Credit card reform doesn’t suggest consumers can relax and feel safe. People need to be wary now a lot more than ever. The credit card reform act of 2009 has looked at 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 looking for more ways to make money with new fees, shorter grace periods and higher late fees. Credit card users have to read the fine print on any and all applications and read statements carefully when they get them.
Exploding credit card offers
Credit card companies can be very hard to control. Even with a terrible economy, the credit card reform act of 2009 has credit card company marketing efforts in overdrive. 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. Credit card companies have more than doubled their efforts. Some of the largest ones could be considered predatory in the fees they come up with to charge customers more.
Scams for a credit card
You will find numerous creative credit card scams. Many say the late fees are there for risk. But now there is 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 said 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 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. The other is to have the deadline be early within the morning the day it is due.
Credit card late fees, and a lot more
Credit card late fees are just the tip of the iceberg. As outlined by USA Today, other tricks to watch out for include balance transfer fees, shorter introductory offer periods, and the fine print about annual fees on rewards cards.
Some of the 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. 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 credit card companies from offering introductory rates for under six months. Card holders need to choose if they can pay down the balance before the offer expires. Plus, if the payment is a day late, credit card companies will cancel the introductory rate.
Annual fees: More rewards cards are coming with annual fees, especially airline credit cards. Calculations are a lot more complicated with these companies. Unless it takes you years to get it, a fee could be worth the ticket. No average traveler will get enough points. Some of these great 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 more with credit cards
Credit card offers are overflowing because of the credit card reform act of 2009. But assuming a lot more credit card debt in a poor economy is a bad idea. Smartmoney.com reports that 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 everything from automobiles to airfare falls, so does their value when they’re purchased with credit cards. When a product is charged on a credit card, the ultimate price paid for it rises as the product loses all of its value, and that doesn’t include interest.
Additional details at these websites
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/
