Just because there has been a credit card reform doesn’t mean that consumers can relax. Now individuals need to be wary more than they ever have before. The credit card reform act of 2009 has looked at a lot more underhanded credit card scams from financial institutions. So now those institutions are just trying harder to sign people up for credit card debt than ever before. 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 can be extremely hard to control. Even with 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 credit card companies more than doubled their efforts. Some of the largest ones could be considered predatory in the fees they come up with to charge consumers more.
Credit card scams
There is apparently a lot of credit card scams. Many say the late fees are there for risk. But now there is a new report with the Center for Responsible Lending shows that late fees have nothing to do with the credit card company’s potential loss. As outlined by the report, late fees aren’t pegged to the risk a borrower might default on their credit card debt. Rather than that, nine of the top 10 traits of credit card companies who charge high late fees are other unfair or deceptive practices. One is if a customer is late, the interest rate goes up. An additional is to have the payment deadline be for early morning on the due date.
A lot more than just credit card late fees
Credit card late fees are just the tip of the iceberg. According to USA Today, other tricks to watch out for consist of 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. The amount transferred is being charged around 5% with no cap. That means transferring a balance of $ 20,000 could cost up to $ 1,000.
Some of the shorter introductory offers: Some credit card companies offer percent interest for up to 18 months, but a six months is becoming much a lot more common. The credit card reform bill prohibits credit card companies from offering introductory rates for less than six months. Card holders have to determine if they can settle 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. Calculations are more complicated with these companies. The fee may be worth the ticket unless it takes you years to get it. Nobody who travels on average terms will want the mileage card. Some rewards cards will withhold rewards because of a late payment and demand a reinstatement fee to reclaim the rewards.
Credit cards make everything cost more
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. According to Smartmoney.com, when the economy is struggling, the value of goods and services falls relative to the value of money. A rock and a hard place are where people fall with debt. As the price of anything 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 include interest.
A lot 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/
