You may have read the recent article Fed Wants to Clear Credit Card Confusion by Jeannine Aversa of the AP. She discusses how the U.S. Federal Reserve may try to clear up confusing rules and pitfalls by credit card companies. Wow… wouldn’t it be nice to have 45 days instead of 15 days notice if a credit card company wanted to change rate or late payment terms? There’s a host of other potential changes, and in my view it’s about time! Congress has recently been wrestling with the same issue as consumer complaints have continued to rise over the whims of credit card company actions. How many of us really understand the terms of a credit card agreement? I don’t… I know the basic rate, and due date of the monthly bill (although that seems to change sometimes as well). I ensure I pay the bills on time and watch for any issues the credit card company may raise about rate terms, etc. But most of that language just seems to imply they can do anything they want at any time.
Fortunately most of the credit card companies are starting to feel the consumer backlash and reigning in some of the most egregious practices such as universal default. If I’m late on some payment one month I don’t think it’s appropriate for a different credit card company to raise my interest rates. Sure, it may indicate that a consumer’s credit risk has changed in some way, but that shouldn’t allow them to change rate terms on unrelated debt… that’s the heart of universal default. Certainly we don’t have to use credit cards, and we do agree to the terms of use when we activate the card. But I applaud the Fed’s efforts to improve disclosure and help consumers understand what they are really agreeing to in the first place. I think all most consumers really want is clarity and a fair agreement. Yes, business is business… but some companies will nickle and dime consumers at every turn. If the credit card companies cannot or will not respond effectively to consumer complaints, then legislation and fed intervention will probably happen. That’s not always a good thing… but in this case the political climate is leading the way and I have to agree that consumer’s interests must be balanced more fairly against a credit card company’s efforts to make profits.
–Updated–
CNN/Money has a great article about Credit Card Companies being as “tough as ever” while discussing fees, charges, etc. We are due for some change…. literally!
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