Quick Credit Cards

We’ve heard plenty over the past few months regarding unfair credit card practices, but it seems more fees have surfaced causing consumers greater financial despair. According to a new report from Durham, N.C.-based Center for Responsible Lending, credit card companies are imposing deceptive fees and hidden charges to sidestep new consumer regulations.

Data from New Consumer Study

The study conducted by the Center and released Thursday, Dec. 10 revealed some interesting new practices that credit card companies have taken on to save themselves money in the wake of the Credit CARD Act. Unfortunately, the new industry practices are costing American families millions a year.

Some of these practices include:

• Pick-a-rate: Instead of credit card companies linking their interest rate to that of the primate rate falling on the last day of the billing cycle, some have switching to picking the highest rate they see within a 90-day period, which can raise an APR by 0.3 percent. This practice alone can cost consumers between $720 million and $2.5 billion per year, according to the Center.
• Penalty-fee manipulation: In the past, credit card issuers imposed the highest penalty fees on late payments for balances above $1,000. But it seems the highest fee threshold has dropped to $250. This means, instead of 53 percent paying the highest fee, 87 percent would pay.
• International transaction fees: Now many companies are adopting international transaction fees for purchases that involve a currency exchange. And for those that already imposed the fee, rates are rising from the standard 2 percent to 3 percent..

According to the study, the industry has been altering at least eight practices to compensate for revenue they’ve lost due to the new regulations.

What the New Practices Mean to You

Unfortunately, because the companies have found loopholes in the system, they’ve managed to take on new practices that either aren’t banned or could be debated. So far, the cost of these new practices is expected to exceed $1 billion for consumers.

The authors of the report declare that it will be necessary for a consumer protection agency to monitor companies as they come up with new tricks. In the near future, the Center hopes that it will be successful in pushing this issue with Congress as it has been in the past.

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