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Banks won't change til they have to
A new report says even though new laws are coming soon, credit card companies are nowhere close to complying with the stricter regulations.
In fact, the Pew Charitable Trusts found that 100% of the cards it investigated would be illegal under the new requirements:
"Since passage of the Credit CARD Act, we found that credit card issuers have done little to remove practices deemed unfair or deceptive by the Federal Reserve," said Shelley A. Hearne, managing director of the Pew Health Group, which oversees the project. "In fact, some of the most harmful practices have actually grown more widespread-not one of the bank cards reviewed would meet the legal requirements outlined in the Credit CARD Act, which is bad news for consumers."
Another observation from the report, "Still Waiting":
"Still Waiting" also provides the first comprehensive comparison of bank cards to those issued by credit unions, based on advertised terms and conditions. The analysis showed that credit unions offered much lower APRs, less punitive penalty rates and engaged in far fewer unfair or deceptive practices than their commercial peers.
You can read the entire report here.
Of course, the banks have some time to change their practices. Most of the new rules take effect in late February, and the banks are trying out alternatives. One of them -- annual fees for people who pay off their balances regularly. From USA Today:
Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.
Citigroup, meanwhile, has started charging annual fees to card holders who don't put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don't use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.
I've been meaning to ask you about this. Annual fees on customers with excellent credit; inactivity fees. Fair or unfair?
By the way, if you want to get rid of your credit cards, I'd recommend hiring this guy:
And for slasher movie buffs, The Tennessee Credit Card Massacre:
I have never paid a annual fee. I have been charged an inactivity fee a few times but when I have called them they have always dropped the charge, except once for a AOPA Visa card which I then dropped. Renting a car might be a pain but I’m sure that will change soon also. Banks will push all they can we just have to push back.
I wouldn't mind an annual fee, as long as its not more than about $40. We pay an annual fee to Am Ex (though we get more out of Am Ex than we would out of a credit card -- namely responsive customer service, buyer protection on things we purchase, and did I mention actual customer service? And great points? And the capacity to use them in multiple ways? ). Much more than $40, and I'd be unhappy. But I'd rather the fee upfront than the hidden and escalating charges later. Because, whatever the new law says, these guys WILL find ways to get around it.
Bank of American is going to start charging us a $49 annual fee. We have excellent credit and are in good financial standing. BofA, which has made poor financial choices and therefore needs credit itself from the taxpayers, perhaps should just deduct those annual fees from the bailout money. I refuse to pay twice for their poor risk management!
Maybe we should learn from the past. Our big business leaders blamed the middle class for earning too much money, saying the greed of the middle class caused businesses to move their production overseas. Now the banks are getting too greedy and it's time for free trade agreements to be extended to banking so paid off politicians can help Bank of Beijing to offer credit cards and mortgages at rates undercutting what the greedy American banks are charging. Let the "free market" do it's job in reducing banks incomes and compensation packages for overpaid executive managers just like what has been done to American workers.
I agree with Deb. It doesn't make sense for prudent consumers with good credit to subsidize banks who have acted irresponsibly and cheated their customers for years. We've already bailed them all out. That's enough.
We should have incentives for prudent risk management and good credit, not the opposite.
I love my Platinum Visa credit card from my little bitty credit union. The rates are low and there are no fees.
If there is a problem, I call the credit union and leave a message on Suzanne's voicemail and Suzanne calls me back and work in a couple of hours and lets me know that it's fixed.
:+)
To answer your question:
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I’ve been meaning to ask you about this. Annual fees on customers with excellent credit; inactivity fees. Fair or unfair?
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If you have excellent credit means you have money and also have been prudent with it. In the current environment where money saved by prudent people pays for morons, I think it is fair to charge fees.
I travel as part of my job and there is no way I could do so in todays world
without the use of a credit card. I already give my employer a free loan for
a job that they have committed me to do.
I have good credit and I don't carry a balance on my cards. As far as I
can tell there is no shortage of companies willing to take a percentage off
of all my purchases.
If I get a notice from any of my credit cards indicating that they will
start charging a fee, I will promptly cancel and take my business
elsewhere, thank you!
