The Credit Card Accountability Responsibility and Disclosure Act of 2009, was designed to protect consumers from questionable billing practices and give consumers a straightforward notice of interest-rate increases and fees charged.
However, the credit card industry has managed to stay a step ahead of the Card Act, as it is known, by coming up with new fees for the unwitting consumer, some of which may actually violate the law according to consumer advocates.
Victor Stango, an associate economist with the Federal Reserve Bank of Chicago and a professor at the University of California, Davis said “card companies are figuring out how to replace old fees with new ones”…” “It’s a race between regulators writing ever-more-complex laws and credit-card companies setting up ever-more-complex fees.”
It has been estimated the Card Act will eliminate $390 million a year in fee revenue. That is a big chunk of revenue the credit card industry is not about to go without. The banks are attempting to fill the gap with new ways of gauging consumers. Some of those new ways of staying a step ahead are as follows:
- Increased annual fees on bank credit cards.
- Increased cash advance and balance transfer fees.
- Upfront processing fees (The Card Act dictates annual fees can’t exceed 25% of a borrower’s credit line, charging an upfront fee legally skirts the law).
- A new form of a consumer credit card called “professional cards” which act like business credit cards and are not covered under the Card Act.
- Raising minimum finance charges.
- Charging late fees of up to $39.00 for bills not paid on the due date, even if that date is a nontraditional business day such as a Saturday or Sunday. Most credit card companies now accept payments 24 hours a day, 7 days a week. This would seem like a good thing; except, some customers justifiably assume their credit card bill would not be due on a Saturday or Sunday. Keep in mind that fee is due to drop to $25.00 some time in August 2010.
- Increasing foreign transaction fees
- Offering rebate cards which are not governed by the Card Act
Consumers must remain vigilant in countering the loopholes and creative ways the credit industry is inventing to recoup the $390 million in fees the Card Act has eliminated. One way to stay in step with the credit card companies is to dispute any fee you do not understand or agree with. You can make a call to the credit card company and plead your case or utilize the Fair Credit Billing Act which governs billing disputes with your creditor.
Additionally, the Direct Dispute Rule allows you to dispute an error or mistake on your credit report directly with the creditor (furnisher of the information). The easiest way to avoid fees is to pay your credit card bills on time. Do not give the credit card issuer a reason to dump expensive late fees and interest rate hikes on your account.