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Owning a credit card company is a license to steal. Government studies routinely show that credit card banking is the most profitable form of banking. One reason is interest and fees that are too high and that are imposed deceptively. Owning a credit card company is a license to steal. In addition to imposing deceptively low minimum payments, among their other unfair practices are the following: changing “fixed” interest rates with as little as fifteen days notice; imposing late fees and penalty interest rates on consumers who pay their bills on time; retroactively imposing interest rate increases on previous balances; raising interest rates to 25% APR or more (universal default) even when you have a perfect payment record with them, but are allegedly late to some other creditor; and, making teaser rate or other promises that are not kept. PIRG-supported legislation, S. 393, the Akaka (HI) Credit Card Minimum Payment Warning Act, would replace the new bankruptcy law’s industry-approved, generalized minimum payment disclosure with a specific, customized warning. Each monthly statement would include a two-part next to the minimum payment request and due date. Consumers would learn exactly how many years and how much additional interest they would pay if they only made the minimum payment and would have a greater incentive to pay down over-priced credit card debt. In addition, the PIRG-supported bill, S. 499 (Dodd-CT), the Credit Card Accountability Responsibility and Disclosure Act (known as the CARD Act), would add additional consumer protections. Among other provisions, the bill prohibits penalties, finance charges, interest charges, or cancellations from being imposed for: (1) on-time payments; (2) payments in full; or (3) over-the-limit fees for creditor-approved transactions. The bill bans retroactive interest increases, limiting new interest rates to new balances. It would also protect young consumers from the barrage of deceptive credit card marketing that they face on campus, as a series of PIRG reports attests. PIRG research has found that consumers should either pay balances in full, or make the largest payments they can afford. Always pay early in the cycle to avoid late fees. Rewards cards are useless, when compared to the interest penalties, unless you are a convenience user who pays off balances in full each month. In addition, if you think your rates are too high, call your credit card company and see if they’ll lower it. Threaten to get a new credit card with a different company. That’s the lesson of the PIRG report: "Deflate Your Rate." PIRG research has also found that all consumers, whether they pay with cash, debit cards or credit cards, are paying more at the store and more at the pump due to high interchange fees that banks charge merchants for accepting plastic. In February, PIRG made recommendation in testimony to the House Energy and Commerce Committee to rein in these charges, which may be based on illegal anti-competitive practices.
Overview | Fact Sheet | Tell A Friend |
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