Credit card companies piling on fees, raising rates ahead of new federal rules
Filed under: Company News
The Center For Responsible Lending (CRL) released its findings on Monday and according to the report, Citigroup (C), Bank of America (BAC), J.P. Morgan Chase (JPM), Capital One (COF), HSBC (HBC), Discover (DFS), American Express (AXP) and Well Fargo (WFC) have each increased interest rates on existing balances for many of their account holders on an "any time, any reason" basis within the last six months. This practice will be illegal under the new Fed rules which take affect in July 2010. The CRL estimates that at least 10 million card holders have been affected, and some have seen increases of 10 percentage points or more on their existing rate at a time when many consumers are having trouble staying afloat.
"This shows that they are trying to get as much money as possible before the rules change," said Kathleen Day, a spokesperson for the center.
Day said the companies were "revving up" practices that they know are unfair. The companies fear their revenues will be affected when the practices are banned or curtailed after the Fed rules take affect. Legislation moving quickly though Congress could also put a damper on revenues. The result is that the companies are hitting their "best" customers -- those that have been able to continue to pay even as the recession has worsened -- with additional fees and charges to offset lost revenues when these practices are outlawed, and to hedge against losses from possible credit card defaults as the recession continues.
"New rules have to be put in place sooner rather than later because we see how the industry is reacting," said Day.
The report also said two of the top issuers have raised balance transfer and cash advance fees to an unprecedented level of four percent per transaction.
Several issuers have shortened grace periods between the issuance of a bill and the assessment of a late fee. The new Fed rules require longer grace periods.
And most credit card issuers have broadened the definition of over-the-limit, returned payment and convenience-check fees so that more customers are required to pay.
All of these practices would be eliminated under the new legislation. "Nothing that they are doing is new, but it's more of the same and it's worse," Day said.
The report did point out that some credit card issuers have taken steps to implement a few of the changes the Fed rules will bring, but on the issues that save consumers the most money, there has been no progress.
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Reader Comments (Page 1 of 22)
5-13-2009 @ 1:17PM
AL said...
I have quit using any credit cards, PERIOD. We can hurt these bums that are collecting bailout money and still screwing us over and over. It's damn unfortunate that OBAMA has yet to indict these people for FRAUD. AIG, Bank of America (Mexico) CitiBank etc. have the unmitigated gall to beg for taxpayer monies and then screw us. Do as I and many others have done and quit using credit cards and in a few years, they will be begging for us to come back and don't. Let them continue giving credit to college kids with no income or illegal immigrants and see if they get paid. Americans are fed up with the FRAUD of double dipping and getting away with it. Many people have just plain quit paying on their credit cards and who can blame them? OBAMA promised indictments for criminal activitys in the banking industry and also Wall Street and has that happnened yet? Do I think it will? HELL NO!
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5-13-2009 @ 1:37PM
P. Rockwell said...
Better yet, do what I did. Get rid of all your credit cards. The banks will disappear like a cancer in remission
5-13-2009 @ 1:52PM
Elorac said...
I totally agree with you. The answer is to STOP using credit cards.........The banks have a license to steal and that's just what they are doing. The dead beats won't pay - so they go after the ones who DO pay - and make fools out of us.
5-13-2009 @ 1:51PM
mickey said...
Pretty ridiculous to give credit card companies a list of things they are going to do to them a year from now. How was that supposed to help the consumer?
5-13-2009 @ 2:10PM
HELPLESS said...
CONSUMER CONFIDENCE AND SALES PLUMMET ON NEWS THAT BANKS THAT RECEIVED TARP FUNDS ARE SCREWING EVEN THEIR BEST CREDIT CARD CUSTOMERS.
5-13-2009 @ 3:11PM
angela pezzolla said...
Don't they realize people will just have to go bankcrupt and then they get screwed??
I have been closing most of my cards and getting the interest lowered at least for a year. It drops the payments in half.
5-13-2009 @ 5:01PM
David Bowles said...
I totally agree with you. Citibank raised my rate from 9.99% to over 14% without my knowledge. When I called about it, they said it was in some information I had received some months back (probably buried in fine print). They said I could close the account and keep the rate. So I did, but they did not keep their word. The rate is over 10%. I had my Sears credit card for over 40 years. So the merchant loses a customer, the bank loses a customer, and I lose a long-standing credit account, so the economy loses too. What S.O.B.'s these banks are--when I complained to the guy on the phone about the bank taking taxpayer money, then screwing us, he said it happened to him too, and works for Citibank! I am encouraging my Congressman and Senators to repeal the "too big to fail" rule and break up these huge banks.
5-13-2009 @ 5:16PM
Typhoon said...
