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Plain Talk More Schemes From Credit Card Companies
Blog Post Date: Feb 17 2010
Plain Talk: More schemes from credit card companies
The Credit Card Accountability, Responsibility and Disclosure Act, is finally in action in this month. One of the many new provisions in this consumer protection legislation is a requirement that credit card issuers can’t raise interest rates for twelve months after an account is opened. And, once the rate is jacked up after those twelve months, it can only be applied to new charges, not the balance you used that first year.
Those new rules alone will stop much of the consumer abuse that the big issuers of credit cards have perpetrated over the past many years, enticing credit card users to run up big balances and then hitting them with a usurious interest rate. There are other rules in the act that are aimed at finally reversing what has been a playing field tilted heavily to the side of the banks.
But, the credit card industry is not giving up that easily. They have already determined ways to make up for some of the unconscionable billions in charges, penalties and arbitrarily higher rates that have fed their bottom lines and padded their bonus pools all these past years.
New York Time’s Gretchen Morgenson reported, for instance, that Alliance Data Systems, a huge issuer of private-label credit cards, has enacted a 1 dollar monthly surcharge on customers who opt to get their monthly statements by mail.
There are other schemes being thought out to get around the new rules, but as Morgenson pointed out, the government might not give much of a response because the Office of the Comptroller of the Currency, which has been assigned with enforcing the new rules, actually rallied against them when Congress was debating the legislation last year.
Morgenson’s story included a quote from the legislative director for the Consumer Federation of America,Travis Plunkett,
“The OCC to the end fought the rules and tried to get huge exceptions, carrying water again for the large banks they were regulating. Now they have to enforce this law that they disagreed with.”
The OCC bought the banks’ self-serving discussion that to put restrictions on credit card fees would increase the interest rates they would have to charge good credit risks, a position that was widely discredited during congressional debate.
The oppositions of credit card consumer protections have always maintained that the regulations smack of “the nanny state.”
But, as Morgenson remarked, isn’t that more acceptable than the “the pirate state” that brought this economy to its knees?
Or, as one wag suggested the day before, why don’t we charge the banks 29.9% interest on the bailout loans they got in the past year and a half? That’s what they’d charge us.
Dave Zweifel is editor emeritus of The Capital Times. dzweifel@madison.com
VIA Host.Madison
Keyword: Credit Card
The Credit Card Accountability, Responsibility and Disclosure Act, is finally in action in this month. One of the many new provisions in this consumer protection legislation is a requirement that credit card issuers can’t raise interest rates for twelve months after an account is opened. And, once the rate is jacked up after those twelve months, it can only be applied to new charges, not the balance you used that first year.
Those new rules alone will stop much of the consumer abuse that the big issuers of credit cards have perpetrated over the past many years, enticing credit card users to run up big balances and then hitting them with a usurious interest rate. There are other rules in the act that are aimed at finally reversing what has been a playing field tilted heavily to the side of the banks.
But, the credit card industry is not giving up that easily. They have already determined ways to make up for some of the unconscionable billions in charges, penalties and arbitrarily higher rates that have fed their bottom lines and padded their bonus pools all these past years.
New York Time’s Gretchen Morgenson reported, for instance, that Alliance Data Systems, a huge issuer of private-label credit cards, has enacted a 1 dollar monthly surcharge on customers who opt to get their monthly statements by mail.
There are other schemes being thought out to get around the new rules, but as Morgenson pointed out, the government might not give much of a response because the Office of the Comptroller of the Currency, which has been assigned with enforcing the new rules, actually rallied against them when Congress was debating the legislation last year.
Morgenson’s story included a quote from the legislative director for the Consumer Federation of America,Travis Plunkett,
“The OCC to the end fought the rules and tried to get huge exceptions, carrying water again for the large banks they were regulating. Now they have to enforce this law that they disagreed with.”
The OCC bought the banks’ self-serving discussion that to put restrictions on credit card fees would increase the interest rates they would have to charge good credit risks, a position that was widely discredited during congressional debate.
The oppositions of credit card consumer protections have always maintained that the regulations smack of “the nanny state.”
But, as Morgenson remarked, isn’t that more acceptable than the “the pirate state” that brought this economy to its knees?
Or, as one wag suggested the day before, why don’t we charge the banks 29.9% interest on the bailout loans they got in the past year and a half? That’s what they’d charge us.
Dave Zweifel is editor emeritus of The Capital Times. dzweifel@madison.com
VIA Host.Madison
Keyword: Credit Card
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