If you have checked your credit card bill, you may notice how some banks have loaded up on new charges and imposed interest hikes. The financial industry seems to be rewriting the credit card scheme.
Early in October, Bank of America informed some of its customers about a new annual fee of $29 to $99. This is a price card holders have to pay even if they pay their bills on time and in full.
It is not a surprise that credit card complaints are continuously increasing. The reform legislation that was supposed to protect card holders is now costing them.
New fees and higher rates imposed by banks and credit card companies are the financial industry's response to the Credit CARD Act. The law, which will regulate the charging of rates to customers, will take effect in February.
Linda Howland, Executive Director of Consumer Credit Counseling Services of Rochester, warns card holders about the legislation -- saying that this may be what they want, but they do not realize the consequences of its ratification.
Banks are now finding strategies to make a profit on cards before 2010. These institutions are looking for effective tactics -- and fees and interest charges are definitely among their options.
Jan Kelley, a consumer from Rochester, says a lot of people are living beyond what they could afford through their plastic. Now that the tough times are here, they are the ones greatly affected.
Bank of America is not the only bank that tried to increase its card profits. Other companies like Citigroup also began imposing annual charges to those who do not spend more than $2,400 each year.
Another consumer from Rochester, Dan Wagner, says he checks his credit card every week to make sure there are no charges that should not be there. He treats his plastic like cash that he has, and not one that he will have in the future. He reveals that if interest rates will be tacked on, he will cancel his card.
Linda Howland advises consumers that if they could not pay off balance and are forced to cancel their cards, there are still options left for them.
Banks may be willing to negotiate with those that have good standing. Card holders can ask to have the annual fee waived or interest rate decreased. Others can always check out other banks to transfer their balance.
Kelley says a lot of people do not look at their credit card bills, but they should. If she sees new annual fees or rate hikes, she will close her account.