Credit card reform does not mean consumers can relax and feel safe. Now people have to be wary more than they ever have before. The credit card reform act of 2009 has looked at a lot more underhanded credit card scams from financial institutions. So now those establishments are trying much harder to sign individuals up for credit card debt than they ever have. And they’re looking for more interesting and exciting ways to make money with new fees, shorter grace periods and higher late fees. Credit card users need to read the fine print on applications and read statements carefully when they receive them.
Credit card offers
Credit card companies are hard to control. Besides a terrible economy, the credit card reform act of 2009 has credit card business marketing efforts going crazy. Synovate Mail Monitor reports that 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 are just predatory within the fees they come up with to charge customers .
Some credit card hoaxes
There seems to be many credit card scams. Many say they price late fees for risk. But now there is a new report with the Center for Responsible Lending shows that late fees have nothing to do with the credit card company’s potential loss. According to the report, late fees aren’t pegged to the risk a borrower might default on their credit card debt. Instead, nine of the top 10 characteristics of credit card companies who charge high late fees are deceptive practices. One of these is paying a higher interest rate if there is a late fee. Another tactic is to set the payment deadline for early morning on the due date.
Credit card late fees and even more than that
Credit card late fees are just the beginning. 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.
Balance-transfer fees: Credit card companies offer percent introductory rates to transfer balances to a new card. But with no cap, they are charging fees of 5% on the amount transferred. $ 20,000 could cost you $ 1,000 to transfer.
There’s also shorter introductory offers: Some credit card companies offer percent interest for up to 18 months, but a six months is becoming much more common. The credit card reform bill will not allow credit card companies from offering introductory rates for less than six months. Card holders need to determine if they can settle the balance before the offer expires. Also, credit card companies cancel the introductory rate with late payments.
Annual fees: More rewards cards are coming with annual fees, especially airline credit cards. Calculations are more complicated with these companies. Unless it takes you years to get it, a fee worth the ticket. It’s very difficult for average leisure travelers to justify the cost of a mileage card. Some rewards cards will withhold rewards because of a late payment and demand a reinstatement fee to reclaim the rewards.
Everything costs a lot more with credit cards
Credit card offers are exploding because of the credit card reform act of 2009. But a poor economy and credit card debt are a bad mix. As outlined by Smartmoney.com, 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 individuals fall with debt. As the price of every little thing falls, so does their value. When a product is charged on a credit card, the ultimate price paid for it rises consistently when the product loses value, and that doesn’t consist of interest.
Read a lot more on this topic here
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/
