Rat your credit-card company out to the Fed

Ripped from the wires ... In an editorial Saturday, the Philadelphia Inquirer notes that readers sick of sleazy credit-card-company tactics should comment on the Federal Reserve's proposed new crackdown rules. This piece includes a link to the Fed's public-comments section:

Consumers have plenty of reasons to be disgusted with credit-card companies these days.

Without warning, banks are tripling a cardholder's interest rate, to levels as high as 32 percent. Late fees, which averaged about $10 a few years ago, have risen as high as $39. Mailed statements seem timed to give the consumer the fewest days possible to return a payment by the due date.

About one-third of credit-card companies engage in "double-cycle billing,'' charging customers interest not only on the unpaid balance, but also on the portion of the balance that was paid on time.

The growing number of consumers' complaints about unfair credit-card fees and deceptive business practices has prompted the Federal Reserve Board, and some lawmakers in Congress, to consider cracking down. The need for action on behalf of cardholders is clear.

The tricks played by credit-card companies are making it harder for consumers to dig out from under a growing mountain of debt. Americans were carrying $960 billion of credit-card debt in May, up from $879 billion at the end of 2006. The average household with credit cards has a balance of $8,600.

The Federal Reserve Board is proposing new rules to protect consumers from unfair practices such as double-cycle billing. It is inviting the public to post comments on its Web site at www.federalreserve.gov. Click on "Consumer Information'' and go to the "Proposed Rules for Credit Cards and Overdraft Services.''

Since May, more than 12,000 consumers have logged their complaints and suggestions. Among them is a Drexel Hill, Pa., man who told the Fed that his credit-card company raised his rate from 8 percent to 28 percent despite never having missed a payment or exceeded his credit limit.

"How can an institution justify this, and how is it fair to a consumer who honored and continues to honor his obligation?'' he asked.

A man from Sewell, N.J., complained that his credit-card company raised his interest rate 8 percent, despite an improvement in his credit score. And Paul Kelley of Havertown, Pa., told the Fed, "Enough half-truths and shell games. Credit-card companies do not give people an honest chance to be responsible.''

Congress has been hearing the outrage, too. An Ohio man testified to the Senate Small Business Committee that he paid $6,300 on a $3,200 credit-card debt over six years, but still owed $4,400. How? The card issuer had charged him $4,900 in interest, $1,100 in late fees, and $1,500 in over-the-limit fees. (He was charged over-the-limit fees 47 times, although he'd gone over his limit three times). The fees and interest totaled $7,500, for a total charge to the customer of $10,700.

Although it is no guarantee, there is a way for consumers to fight back in the short term. Some people have reported success when they contact their credit-card company to restore a lower interest rate or to waive a fee that they believe was charged unfairly.

Banks scored record profits thanks to questionable lending practices. The emphasis on credit-card fees and penalties has grown out of whack because it has become too important to a bank's profitability. It is time for the Federal Reserve Board and Congress to restore some fairness to the system.

In addition to the Fed's proposals, a bill languishing in the Senate would prohibit the charging of interest on debt that is paid on time. It would also require companies to provide 45 days' notice before raising interest rates, and to mail statements at least 25 days prior to the due date.

The deadline for the Fed to receive public input is Aug. 4. Go online and put your outrage to good use.

http://www.philly.com/

Comments?

Comments

[DanielC]

Once in another lifetime (aka many moons ago), I too was suckered into the "easy CC scam" of C***Bank (name hidden to protect the ...) after college.

Here too my rate once I had a balance, well under the 2k limit started jumping up to above 20%. You know the vice-squad in most cities bust "loan-sharks" for this practice, but our banking cartel goes on unregulated. If regulations are put in place Congress (state or fed) seem to come to the rescue and "save the cartel" and take those pesky regulations away.

Anyhow, after the $200.00 debt grew close to $500 in fees and charges, I "juggled" bills and paid the darn thing off, and only kept it for ID purchases on Rental cars. Yeah, I paid the annual fee for a couple of years till I just got rid of the blood-sucking card.

From time-to-time I wish I still had one, but for the most part, I'm glad I rid myself of this thing. Now with debt cards being MC or Visa, I get rentals without the hassle of the fees or charges.

It's called FREEDOM!

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[Denney Clements]

Could not agree more, Daniel. Best way to avoid these problems is to pay cash. Of course, not everyone feels he can do that. Doing without while saving up for a "want" seems to be a lost art in America.

dc

[Nick]

Credit One? I would get rid of that card, but it still has a good amount of debt on it.

Similar thing with our mortgage company. Long story short, we were late for a couple of months, missed a payment, nothing too too serious. They sent us a letter telling us what was owed, we paid it, up to date. Then they come back with a $49 administration fee. We, meaning myself, my parents, and the mortgage company itself, couldn't figure out what it was, only to laugh and guess that it was the fee for writing and mailing a letter telling us we owed $49, since every other fee was accounted for, with none waived either (our decision, we didn't want that to come back and haunt us).

Depends where you go with a debit card though. For some reason, some car rental companies refuse to take them, even though as I understand it, that is illegal. Oh well, maybe I liked using a certain company that decided to drop this bombshell. So I go with another company, say Hertz, and have no problems, and actually may like them better. Company 1 may have lost a customer.

[Denney Clements]

That's why I keep an Amex card for travel. Safer that way, too, than using a debit card. But I pay off the balance every month, usually online, to avoid invoking the fees.

dc

[beachguy(original)]

The people that own the banks, own the federal reserve.

This yak yak is just republican press-getting headlines.

If anything the rates will get higher.

All you gotta do is look at the success of the city where the chief of the fed was born....This will give you an idea of what kind of lifestyle is in your near future.

ha ha

[Screaming Violet]

How about the new where in Wash DC my buddy Barney Franks won't let out of committee some piece of legislation that will aid in putting more oversight in the practices of the Credit Card compainies.
And I thoought that the Dems were suppose to help the American people.
Well, it looks like I may hasto see my ol' chum and give him a tongue lashing.
Maybe that'll do the trick We the People need?

[DanielC]

Patrick,

I can read your pain and anger in your post. I can put myself in your place and understand some of your points.

It's a job, we all get laid-off, fired, terminated, downsized, and/or forced to sell/close the business and feel anger at the event.

I'll say a prayer for your family and you tonight. It's all I can provide at this time.

Much love,
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