Consumers can’t relax with the credit card reform. People need to be wary now a lot more than ever. 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 people 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 any and all applications and read statements carefully when they get them.
Credit card offers exploding
Credit card companies can be very hard to control. Even with a horrible economy, the credit card reform act of 2009 has credit card business marketing efforts in overdrive. As documented by Synovate Mail Monitor, which tracks direct-mail offers, credit card spiels to U.S. households increased 29 percent first quarter of 2010. Some of the companies have doubled their efforts. Some of the largest ones are just predatory within the fees they come up with to charge customers more.
Credit card frauds
There is apparently a lot of credit card scams. Many say risk is why you will find late fees. 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. The report described that 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 is if a customer is late, the goes up. Another tactic is to set the payment deadline for early morning on the due date.
Credit card late fees, and more
Just the beginning are credit card late fees. It was reported by USA Today that other tricks to watch out for contain 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 increasingly, they’re charging fees of up to 5% on the amount transferred, with no cap. That means transferring a balance of $ 20,000 could cost up to $ 1,000.
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 a lot more common. The credit card reform bill will not allow credit card companies from offering introductory rates for less than six months. Card holders have to determine if they can settle the balance before the offer expires. Any late payments will prompt the business to cancel the introductory rate.
Some Annual fees: A lot 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 may be worth the ticket. Nobody who travels on average terms will want the mileage card. Some rewards cards will withhold rewards because of a late payment and demand a reinstatement fee to reclaim the rewards.
Credit cards make anything cost more
Credit card offers are overflowing because of the credit card reform act of 2009. But assuming more credit card debt in a poor economy is a bad idea. According to Smartmoney.com, when the economy is struggling, the value of goods and services falls relative to the value of money. That situation puts people with many credit card debt between a rock and a hard place. The value of things die while the price of anything falls. 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.
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/
