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Credit Card Applications » News » Other » Unfair Credit Card Practices Still Rampant

Unfair Credit Card Practices Still Rampant

December 08, 2009
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The Pew Heath Group's Safe Credit Cards Project released a report which discloses that all credit cards offered by major card companies include practices that will be outlawed by the Credit CARD Act next year.

The report disclosed that even if banks' cost of lending decreased, advertised card rates increased to an average of twenty percent in the first two quarters of 2009. It also includes policy recommendations for regulators.

The Federal Reserve is currently making rules under the Credit CARD Act to ensure that penalties are proportional and justifiable. According to Shelley Hearne, managing director of the Pew Health Group, they found that credit card issuers have only done little in eradicating unscrupulous practices since enactment of this law.

She reveals that some unfair practices have grown more widespread that not even one of the banks they studied would meet legal requirements in the act.

The Pew Health Group report has examined all credit cards issued by the twelve largest card providers in the United States. These banks are said to control more than 90% of outstanding credit card debt nationwide. The report also checked the cards offered by US' biggest credit union. The group collected data last July on four hundred cards, which is an addition to data it gathered last December 2008.

The results of this report show three important things:

1. Ninety-nine percent of bank credit cards actually allow providers to raise charges on outstanding balances, which is a big leap from ninety-three percent last December.

2. Ninety percent of these cards had penalty rate hikes, triggered by only one or two late payments in a single year.

3. Ninety-five percent of bank cards allowed issuers to apply payments which could cause financial injury to card holders.

Nick Bourke, manager of Pew's Safe Credit Cards Project, said the Federal Reserve must now ensure that its rules will not be detrimental to consumers. Last July, the advertised annual percentage rates (APRs) for bank-issued card purchases were between 12.24 and 17.99 percent, as compared with a range of 9.99 to 15.99 percent last December 2008. The lowest advertised bank rates increased by more than twenty percent while the highest advertised rates also went up by about 13 percent.

To ensure that this Credit CARD Act safeguards consumers, the Pew Project provides policy recommendations for Federal Reserve as well as other regulators:

1. The new rules being developed must regulate rate hikes governing justifiable fees and charge in accordance with the law.

2. They must scrutinize partially variable rates, which may increase when index rises but cannot decrease below the minimum set by issuer.

3. They must eradicate penalties not aligned with achieving the Act's goals of consumer protection.

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  • Larry
    With the Virgin / Barclaycard signature offer, there seems to be some consumer deception or maybe even outright fraud goin on.   I decided to jump on this offer..  read all the info on it..  was approved for their platinum card, paid the fee, then was only awarded 10,000 points instead of the advertised 20,000.   When i inquired about the less than advertised bonus points, Barclaycard claims only Signiture Visa cardmembers get the 20,000..  as a platinum cardholder, you don't qualify for that level of bonus, so you get 10k instead.   Well, in their current ongoing promotions, it states plain as day that....    Applicants approved for the Visa Signature or Platinum Card with $49 annual fee will receive 20,000 Bonus Points awarded to your Virgin America Rewards Account at the close of the first billing statement in which you make your first purchase or balance transfer (that is not returned or rescinded) and have paid the Annual Fee on the account (and such fee is not rescinded). They don't mention anything about a separate program for platinum cardholders..  However, trying to get someone to resolve this issue with either Virgin or Barclaycard seems to be rather impossible.. Seems to me they're simply drawing people in with the fraudulent offer, then simply saying, oh, we're sorry you don't qualify..  but thanks for signing up for our garbage credit card with insane fees..   
  • CreditLandCom
    Thank you for sharing your experience with us. We have reviewed this offer and you are correct, nowhere it is mentioned that 20,000 Bonus can become a 10,000 Bonus all of a sudden... We will mention this in our review of this card so others can make an informed decision. Another way to get Virgin miles is to get an American Express charge card: The Business Gold Rewards Card® now offers 50,000 Miles, though you do have to spend $5,000 in the first three months of card membership to get it. It also has $0 introductory annual fee for the first year, then $175. http://www.credit-land.com/details/the-business-gold-rewards-card-from-american-express-open.php Premier Rewards Gold Card now offers 25,000 Miles, though you do have to spend $2,000 during your first three months of Card membership. It also has annual fee of $0 for the first year, then $175. http://www.credit-land.com/details/american-express-premier-rewards-gold-card.php While we do not know If any of these offers make sense to you, we are at least sure that you will get advertised bonus in full if you decide to get them... Conversion rates for Virgin America are: 100 Elevate Points = 200 Membership Rewards® Points All the best.
  • Deborah Ellsworth
     would very much like to start a new credit history  by making payments on time I would tohave a credit card that is NOT PREPAYID! I don't need a card with a high limit just something to start a new credit history. Thank You Deborah Ellsworth
  • Deborah Ellsworth
    I would very much like to start a new credit line to get back on track. I DO NOT WANT A PREPAID CARD!! This new credit card if I am approved does not have to hace a high limit just something for me to start over again and prove myself ThankYou. D Ellsworth
  • Miss Edna
    there is a huge problem with the RFIP chip: it is easily compromised. There are already 'readers' in the form of what looks like a cellphone in a case, that scans all the info in the chip by merely walking near a person -- this 'reader' penetrates leather, cloth, spandex, etc. The only thing it will NOT penetrate is METAL. Perhaps one has seen commercials touting metal credit card cases. Here is my hint for a free fix: cut a piece of aluminum foil or use the foil that is used to keep foods fresh, like coffee. Cut it so that when folded once, it forms a sleeve for your credit card. place the credit card in the sleeve, then place the sleeve in your wallet.
  • Robin Parks
    I am looking to apply for the AARP Visa signature card from Chase that offers $100 after spend $500 in first 3 months, no annual fee and 0% interest first year; I don't want to mail in offer because of having to write in Social security #. Can you direct me to the proper on-line site?
  • CreditLandCom
    The Chase bank cards are not currently available at Credit-Land.com, but you can consider applying for the Citi® Dividend Platinum Select® Visa® Card - $100 Cash Back. The cards has similar terms and cash back program.
  • Becky
    This is Becky Now what do I do just waqit for acard to come to me?
  • CreditLandCom
    Once you have applied, you should receive a letter within 10 business days letting you know if you were approved and when your card will arrive. If you did not receive any letter or notification from the issuer, you should contact them directly. Also, you should contact the issuer if you’ve been waiting for your credit card longer than 30 days. Since we are not a bank and don’t issue credit cards, we cannot give you any information about your application or credit card.
  • SavingStar
    Thank you for posting about SavingStar. Just to clarify one sentence in your article, we have over 5 million members (not 500). Thanks, Josh
  • CreditLandCom
    Sorry for the misprint. We’ve corrected the sentence. Thank you for noticing that.
  • Eric
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