Credit Card Companies Worm Their Way Around New Restrictions

[The Straight Story]

Credit Card Companies Worm Their Way Around New Restrictions
Friday, February 05, 2010

Determined to make up for lost revenue from the 2009 Credit CARD Act, issuers of credit cards are increasingly relying on other fees not restricted by the federal legislation. The Center for Responsible Lending has determined in a report that credit card companies are using at least “eight hidden charges across more than four hundred million accounts” to keep their businesses profitable.

Among the new ways lenders are gouging customers is pick-a-rate, in which companies change the formula for calculating variable interest rates. This costs consumers at least $720 million a year. Another trick is variable rate floors that prevent interest rates from ever falling below a new credit card’s starting point.

Consumers who pay off their balances and chose not to use a credit card can still be a source of revenue through the use of inactivity fees, which can be as high as $36 a year, according to the center.

http://www.allgov.com/Controversies/ViewNews/Credit_Card_Companies_Worm_Their_Way_Around_New_Restrictions_100205

[aint_no_life_nowhere]

1. Parasitism has become a science

All of those credit card company employees and all that thought and effort that goes into fleecing the public. It's a shame they can't turn that energy and knowledge into something that actually does good.

[Vinnie From Indy]

2. the 2009 Act was a sham from the get go

The nod, nod, wink, wink between these giant credit card companies and Congress is exploding all over the place. From "phasing in" the acts provisions to knowingly leaving huge loopholes Congress delivered a masterpiece of bullshit and called it a resounding win for consumers.

In short, the legislation was designed, in large part, by the very companies it was meant to reign in. The phase in period was a cruel joke allowing credit card companies time to jack rates up to 29.99% on folks with large existing balances.

This is just another gargantuan example of how Washington DC simply DOES NOT care about average Americans. These credit card companies, banks and mortgage companies are truly driving people into absolute poverty with these, IMHO, criminal activities.

[SoCalDem]

9. yes indeed.. financial/insurance legislation is written by the

banks & insurers... no way will they every willingly accept less.. only more... and then more...and after that?..more.

[Mari333]

3. better yet, dont use credit cards . nt

[Dappleganger]

4. We desperately need a Consumer Protection Agency! nt

[jtuck004]

5. Worming. Should we expect more from snakes n/t

[cbdo2007]

6. So at what point do we realize we can't trust the Credit Card companies and just stop using them?

I've already done that. Everyone else here should do that to and encourage everyone you know to stop using CC's and cancel most of them. Keep one for emergencies with no inactivity/annual fee. Get rid of the rest.

[Matariki]

7. "inactivity fees"

:eyes:

[cbdo2007]

10. Really...thinking about it, inactivity fees are the best thing to happen to

consumers in decades. Hear me out...

Anyone who tells the credit card company "here, take this money from me every year for no reason. all I'm going to do is sit here and let you have it." is a fool and is getting what they deserve.

"Inactivity fees" need to encourage people to cancel those cards. If you're not using it, you expecially don't need it. So if "inactivity fees" starts healing the current complacency that we all have about our own personal finances, then they are really in everones best interest and will do a LOT of good.

[Matariki]

17. And cancelling cards negatively impacts credit scores.

meh. the whole stupid setup.

[MadHound]

8. The only thing that is going to stop credit card companies is if the people stop using them

It's that simple. Cut up your cards, go to a cash/check/debit basis. Starve the beast.

[Vinnie From Indy]

12. While your offering is no doubt great advice,

it really misses the point in many ways. The fact is that there are MILLIONS of Americans that have large credit card debt. They accumulated these debts over many years and many, if not all, have seen the credit card companies jack their rates to 29.99% or more on existing balances. Regardless of whether you personally have any credit card debt, the fact is that these practices are harming our economy in significant ways that DO effect you personally.

I understand and agree with all the folks advocating an end to credit card use where possible, but that is NOT the issue here. The issue is the millions of families that are struggling to stay above water and that will eventually cause our economic situation and society great problems.

[cbdo2007]

14. We understand the issue and aren't missing the point at all. You can't fight

the credit card companies. They will always win. The minute anyone borrows money from someone they are enslaved to them.

Literally the only way to beat the CC companies is to teach people to get out of debt and stop charging on credit cards. While I agree that there are many instances where the CC companies have taken advantage of people and jacked up their rates for no reason and other unethical practices, the majority of people who are slaves to the CC companies just don't know/care what they're doing. They have lived well beyond their means for years, buying all sorts of useless stuff and then realize 1/4th of their monthly income is going to credit cards. I was there. I use to be complacent about it and I was having a damn good time but getting rid of the CC debt is one of the best decisions I've ever made and to do it I had to live well below my means.

[Vinnie From Indy]

16. I disagree

you write,
"the majority of people who are slaves to the CC companies just don't know/care what they're doing."

Any proof to back that up?

The fact is that this IS a serious issue for millions of Americans and it has a substantial impact on the economy as a whole not to mention the tens of millions who are being robbed each and every month by these companies.

It may be true that many people did not know that they could be on the receiving end of such practices, but does that in any way make their plight less valid or less in need of redress?

You seem to confuse your situation as being the same as all people caught in this web. So, yeah, I do think you are missing the point.

Cheers! :)

[Skink]

11. Who had that inactivity fee?

This is sort of like the yearly fee companies used to charge.

[formercia]

13. This is why they hire lawyers

especially ones who are members or staff in Congress. What happened to plain language legislation?

[bvar22]

15. Those who support the current HCR because it "regulates" the indusrty...

..NEED to look at THIS.
THIS is EXACTLY HOW effective the NEW Health Insurance "Regulations" will be.

The Bought Politicians and the Lobbyists writing these new Health Insurance Industry "Regulations" already know this.