percentage rate (APR) or make any significant change, defined by the Federal Reserve Board, like raising your fees, they have to give you 45 days warning.
And each statement has to be mailed at least 21 days before the payment due date or grace period expiration date. No more of this, getting your bill and realizing it's due in four days.
OK, so far, so good, but according to Business Week, "there's a loophole: The rules don't apply to variable-rate cards, with rates that float up and down." And so credit card companies are shifting their customers to variable-rate cards. The article mentions that a Bankrate.com researcher estimates that 75% of all credit cards being used this year are now variable-rate cards. That's a pretty big loophole. Not only can the rates on two-thirds of the nation's credit cards change at any time, the 45-day warning and 21-day mailing rules are moot as well.
And then come this February, credit cards won't be able to lodge a fee when consumers go over their credit limit. That'll be welcome relief, but at least one credit card has come up with a new charge to make up for this lost revenue. Again, according to Business Week, Fifth Third Bank just began foisting a $19 fee if borrowers don't use the card for 12 months, which will likely bewilder financially-overburdened customers who are trying to use their credit cards less and more responsibly.
Is it any wonder some people in Congress are proposing a Consumer Financial Protection Agency?
The idea is that the CFPA would be able to come up with a consistent set of rules to protect people from their plastic. They'd also have the power to bring the law down on credit card companies that skirt those rules.
So if you're at all angry, you know the drill. Contact your Congressman or Congresswoman. I'm sure they'll be as shocked as you are that credit card companies are still, in effect, holding customers upside down and trying to shake all of the change out of their pockets.
Reader Comments (Page 1 of 1)
9-10-2009 @ 9:34PM
mjames2497 said...
The banks just keep pushing, at some point there will be another revolution in this country that will make the first one look like a tea party. How insane is it in the first place to give credit card companies a year to screw us before any laws take effect. And the idiots in Washington need term limits. That is a constitutional change that every American would agree to.
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9-11-2009 @ 11:54AM
Mike said...
Did anyone really believe that ANY regulation COULD help? Remember, the only goal of the politicians pushing regulation is to get re-elected. They have no reason to "fix" the "problem". It's irrelevant to them, no-one will notice that their regulations failed but hey, at least they "fought for the people".
If you don't like your credit card company then don't use their product. No-one has a "right" to borrow money for free and not be penalized for using it improperly (as defined by the agreement they signed). It's a PRODUCT, if you don't like it, don't use it. Leave the regulators out of it, they'll only make it worse, changing the rules mid-course again and again. That's not good for anyone.
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9-11-2009 @ 11:40AM
Gerry said...
Term limits is good... love the idea of it. Hope everyone will come on board and make your idea happen.. We need change now and this is the best change yet that can put people's power above from everyone else--be it "politicians or corporate america" Let's do it America!!
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9-11-2009 @ 3:29PM
CLEM said...
IT IS TIME TO TAKE BACK OUR COUNTRY FROM THE GLOBAL BANKS. WE NEED TO FIRE THE FEDERAL RESERVE ( NOT PART OF OUR THREE BRANCHES OF GOVERMENT) THE TREASURY SHOULD BE PRINTING OUR CURRENCY. THE BANKS SHOULD HAVE TO PAY A FAIR INTEREST RATE FOR SAVINGS AND NEVER BE ABLE TO CHARGE MORE THAN 10% INTEREST ON LOANS THE CURRENT SYSTEM FORCES PEOPLE TO SAVE IN THE STOCK MARKET WITH THEIR 401kS
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9-11-2009 @ 2:14PM
vmarie said...
Its insane, the credit card company tells you your limit and you know your limit but when shopping you grab the card and the transaction goes thru and when you get your next bill -first you get the collection call, statement comes shows 25.00 transaction when you only had 16.dollars available
1. shouldn't that credit card transaction been denied.
2. no it goes thru, your interest rate goes up the max. you are assessed a 35.00 over the limit fee, 19 .00 late fee where if the 25.00 was denied. your credit rating would still be good there would be no ovl and late fees . Also we should not have interest fee accrual on fees.
I also have a dentist office would rather turn me over to the credit bureau for 80.00 because I was home sick from work and did not call 24 in advance to cancel my appt. No I have not paid it and they are losing hundreds of dollar because I missed a quad cleaning. I refuse to pay 80.00 fir being sick which can be proven by my job. How can you charge someone 80 for nothing..
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9-12-2009 @ 4:53PM
Sharon said...
I agree we need to fire the Federal Reserve and our government as well as our people need to live by the rules our grandparents did if you dont have the cash to pay for it then you dont need it. We should have learned from the great depression that banks were bad instead we gave them even more power over us. When is this gonna end? I dont want to praise some hokeypokey politician for laws that the credit cards are already finding ways around. How acine is this whole situation. Law makers make laws that only the banks are allowed to break?
stop living in excess of our means people.
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9-12-2009 @ 6:32PM
luette said...
Another case of the government "trying" to fix something....
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9-12-2009 @ 9:26PM
donovansdanes said...
Has any one thought about starting to sue banks? When an individual applies for a credit card, the individual and bank enter in to an agreement. The agreement/terms of use and conditions are also stated in black and white when your card arrives. and therefore becomes a binding contract between lender and borrower, once you activate, and start using your card. Now I don't know about anyone else. But these B.S. changes in excessive APR rates "due to the overall economy" as I was told. Were never mentioned in any of my card member agreements. Nothing was ever stated in printed form. That at any time, the lender/bank or overall economy were to fall on financial dismay, the lender/bank automatically had the right to change all terms and conditions of my original card member agreement.
Now it did state that if "I" were to default, the terms (APR) rate etc may change. But nothing was ever stated about the lender or entire economy going to hell., would as well be just cause for the lender/bank to (automatically) change all terms and conditions to my agreement. An agreement (is) a contract. I DID NOT break MY contract with the bank/lender. The bank however, did break the contract/agreement, with out JUST cause.
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9-13-2009 @ 11:03AM
Barron Greynold said...
Got another good one for you!
Been a business customer at a Regional Bank for a number of years. Credit Card payments routinely "enhanced" the balance. Sevela times, when I went negative they "informally" covered the check. It was not abused!
Recently, a check was presented and, whoops, deposits had not been recorded! Federal Govt babk examiners were on the premises and they (a) required the $300 check returned, charged me $45, THEN applied the deposits and finally FROZE the account!
How about them apples! So much for the Obama administration helping "small business"
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9-13-2009 @ 11:45AM
Customize said...
First of all, credit cards are a privilege not a right and they carry with them the responsibility. Second, all of you signed an agreement saying you would abide by the bank's rules. If they are so exhorbitant why did you sign the agreement? Three, using a credit card one time every 12 months to avoid a $19 fee is nothing. Take you family out to eat a McDonald's once every 11 months and you have used your card. Quit whining about going over your limit and then complaining because there is a surcharge. Oh, but I suppose you are also the ones who whine when you are overdrawn on your checking account and simply want the bank to cover it and look the other way. We are abusing our privileges and then demanding the right to continue to abuse the privilege and blame someone else when their are consequences. GROW UP AND GET A GRIP!!!!
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