Couldn't have said it better! We need to stop being taking avantage of by these companies and stop using credit cards. Their way of doing business is sheer thievery and has been for some time now!
5-13-2009 @ 5:17PM
jedkendall said...
We could just bring back usury laws, and put these bankers in the stocks for a while.
Behavior this reprehensible should be punishable retroactively -- it's sickening that they can behave in such a vicious, immoral manner purely because the laws prohibiting their behavior haven't been signed into law yet.
5-13-2009 @ 5:22PM
jovialdraper said...
I haven't used my VISA for 3 years...and the limit to me is more than I make in a year... what's wrong with this picture?
5-13-2009 @ 5:43PM
HELPLESS said...
CHASE DID THAT TO ME. Last winter, I mailed a payment just like I have for years. BUT OH SO MYSTERIOUSLY, FOR THE FIRST TIME EVER, THEY DIDN'T GET MY PAYMENT. I discovered it a week later and paid online. They charged me a late fee and canceled my promotional interest rate. STRANGELY ENOUGH, A WEEK LATER MY FIRST PAYMENT WAS FINALLY POSTED TO MY ACCOUNT, BUT OF COURSE THEY BLAME ME AND WILL DO NOTHING. I WONDER HOW MANY PEOPLE THEY DID THAT TOO. IS THERE A WEBSITE TO GET TOGETHER WITH OTHER PEOPLE WHO HAVE GOTTEN SCREWED??
5-13-2009 @ 6:27PM
Adam said...
I agree,,,,Just say no! I am one of the fortunate few for whom credit is a luxury and not a need. Therefore the credit card companies are EMPLOYEED by me. I decide when, how and IF I will use a credit card. Abuse me and I fire you by cutting up your card.
5-13-2009 @ 6:32PM
Anita said...
I think if everyone that has a credit card or cards in the USA, if all of us in the USA would go on strike and refuse to pay their credit card bills until they bring their interest rates and other charges back to normal because they are ripping us off and if they think they will give our names to the 3 credit agencies (the financial gestapos), then we will go further and for every bad report they put down on each client during this striking period, then the clients will not pay their bills until it is removed during this striking period. We need someone to organize this massive strike because the average person is tired of getting ripped off by these credit card providers.
5-13-2009 @ 6:49PM
Kathy said...
People these days seem to think it's cool to carry debt on a credit card, but living on credit and paying someone interest every month was not the way our parents lived. A store credit card could be used to make purchases, but was promptly paid off. Most people paid with cash or check. The whole concept that it is normal to carry a balance is out of whack. Since when is it smart to buy stuff you don't really need and then pay interest on the purchases? Since never.
5-13-2009 @ 7:03PM
Kathy said...
Credit cards are only a convenience. Pay them off at the end of the month with one check. Don't carry a balance and "make payments" because you are just throwing away your hard-earned money on interest they can increase any time they want. If you fell into that trap, get out of it. Pay it off, and only buy what you can afford in the future.
5-13-2009 @ 7:06PM
ALEX said...
Keira Knightley's scandal here: http://tr.im/l77j
5-13-2009 @ 7:52PM
GOUGEDANDRAPED said...
All of my 56 years I have conducted my self in a respectable manner and been responsible for all of my debts. All of my life, I have been treated as if I was the worst offender. I am sick of it. I am sick of the arrogance of people put in powerful positions. Go to Hell all of you. The banks will suffer the consequences of their temporary insanity for years to come. I will teach my children, and they will teach their children and the banks will suffer the wrath of the middle class of our society.
5-13-2009 @ 9:37PM
DW said...
I am sick of Credit Card Companies, I tried to get one of mine to lower the interest rate and they were so rude to me
I got mad and told them to close my account the woman said I would still have to pay it or they would send it to their collections dept. I told her I would go bankrupt, but she didn't care. I totally agree with everyone of these people we all should find a way to screw the companies, the Goverment it not going to do anything, but talk big Sign me disgusted with all the banks and credit care companies.
5-13-2009 @ 9:35PM
Rita Burleson said...
Elorac: Oh you are so right they not only "The banks have a license to steal " t he gov. has alwaye sondoned it as they use our money for thire pork.
go to www.Debt Cures .com and learn some shoking things.
5-13-2009 @ 1:18PM
steve said...
Well, I think it's very unfair to hit your best customers the ones who are paying on time with no problems. But what goes around comes around and they will get theirs in time AGAIN.
They have no where to turn but on the ones who are still paying on their debt, THEIR BEST CUSTOMERS. Is that the right thing to do???. Is that moral. We are back to the old greed game again. Get them while we can. Now you know why most people hate banks.
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