Credit Card Bill is Good Progress

But It Pays to Remain Alert to Tricks, Traps, and Any Changes In Your Statement

Although the Credit CARD Act of 2009 was a major win for borrowers, credit card companies still keep you guessing by finding new ways to make money. We've studied their tactics and will keep watch long after the credit card bill becomes law February 22, 2010.

Even with federal legislation in place card issuers can continue to:

  • Saddle you with other, often hard-to-understand charges, such as fees to get a paper statement, for purchases abroad, for having a zero balance or "account management fees" (at least one large bank has done this – in the amount of $19 per year – since passage of the Credit CARD Act).
  • Close your account or reduce your credit limit without notice for any reason. Contact your card company if this happens to you. Under the new law they must wait 45 days before they can tack on an over-the-limit fee or a penalty rate on a newly lowered credit limit.
  • Arbitrarily change any or all terms for credit cards issued to small businesses.
  • Raise your interest rate without limit on future purchases as long as they give 45 days notice. If you don't want the higher rate, you have the right to close the account and pay it off over five years. 
  • Increase your minimum monthly payments, as a percentage of total balance. A major issuer made headlines in the fall of 2009 for doing this.
  • Prevent cardholders from bringing disputes before a jury in court, a practice known as mandatory or forced arbitration
  • Charge whatever fee or interest rate they want.

"Gotcha" Late Fees Stick Around, Too
If you don't pay on time, harsh penalty fees will plague you. In July 2010, the Federal Reserve considers what is fair to card customers (interpreting what a "reasonable and proportional" charge on your remaining balance is). Until then card companies decide.

CRL's Dodging Reform report found that 9 of 10 borrowers get hit by a fee of $39 if they're late. As late fees are structured now, people with balances of $250.01 are paying the same late fee as a borrower with more than a $1,000 balance.

Needed Now? A Regulatory Agency that Safeguards Consumers
The Credit CARD Act stops the worst practices dished out by industry to date, but Congress can’t pass a law each time abusive lenders come up with new bad practices and products. An independent financial regulator whose mission is to ensure that borrowers receive fair loans and affordable financial products is critically important and needed now.