There were many practices that credit card issuers have eliminated after lawmakers have deemed those practices unfair after the Credit CARD Act. These went into effect in February. However, there are other practices that could potentially put the consumer in risk and these are steadily increasing according to Pew health Group`s study called Safe Credit Cards Project that was released during last month. According to the managing director of Pew Health Group, Shelley A Hearne, most parts of the news are good although a rise of new harmful behavior is being seen as well. The data was gathered for the study from 12 large banks in US and 12 largest credit unions in the country which encompasses a total of 450 different credit cards.
Issuers have ceased the interest rates of cardholders` on the existing balances for infractions such as being a day late in payment. There are increasing cardholders` rates of interest only when payment rates are more than 2 months late.
If cardholders make six payments on time after receiving a penalty in the form of increased interest, their original interest rate will be restored. However, according to what Pew has revealed, many banks are not disclosing this fact to consumers in cardholder agreements. Within the past years issuers have increasingly failed to disclose actual penalty rates of interests to consumers. These penalty rates are found to be around 2 or 3 times higher than the base rates advertised thus making it difficult or almost impossible for a struggling cardholder to get back to paying the outstanding balances on time according to the study.
The credit card issuers are giving credit card holders 45 days` notice of pending interest rate changes and the payments are applied first to balances with highest rates of interest according to the new law. The over limit fees has been abandoned by most issuers over the past one year. According to Pew only 23 % of all cards had an over limit fee which was down from 80% in July 2009. The credit unions` proportion in the over limit fees fell to 19% in March which was a massive 89% in the month of July last year. The arbitration clauses that limit the rights of cardholders` to settle court disputes have almost disappeared. They exist now in only 10% of cardholder agreements compared to the 68% mark that existed during the same period last year.