Other Languages"If you have every major issuer saying that we are losing our shirt, then that speaks volumes," says David Robertson, the publisher of financial industry newsletter Nilson Report.
This quote from a recent Wall Street Journal article was a reaction from reports that new regulations brought on by The Credit Card Accountability Responsibility and Disclosure Act of 2009 (aka The Card Act) would force Bank of America – like many others – to write off huge revenues.
The purpose of the legislation was to curtail the occasionally usurious and often arbitrary fees and practices that issuers have been saddling consumers with more and more in recent years.
Issuers, however, are finding creative ways to recoup this cash. They are pushing “professional cards” that have similar terms as consumer cards without falling under the umbrella of the legislation. While The Card Act prohibits rate increases before the consumer is more than 60 days past due, “rebate cards” are also becoming a popular work-around for banks. Not covered by the act, rebate offers can be revoked, allowing the issuer to significantly raise the interest rate at will.
“Profits are rising and financial institutions are aggressively seeking new customers,” states Consumer Affairs. “It may be a good reason for consumers to display a certain amount of wariness in their dealing with credit card companies.”
WSJ created a useful chart that shows some of the ways that consumers are being slapped with fees, and tips on what to watch out for. The common thread is vigilance. Keep an eye on what, how, and when a card issuer is charging you. Because while loopholes in the legislation are being closed as we speak, others are being discovered.
- Darius Schwarz, AGO Public Affairs Intern
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