Credit CARD Act countdown: Banks sneak in higher fees and rates

The Credit Card Accountability, Responsibility and Disclosure Act, aka the Credit CARD Act, will go into effect next February, but a few provisions are scheduled to kick in on August 20, about 6 weeks from now. Those provisions include a requirement that credit care issuers give 45 days' notice before an interest rate hike, compared with the 15-day notice currently required now. That'll give consumers time to shop for a new card if they're unhappy with the new rate.

In recent weeks, however, banks have been sneaking in changes in advance of the new law's effective date. Here are a few, identified by Bill Hardekopf, CEO of www.LowCards.com, and author of The Credit Card Guidebook:

•JP Morgan Chase increased the minimum payment percentage to 5 percent of what's owed, from 2 percent. In one sense, that's good for consumers because it forces a quicker payment of the principal, resulting in lower interest payments overall. But it could throw others–particularly those only able to afford to 2 percent–for a loop. [UPDATE July 15, 2009: Chase says they notifed less than one percent of its customers that their monthly payment would increase this way.–Ed.]

•Chase also increased its the maximum balance transfer fee and cash advance fee to 5 percent, effective in August. Hardekopf says that's the highest in the industry. Bank of America's balance transfer fee is now 4 percent, up from 3 percent. 

•Several banks announced they would be moving to a variable rate from a fixed rate. Simmons Visa Platinum Rewards, for instance, is moving tomorrow to a variable rate of 9.25 percent, from a fixed rate of 8.95 percent.

Sneaky as those changes are, you can fight back with your own tactics. Click here for our advice on avoiding credit-card snags and getting the best rates and lowest fees.–Tobie Stanger

Comments

[J]

So how do all these changes affect those who live within their means and pay off their balance every month?

Yawn.

[Fern Carr]

I have always been responsible by paying my bills on time but with all the underhanded ways the banks have of raising payments and interest rates I'm no longer sure I can pay them now. I don't know what world they live in but in my world theres a recession going on.They are only raises payments to give them excuses to raise your rates if you can't make the new payment.A perfect example of this is Chase Bank.

[Alessandro Machi]

The Shrinking tax base is being caused by the one trillion dollar in consumer credit card debt that NOBODY in power seems to want to see decreased. Here are some important links started by consumers who now realize that Chase Bank and others are not only incompetent in what they do, they are actually causing UNNECESSARY community hardships and RUINING THE ECONOMY as well.

http://opengov.ideascale.com/akira/dtd/4487-4049

http://daily-protest.blogspot.com/2009/07/chase-banks-2-to-5-monthly-minimum.html

http://www.daily-protest.com

http://www.bloggersagainstchasebank.com

http://dailypuma.blogspot.com/2009/07/credit-card-companies-me-first-approach.html

http://www.consumeraffairs.com/credit_cards/chase_credit_cards.html

http://www.changeinterms.com

[eric]

Fern Carr - you need to read the first comment by J. Then, your issue would be a non-issue.

Right on J!

[Goodwir]

J: This affects everyone. At a time when millions of people are stretched to their financial limits, it is unconscionable for credit card issuers to implement variable interest rate increases of over 15% coupled with a larger monthly payment. This conduct can only lead to more foreclosures, lower housing prices and loss of more jobs (maybe yours). The conduct of these financial institutions is a catalyst for the further erosion of our quality of life. Why? Because it shrinks discretionary income, thereby nudging the world wide economy closer to a death spiral that will continue until it either hits bottom or the governments around the world infuse trillions of dollars to save jobs, industries and homes in anticipation that these capital infusions eventually will stabilize the economies to the point that consumers regain confidence to spend their discretionary income reasonably rather than save most of it.

If you are a homeowner, foreclosures are drowning home values and you have lost thousands of dollars of equity. If you live in a development controlled by a homeowners association, your monthly fees will increase because banks rarely pay association fees. Some HOA's are engaging in opressive enforcement of convenants to generate income to pay essential bills. (That practice is illegal in many states but try to prove it.) In the mean time, the foreclosed homes are becoming a neighborhood blight and burglary targets which makes your neighborhood less safe.

Few of us are immune from being laid off and left not only without an income but also without a home or healthcare. Lots of people who believe that the banks' greed will not affect them because they have no credit card or other consumer debt such as an auto loan are simply deluding themselves!!

How's your 401(k)? While many people are angry at foreclosed homeowners who bought homes financed by fast talking subprime lenders who preyed on slow minds, CR has it right. It is the financial institutions' current conduct that is the fuel for the next wave of foreclosures and job losses. No one is immune.

Finally, one of my credit card issuers sent me a tiny notice stating a change in the agreement that gives them my permission to sell access to my cell phone number to anyone-unless I write a letter opting out by July 25th. Very inventive and a nice way around the Do Not Call law.

[MidwestMom]

To the Editor,
I find your insertion of Chase's p.r. statement on July 15 contrary to what Consumer Reports stands for and a huge dis-service to the people that rely on your reports for unbiased information. While the increased minimum payment may only apply to (approximately) 1 million customers, what Chase is not telling you is the ONLY customers affected are ones with fixed low interest rates that pay on time every month. This is very important information to consumers deciding with whom they wish to establish financial relationships.