Thursday, May 21, 2009
CREDIT CARD REFORM: IT'S ABOUT DAMN TIME
For years, I (and finally a few members of government) have been railing against the credit card companies/banks and their obviously abusive policies regarding overlimit fees, payment fees and interest rates. Finally, we have a president and Congress willing to act upon the years of blatant disregard for consumer rights. Tuesday, a bill was passed by the senate that will regulate the massive credit industry in the United States. What does this mean to average credit users? (and certainly there are credit abusers as well) Consumer Reports, a trusted source of consumer info for decades, has provided an easy to digest list of reforms that may benefit you. Here is the pilfered list with all credit due to CR:
•Interest rates can’t be raised during the first year of an account
•Customers will be notified 45 days in advance of any change in interest rates
•Bills can be paid online or over the phone without incurring a processing fee
•Customers must be over 60 days late on payments before their interest rate can be raised on balances; if the rate is raised, it will go back to the lower rate if customers make the minimum payment on time for six months in a row.
•Overlimit fees can’t be charged unless cardholders are told that the purchase will put them over their limit and they authorize it to go through anyway
•If your card has more than one interest rate on balances, then payments must be applied to the highest interest rate first
•Gift cards can’t expire for five years, and issuers can’t charge dormancy fees for unused amounts left on the card
•Credit card statements must be mailed out 21 days before they’re due
•Individuals under 21 will need a co-signer on their cards unless they can prove that they have the means to make payments on their own
•Credit card agreements will have to be posted on the internet
Most notable here are the efforts to curb outrageous interest hikes (some for simply making ONE late payment) and the fees charged for overlimits and making payments (yes, charge your customers for paying their bills, that was always a great idea). This means that Master Card debit/credit cards will no longer be allowed to extend your credit by approving purchases that go over your limit without your knowledge/consent AND more perhaps more importantly, you can avoid the $30-$60 overlimit fees. I would have gone further to ban the over limit purchases all together, but that's just me.
Keep in mind, the protection against “retroactive” rate increases do not include cardholders who have made payments that are more than 30 days late in the previous year. This unfortunately includes more than 10 million Americans who may need this legislation the most. (NCLC)
Hopefully, this is the tip of the iceberg in securing consumer rights in a capitalist system that obviously thrives on wasteful spending and then abuses most of those who spend. Consumers must practice restraint and responsibility in spending, but I see increasing difficulty in young people's ability to do so considering the status and prestige assigned to the products/services they are almost required to buy in our society. I still feel that there should be a department of consumer affairs in the president's cabinet to represent the people/consumers instead of the current agencies that seem to only represent the interests of the American business; but that's another story.
Here is a brief list of current consumer protection groups:
Federal Trade Commission
National Association of Consumer Advocates
National Consumer Law Center
Consumer Product Safety Commission
Also, I'm not impressed with the loaded weapons in national parks rider attached to the bill. Riders (A clause, usually having little relevance to the main issue, that is added to a legislative bill) in general, are a bad deal and a stain on our democracy.
(via Consumer Reports and the pic by Liyin)