Sign a Petition Against Deceptive Credit Card Practices
Consumers Union is organizing a petition in the hopes that it will lead to meaningful credit card reform. Their list of targeted practices includes:
Universal default: Your interest rate can skyrocket if your credit score declines because of your behavior with other creditors even if you always pay your credit card on time and never miss a payment. Some card issuers will raise your rate if you inquire about a car loan or open a new credit card.
Change of terms: Credit card terms keep changing. Read the fine print and chances are you’ll find this disclosure: “We reserve the right to change the terms (including the APRs) at any time for any reason.” A fixed rate is fixed until the bank gives you at least 15 days notice that it isn’t. If you want to keep your account open, you’ll pay the higher new rate on your existing balance.
Teaser rates: That low rate you signed up for expires suddenly and you end up paying more. A temptingly low introductory rate can climb to 30 percent or more.
Minimum payment: If you pay the minimum payment every month, you’ll end up paying a lot more than what you charged and you could be on the hook for a very long time.
On time payment: Card issuers are systematically mailing statements closer to the due date, giving customers less turnaround time. You can be hit with a late fee even if the payment is mailed on time. The average fee for a late payment has more than doubled in the past decade.
Double cycle billing: Finance charges are usually calculated using the average daily balance. If you alternate between paying off and carrying a balance, you’ll end up paying more interest.
Cash advance/convenience checks: The interest rates on these are higher than your credit card.
Penalty interest and fees: Late payments can raise your interest from 7% to 27%! Rather than rejecting charges that exceed your credit card limit, issuers today often let them go through but then charge a hefty fee — as high as $39.
Fees, fees, and more fees: As if the penalties weren’t enough, you pay more fees for paying by phone or charging abroad. You may have to pay a fee to receive what used to be free year-end summary statements.
Balance transfer switcheroo: Transferring a balance from an account with a high APR to another one with a lower interest rate could come at a high cost. Any payments you make are typically applied first to the lowest rate balance. So while the credit card company uses your payment to quickly pay off that 0 percent transfer balance, you are piling up interest on purchases, at say, 18 percent. Multiple balance transfers will hurt your credit score.