Caveat Emptor! New Credit Card Fees, Tactics on the Way?
What's wrong with the current credit card bill? Well, for starters, the new credit card rule which went into effect this week could wipe billions of dollars from the revenues of major credit card companies.
Okay, but what's the bad news in that?
Answer: Did you really think that the major credit card companies would go down without a fight?
As discussed in this blog, on Monday, major portions of the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) went into effect, amending the Truth in Lending Act and providing some legislative relief to consumers. The CARD Act, shields consumers from some deceptive trade practices employed in the consumer credit industry, particularly by credit card companies.
Of course, credit card companies are balking at the prospect of shelling out billions under this new law.
Here's card companies might do in order to recuperate their losses:
- Raise Rates. There was no blanket rule in the legislation to prohibit the major credit card companies from raising rates. There were just limitations, including the requirement to notify cardholders 45 days in advance. Remember those little notices you receive in the mail, from time to time? The ones that tell you that there has been a change in your credit card terms-and-conditions? Well, maybe you should read it, because if you don't agree, you could cancel your card and pay off your remaining balance at your old terms.
- New credit card fees. There laws leaves the door open for a variety of new credit card fees. Some of these may include: fees for paper statements, fees for overseas transactions (i.e. even on online purchases made with a foreign seller), fees to reinstate your rewards and fees to transfer your balance... even fees for not using your card.
- Stingy rewards. Many credit card companies will start becoming more stingy on rewards plans, according to CNN. And some have gone as far as removing your rewards if you're late to pay, allowing you to reinstate the rewards by paying a fee.
- Stingier credit. Credit card companies will be cracking down on credit extension. It may start becoming more difficult to get a credit card or to have your credit limit extended.
There are probably many things you can do to protect yourself, such as paying your balance on time, for starters. But one of the most important things for consumers to know is that they must be in the know. Consumers should take every effort to read the terms and conditions of their credit card agreement. They should also make sure to read the letters the card companies send in the mail, detailing any change to the credit card services. These notices will tell you when the companies are introducing new fees.
Remember, those notices can be your ticket out of your credit card, if you're not happy with their new fees.
- CARD Act Part 2: Key Credit Card Reform Takes Effect (FindLaw's Common Law)
- First Part of New Credit Card Laws Take Effect (FindLaw's Common Law)
- Credit Card Accountability, Responsibility and Disclosure Act (Open Congress)
- Credit Card Fees: The New Traps (Wall Street Journal Online)
- New Rules, New Traps for Credit Cards (CNN)
- Credit Card Debt Relief (provided by Law Office of Thomas P. Hogan, Attorney At Law)
- Rebuilding Your Credit After Bankruptcy (provided by UHLLAW, PC)