Credit card companies find clever ways around Credit CARD act.
The much anticipated Credit Card Responsibility Accountability and Disclosure Act (or Credit CARD Act) finally took effect on 22nd of February, 2010. The purpose of this law is to reform credit card industry deceptive and abusive practices without resorting to price controls and rates/fees setting. Indeed, provisions of this new piece of legislation outlawed the most outrageous practices the credit card industry was notorious for such as double-cycling billing, universal default, arbitrary rate increases, excessive fees, and due date gimmicks.
With more than 60% of American cardholders carrying the month to month balance on their credit cards, and average balance per household being approximately $7,300, the timing for this law couldn’t have been better. Today American credit card holders need all the protection from predatory and unfair lending practices they can get. New Credit CARD act also obligated the card issuers to eliminate deceptive, confusing or unclear language in their contracts and statements in order to make them easier to understand.
It’s been 9 months since the bill was passed by Congress and Senate, and then signed by President Obama. During this time creative minds employed credit card industry didn’t rest for a second, working hard on the new ways to make up for the lost $18 billions in profits from penalties and fees every year.
Let’s have a look at what they have come up with so far.
Before the Credit CARD Act even went into effect most of credit card companies pro-actively increased rates and fees.
Most of the major credit cards also introduced $1 “statement fee”. $12 annually per credit card, multiplied by $630 millions of credit cards in circulations in America brings us to around $7 billion of additional revenue. Neat, isn’t it?
Next one is rate rebates. It’s illegal to retroactively increase rates anymore, but it’s ok to place high interest rates on the account, and then provide a discount rate for on-time payment.
Credit card companies are notorious for being deceptive and sneaky, don’t let them trick you. Keep an eye on your account and shop around for better deals. If your outstanding balance is too high to handle and you are struggling with your monthly payments, don’t despair. Be proactive. Get in touch with one of our legal team members by filling in the form below and we will be able to offer you a solution to your problems.
Sarah M. Kline
TEPA Opportunities
(310) 295-1965 (9-6 PST)
