Just because there’s been a credit card reform doesn't mean that people can relax. Now people need to be wary a lot more than they ever have before. The credit card reform act of 2009 is cutting into some of the a lot more underhanded credit card scams from many of the financial institutions. So now those institutions are trying much harder to sign people up for credit card debt than they ever have. And they’re looking for more solutions to make money with new fees, shorter grace periods and higher late fees. Credit card users have to read the fine print on their applications and read statements very carefully when they go to receive them.
Resource for this article: With credit reform, credit card offers are getting a lot more deceptive By Personal Money Store
Exploding credit card offers
Credit card companies can be extremely hard to control. Even with a terrible economy, the credit card reform act of 2009 has credit card company's trying desperately to sell. As reported by Synovate Mail Monitor, which tracks direct-mail offers, credit card spiels to U.S. households increased 29 percent during the first quarter of 2010. Some credit card companies a lot more than doubled their efforts. Some of the largest ones are just predatory in the fees they come up with to charge customers more.
Credit card frauds
Issuers have many creative credit card scams. Many say the late fees are there for risk. But a new report from the Center for Responsible Lending shows that late fees have nothing to do with the credit card company’s potential loss. The report explained that late fees aren’t pegged to the risk a borrower might default on their credit card debt. Instead, nine of the top 10 characteristics of credit card companies who charge high late fees are other unfair or deceptive practices. One tactic is imposing a much higher rate of interest if a customer pays just a day late. One more is to have the payment deadline be for early morning on the due date.
Credit card late fees and even a lot more than that
Just the beginning are credit card late fees. It was reported by USA Today that other tricks to look at out for include balance transfer fees, shorter introductory offer periods, and also the fine print about annual fees on rewards cards.
Balance-transfer fees: Credit card companies offer percent introductory rates to transfer balances to a new card. But with no cap, they are charging fees of 5% on the amount transferred. That means transferring a balance of $ 20,000 could cost up to $ 1,000.
Shorter introductory offers: Some credit card companies offer percent interest for up to 18 months, but a six months is becoming much more common. The credit card reform bill prohibits any of the credit card companies from offering introductory rates for less than six months. Card holders may have to be able to determine if they are able to pay back the balance before the offer expires. Any late payments will prompt the company to cancel the introductory rate.
Last you will find annual fees: A lot more rewards cards are coming with annual fees, especially airline credit cards. When using these companies, calculations could be more difficult. A free airline ticket may seem worth the annual fee, but accumulating enough miles to buy a ticket could take years. Nobody who travels on average terms will want the mileage card. Some of these great rewards cards will withhold rewards because of a late payment and demand a reinstatement fee to reclaim the rewards.
Everything costs more with credit cards
Because of the credit card reform act of 2009, credit card offers are exploding. But a poor economy and credit card debt are a bad mix. Smartmoney.com reports that when the economy is struggling, the value of goods and services falls relative to the value of money. A rock and a hard place are where individuals fall with debt. As the price of everything from automobiles to airfare falls, so does their value when they’re purchased with credit cards. When a product is charged on a credit card, the ultimate price paid for it rises as the product loses value, and that does not include interest.
Citations
Center for Responsible Lending
responsiblelending.org/credit-cards/research-analysis/a-just-fee-or-just-a-fee.html
USA Today
usatoday.com/money/perfi/columnist/block/2010-06-01-yourmoney01_ST_N.htm
Smartmoney.com
smartmoney.com/Personal-Finance/Debt/carry-credit-card-debt-watch-the-dollar/
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