After years of reeling under the effect of the economic slowdown, banks are now looking bullish and are finding reasons to smile. Thanks to the various financial reforms being implemented over the last few months, credit card lenders are now finding their strong holding. The amounts being posted as profits are increasing, as seen over the last two quarters. This has made banks aggressively market their cards and other services to increase their clientele.
This is the time for customers to be watchful and tread carefully when applying for new credit cards. Some financial analysts and experts had predicted that the CARD Act which came into effect to curb the abusive practices by credit card lenders will pull down the profits for banks and help customer reduce their credit card debts. Unfortunately till date, despite the Act being implemented, the desired results are yet to be seen.
Pew Charitable Trust recently conducted a survey which has revealed that the implementation of the Act has had minimal impact in terms of the rates and annual fees on the card which has only come down by a meager 1% over the last nine months. During the same period, the fees charged by banks increased to $59 from $50 and the credit unions raised their fees to $25 from $15.
The director of the Safe Credit Card Project being executed by Pew, Nick Bourke, said that though they are happy that there were reforms made to ensure transparency and better practices in the credit card industry, the results of the survey conducted clearly indicate that there are further challenges to be overcome. He also went on to say that the first noticeable change was the banks sending out notices to consumers informing them about the impending increase in the interest rates, though the amount of increase was not outlined.
Bourke said that the federal regulators have to turn their attention towards newer trends which are proving to be problematic in nature. With banks withholding crucial information, customers are left clueless about the happenings and this puts their financial security and well being at risk. The federal regulators has informed the banks to notify their card holders well in advance about the increase in fees and interest rates well in advance and give them an option of closing the card if they do not want to opt for the higher rates. While the banks are adhering to a part of this rule, they are negating the crucial aspect of revealing the amount of increase.