Credit card reforms may have made it more difficult for banks to exploit college students, but it turns out there is more than one way to turn an unsuspecting post-adolescent into a debt monkey. The trick is to issue students debit cards that run up their student loans rather than over-regulated credit cards.
credit card reform
Average interest rates have hit a new 9-year high of 14.7%, and we have credit card reform to thank for that. Por-kay? Unable to keep soaking you on the backend with hidden fees, tricks, and traps, issuers now have to push their profit-taking to the fore.
When you are a major national bank, and your fees and policies compare unfavorably to those of a Mafia loan shark, you’re probably in trouble. To celebrate the CARD Act going into effect on Monday, last night “The Daily Show with Jon Stewart” gave their audience a quick overview of how credit cards work. (“Or maybe they’ll just give you a rate hike of 30% for no reason at all. Why? F*** you, that’s why!”) Then correspondent Wyatt Cenac spoke with two people who have unique insights into how the American lending industry works: former Bank of America credit collections CSR, YouTube star, and Consumerist hero Jackie, and former Mafia loan shark Lou.
New laws and rules affecting banks and credit card issuers go into effect soon, depriving them of their badly needed profits. Since sudden rate hikes and cascading overdraft fees are soon to be things of the past, bankers are busy formulating creative new fees. Here’s what you have to look forward to in the new year.
Michael is in a situation that we anticipate will become very, very common in the coming months. His credit card company has imposed a $99 annual fee. He can accept the fee, or close his account. Not only is this his only credit card, but it’s the oldest credit line he has, so closing it would hurt his credit score. What would you do?
Should children have credit cards? Let’s ask ’em!
Hello, credit card reform! The first pieces of the CARD Act went into effect today. Card issuers must now allow customers to opt out of some changes to their cards, mail bills at least 21 days before the due date, and give 45 days’ notice of all changes in interest rates or fees. [Consumer Reports Money]
If you have any Chase credit cards, call to make sure they haven’t been canceled out from under you with no notice. Huh? Are credit card companies allowed to do that? Don’t be silly. Of course they are.
We’ve been keeping you posted about the progress of credit card reform, and sharing stories of readers who have already been affected by credit card companies‘ policy changes. Now the nice folks at Consumers Union want to hear about what kinds of stunts credit card companies are trying to pull on their customers. Won’t you share your stories with them?
Consumers aren’t the only ones looking to save money and gain a little extra cash on the side. Banks are people too, you know! In the face of toxic assets and credit card delinquencies, they’ve come up with a plan to increase their revenue: New fees! Higher fees! Higher minimum balance requirements! Trickier overdrafts!
Two Harvard doctoral students in economics compared how credit unions and banks operated their credit card divisions, and concluded that the recent CARD act “is likely to bring about moderate, and even positive, changes,” as banks begin to emulate parts of the fairer business model of credit unions. Specifically, they say, all the doom and gloom from the banking industry about how consumers will get shafted by the new rules is mostly fearmongering.
Get answers to your credit-card reform questions. We’d like to think we’ve already answered just about any question you may have about the new credit card reform law. But just in case, the experts at Consumers Union are on hand to cover anything we might have missed. Post your questions on their DefendYourDollars site, and they’ll do their best to provide an answer. [DefendYourDollars]