Credit and Prepaid Card News
The latest news on the credit card and prepaid card industry from the Center for Responsible Lending.
- Credit Cards Still Use Soon-to-be-Banned Policies
Associated Press 28 Oct 2009
An analysis conducted by the Pew Charitable Trusts' Safe Credit Cards Project concludes that the nation's 12 biggest credit card issuers are still engaging in practices that will be considered illegal once new restrictions kick in early next year. The organization examined nearly 400 cards offered by the banks that account for 90 percent of outstanding credit in this country. What it found is that most of them continue to hike interest rates on outstanding balances, trigger penalty interest rates with just one or two late payments or over-the-limit transactions, and apply payments to the lowest-interest portion of balances first -- all policies that are outlawed under the Credit Card Accountability, Responsibility and Disclosure (CARD) Act signed by President Obama in May. Additionally, penalty interest rates have climbed, as have the lowest interest rates offered to new customers; and issuers have added fees -- or raised existing ones -- for balance transfers, cash advances, overdraft protection, and other services. "It's clear that until the law takes effect, or Congress accelerates the implementation date of the law, these practices are going to continue to be out there," declares study co-author Nick Bourke. "Once it takes full effect next year, it's going to stop a lot of unfair and deceptive practices." If consumer advocates have it their way, the crackdown will start sooner. Responding to ongoing complaints from the public, Congress is considering moving the effective date of the CARD Act to Dec. 1 instead of waiting until February to fully implement the law.