Tricky Ways Credit Card Companies Are Getting Around New Laws
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now you may have heard of the Credit Card Reform Act. Its aim is to
help consumers, but credit card companies are socking it to their
customers every way they can think of until it takes effect in
February. According to CNN Money, these companies are coming up with
tricky ways to boost profits and get around the new rules. Here are
some things to watch out for:
- Rate hikes. Interest rates have gone up over the past five years, to as high as 36%! There’s no law that caps rates, but the Credit Card Reform Act will help curb abusive practices. After next February, companies won’t be able to raise rates on existing balances, but you will be subject to higher rates if you miss a payment. Companies can raise rates as high as they want on new purchases. The best thing to do is to pay down your balances as quickly as possible and make sure you avoid late payments.
- New fees. The rates aren’t just going up, they’re multiplying. Cardholders are getting hit with fees they’ve never seen before. For example, some banks are now charging an “inactivity fee” for customers who don’t charge anything for a year. So if you have cards you don’t use, you might want to think about cancelling them.
- Higher minimum monthly payments.
Some companies have bumped up minimum monthly payments from 2% of the
balance to 5%. If you’ve got a $5,000 balance, that’s a big increase –
from $100 to $250. This really hits people on a tight budget who’ve
barely been able to pay their minimum payments, because each time they
don’t make the minimum, they rack up another penalty fee.
