A recent article in the New York Times explores some of the continued abuses persisting in the credit card industry, despite the provisions of the Credit CARD Act, which recently took full effect.
According to the Times, many credit card issuers are technically complying with the law, but essentially continuing with what some consider predatory lending practices. Here’s a look at what some card issuers are reportedly doing and what you need to know to keep your finances in order.
- Changing the names of fees: While the CARD Act limited certain types of fees credit card issuers are allowed to charge (including late fees and overdraft fees), many issuers are apparently getting around the restrictions by bringing back old fees (like the account initiation fee) to make up for potentially lost profit.
- Adding new fees: Sources note that one nefarious-sounding credit card issued by First Premier Bank justified its excessive fees ($179 on a card with a $250 limit) by noting that the new law does not restrict fees charged before an account is activated—not exactly the kind of thing the typical credit card user is expecting.
- Maintaining murkiness about terms and conditions: While some credit cards have been praised for their increased transparency, others, it seems, continue to shroud their agreement terms in complex language or difficult-to-find fine print.
- Review your agreement: If you’ve never read through your credit card agreement, now may be a good time to try to work through it. If the legalese is too dense, you may want to consider visiting a lawyer for a brief explanatory consultation, so you know what to expect and how to avoid costly fees in the future.
- Treat your card like cash: Perhaps the best way to keep your head above water with credit is to never charge more than you can pay off at the end of the month. That way, you’ll avoid paying interest and you won’t have to worry about which rate applies to which purchases.
- Call your card issuer: If you see a fee that surprises you, don’t hesitate to call your bank’s customer service department to ask for an explanation. In some cases, banks will waive a first-time fee and you can learn not to repeat whatever behavior caused it. If your bank won’t dismiss the charges, at least you’ll know what not to do in the future.
Protect Yourself and Your Credit
So what can an ordinary credit card user do to make sure she isn’t getting duped by her credit card company? Consider taking these steps, which can help make sure you’re on track with your credit.
Remember: credit cards are often an essential part of modern life and can be invaluable to those rebuilding credit after filing for personal bankruptcy. But using a credit card without fully understanding how it works can lead you into dangerous levels of debt—so make sure you understand the details of yours.
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