The New Credit-Card Tricks
Months after the CARD Act went into effect, some of the largest issuers are finding new ways to recapture lost revenue and are even skirting some of the new rules. Cardholders are getting caught in the traps.
The CARD Act is expected to eliminate $390 a year in fee revenue, according to the the Nilson report. The Walls Street Journal uncovered some of the new ways that issuers are trying to hang on to that revenue.
*Banks are ramping up their marketing of so-called professional cards. These are like corporate cards but can carry the same terms as consumer cards—and aren’t covered under the new law.
*The Card Act stipulates that late-payment fees shouldn’t be triggered on a Sunday or holiday, when there is no mail delivery. However Discover has found a way around this. “The law states that if a creditor does not receive or accept payments on weekends or holidays, then the date is extended. But we accept payments seven days a week.” says Discover spokesman Matthew Towson.
*Citibank rolled out rebate-card offers to some of its customers last fall, offering to refund up to 70% of finance charges when customers pay on time. The problem: Rebate offers aren’t governed by the Card Act, and an issuer can revoke them suddenly and hit cardholders with high charges.
*After August 22, companies won’t be able to charge inactivity fees, so issuers are dressing them up in other ways.
Citigroup has started charging some of its customers an annual fee, which can be waived if a customer’s card activity exceeds $2,400 a year.
What can you do to protect yourself? Make your card payments on time. Dispute fees directly with the issuer when something isn’t right. If it doesn’t work the first time, call again.
Story by Jessica Silver-Greenberg for the Wall Street Journal