So many people were thrilled when Congress passed the Credit Card Act of 2009. But most of the bill will not take effect until February 2010.
In July the Pew Health Group began looking at credit card company practices. They examined the practices of 400 different credit card companies and found that the interest rates on bank credit cards were “13 to 23 percent higher compared to rates in December of 2008.”
“Meanwhile, practices labeled ‘unfair or deceptive’ by the Federal Reserve remained as widespread as they were before Congress passed the new credit card law. In fact some of these practices had become even more common.”
Here’s a snapshot of what the study found:
One hundred percent of credit cards from the largest 12 banks used practices deemed ‘unfair or deceptive’ under Federal Reserve guidelines. None of these bank issued cards would meet the requirements of the Credit Card Act of 2009.
• 99.7 percent of bank cards allowed the issuer to raise interest rates on outstanding balances by changing the account agreement unilaterally—up from 93 percent in December 2008.
• 90 percent of bank cards had penalty interest rates that could be triggered by late payments or over limit transactions. All but 10 percent of these cards had penalty re-pricing terms that would qualify as ‘hair trigger’ under Federal Reserve guidelines (triggers of one or two late payments in twelve months).
• 95 percent of bank cards allowed issuers to apply payments in a manner that the Federal Reserve found likely to cause substantial monetary injury to consumers. The other 5 percent did not disclose the issuer’s policy.