Consumers are encouraged to watch their statements closely to spare them from possible credit trap. According to reports, many Hoosiers will be charged for increased credit card rates, which will be paid by the end of the year.
The Abrupt Modifications of Terms
Rafael Sanchez of 6News reported that a new law intended to guard consumers from the dangers of credit cards might lose its impact by the time it is implemented in February. This is simply because credit card companies are rushing to modify some of the terms and conditions while they are still allowed.
Hoosiers who largely depends on credit to purchase their stuff might not know the sudden modification in their terms, not unless they are watching their statements closely according to Sanchez.
This time, most creditors are flooding their card holders with mails to announce modifications to cards. Many of their notifications refer to higher rates, increased fees, or new charges.
The Effects of Sudden Rate Increase
It was reported that 91 million cardholders are estimated to be affected by the changes in terms - both delinquent and non-delinquent.
Chris Jackson, head of the National Association of Consumer Advocates in Indiana, said credit card companies are attempting to draw more profit. He boldly said that what they are doing is a mark of greed and is definitely shameless.
Jackson also added that the pending law has imminent loopholes. Hence, there is a possibility that instead of helping consumers, this proposed law can only hurt them.
After February 22, consumers are supposed to receive a notice if interest rate is going to increase. However, if consumers hold a card with variable rate, the company will not be obliged to send a notice.
This time, consumers are strongly being encouraged to pay close attention to their bills. Since many companies today are modifying the terms from fixed to variable rates just before the rule is implemented, many consumers might just end up feeling robbed all of a sudden.
Jackson also clarified that the rates can continue to climb high, up to 10 percent, and this cannot be rejected. The only options are to either accept the term or get out of it.
There are already several consumers who opted to drop their card. One of them is Derek Wilds who said that the interest rate on his Capital card increased from eight percent to 18 percent without any explanation.
Unfortunately, consumers who will opt to cancel their higher-interest cards can also affect their credit score, depending on their financial history.
Currently, Congress tries to compel credit card companies to undo the recent changes they made.