Credit Card Issuers Make Changes Just Before Senate Hearings
Chase and Citigroup Make Changes Ahead of Senate Hearings
Just before Senate hearings begin to investigate their industry, Chase and Citigroup have recently announced credit card policy changes that actually help their customers. In January, Chase announced that it was ending its two-cycle billing policy. Last week Citi announced that it was ending its universal default policy and its "any time for any reason" rate increases.
"This is good news for their cardholders and an encouraging sign for consumers. Obviously, pressure from Congress has stirred this change of heart," says Bill Hardekopf, CEO of LowCards.com. "As soon as the Democrats took over, focus turned to the 'abusive' practices of the credit card industry. This is quite different from the blessing of the Republicans who passed a bankruptcy law that protected lenders and made it much more difficult for borrowers to declare bankruptcy."
Today, the Senate Permanent Subcommittee on Investigations holds its first of several hearings to examine practices of the credit cardindustry. They will consider how to protect consumers from lurking fees, sudden interest-rate spikes and other dangers in the fine print.
"The changes by Chase and Citi seem to be an attempt to say they can make the changes themselves, without legislation," says Hardekopf." CEOs from Chase and Citigroup are both testifying at today'shearing, so it will be nice for them to be able to point to the changes they have made on their own. However, I don't think the Senators on the subcommittee will think these changes are good enough."
Chase policy changes include:
Using an average daily balance method of calculating finance charges instead of the two-cycle method. This change will reduce the finance charges for consumers when they choose not to pay for a new purchase in full. Two-cycle billing increases the interest paid by those who occasionally carry a balance.
Providing free, convenient options to manage accounts through Chase Online. Chase is also encouraging customers to use its free alerts for reminders when a payment is due or when they have reached a designated credit limit.
It will no longer charge over-the-credit-limit fees for customers who have been in a "chronic overlimit position" for over 90 days.
Citigroup policy changes include:
Ending "universal default" on all Citi-branded consumer credit cards,effective immediately. Universal default is one of the most penalizing practices that automatically increases the rate to over 30% if you fail to make a payment on another bill, or if your rate goes up with another lender.
Eliminating its "any time for any reason" rate increases. This allowed the company to raise interest rates and change terms at any time and for any reason, another common practice among card issuers. The policy is effective immediately for new customers and will go into effect for current customers by April.
"This is a good start, and we are hopeful that other issuers will follow and eliminate some of their most penalizing practices. Concerned consumers can call their congressman or representative insupport of changes," says Hardekopf. "Cardholders of other issuers also need to be aware of what is going on so that they can use this to negotiate with their own credit card company."
LowCards.com ( http://www.lowcards.com/ ) is a website that helps consumers easily compare credit cards in a variety of categories suchas lowest rates, rewards/rebates, and lowest intro rates. It alsogives an unbiased ranking and review for each card. Created by Hampton & Associates, the company has been analyzing the creditcard industry and supplying objective websites on various consumer expenses for over six years.
Just before Senate hearings begin to investigate their industry, Chase and Citigroup have recently announced credit card policy changes that actually help their customers. In January, Chase announced that it was ending its two-cycle billing policy. Last week Citi announced that it was ending its universal default policy and its "any time for any reason" rate increases.
"This is good news for their cardholders and an encouraging sign for consumers. Obviously, pressure from Congress has stirred this change of heart," says Bill Hardekopf, CEO of LowCards.com. "As soon as the Democrats took over, focus turned to the 'abusive' practices of the credit card industry. This is quite different from the blessing of the Republicans who passed a bankruptcy law that protected lenders and made it much more difficult for borrowers to declare bankruptcy."
Today, the Senate Permanent Subcommittee on Investigations holds its first of several hearings to examine practices of the credit cardindustry. They will consider how to protect consumers from lurking fees, sudden interest-rate spikes and other dangers in the fine print.
"The changes by Chase and Citi seem to be an attempt to say they can make the changes themselves, without legislation," says Hardekopf." CEOs from Chase and Citigroup are both testifying at today'shearing, so it will be nice for them to be able to point to the changes they have made on their own. However, I don't think the Senators on the subcommittee will think these changes are good enough."
Chase policy changes include:
Using an average daily balance method of calculating finance charges instead of the two-cycle method. This change will reduce the finance charges for consumers when they choose not to pay for a new purchase in full. Two-cycle billing increases the interest paid by those who occasionally carry a balance.
Providing free, convenient options to manage accounts through Chase Online. Chase is also encouraging customers to use its free alerts for reminders when a payment is due or when they have reached a designated credit limit.
It will no longer charge over-the-credit-limit fees for customers who have been in a "chronic overlimit position" for over 90 days.
Citigroup policy changes include:
Ending "universal default" on all Citi-branded consumer credit cards,effective immediately. Universal default is one of the most penalizing practices that automatically increases the rate to over 30% if you fail to make a payment on another bill, or if your rate goes up with another lender.
Eliminating its "any time for any reason" rate increases. This allowed the company to raise interest rates and change terms at any time and for any reason, another common practice among card issuers. The policy is effective immediately for new customers and will go into effect for current customers by April.
"This is a good start, and we are hopeful that other issuers will follow and eliminate some of their most penalizing practices. Concerned consumers can call their congressman or representative insupport of changes," says Hardekopf. "Cardholders of other issuers also need to be aware of what is going on so that they can use this to negotiate with their own credit card company."
LowCards.com ( http://www.lowcards.com/ ) is a website that helps consumers easily compare credit cards in a variety of categories suchas lowest rates, rewards/rebates, and lowest intro rates. It alsogives an unbiased ranking and review for each card. Created by Hampton & Associates, the company has been analyzing the creditcard industry and supplying objective websites on various consumer expenses for over six years.
Posted by Lynn at
12:25 PM
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