As you may or may not be aware – today, February 22, 2010, is the first day in which President Obama’s new credit card reform became active. During the past nine months of the run-up to this new law, credit card companies have been taking full advantage of their freedom. They were jacking up interest rates across the board (one card even carried any APY of 80%). They created new fees and cut credit lines from even the most established borrowers and they even closed down millions of accounts. But is the new law really going to change the way in which credit card companies do business for the better? A recent article on Yahoo Finance suggests new implementations (as well as old credit card tricks) made by the major credit card issuers may begin to become more prevelant as this new law sinks in…
Major Adjustments Made by Credit Card Issuers to Counter New Law:
(Further Reading @ Yahoo Finance)
1) Resurrected annual fees – Annual fees, common until about 10 years ago, have made a comeback. During the final three months of last year, 43 percent of new offers for credit cards contained annual fees, versus 25 percent in the same period a year earlier, according to Mintel International, which tracks marketing data. Several banks also added these fees to existing accounts. One example: Many Citigroup customers will start paying a $60 annual fee on April 1.
2) Created new fees and raised old ones – These include a $1 processing fee for paper statements for cards issued by stores such as Victoria’s Secret and Ann Taylor. Another example is a $19 inactivity fee Fifth Third Bank now charges customers who haven’t used their card for six months.
Other banks increased existing fees. JPMorgan Chase, for instance raised the cost of balance transfers from one card to another to 5 percent of the transfer from 3 percent.
3) Raised interest rates – The average rate offered for a new card climbed to 13.6 percent last week, from 10.7 percent during the same week a year ago, meaning cardholders are succumbing to an interest rate hike of nearly 30%.
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