credit cardsJust when you thought new legislation meant plastic was safe. Credit card companies are finding loopholes in the new Credit Card Act of May 2009. Their motive: Making up for lost revenue and side-steeping the reform.

The first part of the law rolled into effect in August, and required banks to give customers more notice before making major changes, like rate hikes, to their accounts. In February 2010, phase two comes into play with issuers being imposed limits on raising rates on existing card balances. Finally, the third phase will take effect in August 2010, when some penalty fees are capped.

Sounds good, right? Not so fast. Analysts caution every law -- even a good one -- is vulnerable. And fueled by the "where there's a will, there's a way" mentality, credit card companies are determined to take as much of your cash as possible.

Here's a few things to avoid.

Fishy Fees

Because the new laws can only tackle existing fees, credit card issuers are scrambling to dream up new fees they can tack onto your account. Annual fees seems to be an easy target.

Earlier this month, some Bank of America customers received a surprise, and not the good kind. BofA notified them that their once "no-fee" cards were converting to ones with annual fees. BofA spokesperson Betty Reiss said this is part of a "test" that affects 0.5% of all consumer accounts. The fees, ranging from $29 to $99, will be assessed to accounts based on risk and profitability.

More monthly moolah

One way to improve cash flow is demanding more money every month. And by raising monthly payments, issuers not only generate more cash, they increase the odds a customer won't be able to make their monthly payment and will fall delinquent. Resulting in even more fees and interest-earning penalties.

Chase is applying this theory to some of its accounts, raising the minimum rate some customers need to pay from 2% to 5% of the balance. On a $5000 balance, that's a $150-a-month hike.

Reduced rewards

It no longer pays to be good. Those in-flight upgrades and "free" hotel stays once earned as incentives are fading out of sight. American Express recently scaled back its Blue Card cash-back program, offering customers $1.25% instead of 1.5%. the catch: You've got to pay your bill on time. Otherwise, you won't accrue points without paying a $29 reinstatement fee.

Although it's not officially a "pitfall," WalletPop's Martha White discovered an interesting nugget while researching upcoming articles on the best and worst credit cards. White found that the Discover Motiva card puts a new spin on rewards. It offers customers paying their bill on time for six consecutive months an interest free seventh month as a reward. Not really cash in hand. But at least it's less cash going out.

Lower Limits

Don't be surprised if you've got less credit than you did a month or two ago. According to the Center for Responsible Lending, some credit card carrying consumers have seen their limits lowered by as much as 75%. Again, for no apparent reason. Bad news for holiday shoppers hoping to swipe their credit cards at the cash registers on Black Friday.

Rising Rates

The new law protects the rates on current balances, but says nothing about those for future purchases. And analysts caution those rates can soar. Lucy Elliot knows firsthand just how high those rates can climb. "The rate on my Visa jumped from 12.99% to 17.99% and I've never missed a payment." When she called to inquire about the hike, Elliot was told she owed too much "across the board" and thus her rate was being "adjusted". "It was re-adjusted 4 months later to 19.99%. It's criminal what they're getting away with."

The bottom line

Do your homework. Monika Ecsedy Nagy, CEO of FinancialFutureCoach.com says consumers should read their statements and disclosures every month. "Even all that fine print." Good advice since that's often where the language for these pitfalls is buried.

Nagy also suggests comparison shopping. "There are still some instances in which consumers can get a good, fair deal." True enough. But she says "you're going to have dig deep to find them."

Gina Roberts-Grey is a freelance writer specializing in consumer issues.


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Dereck

Do yourself a "HUGE FAVOR" and carefully read this:

The 21st Century Act: Final Amendments to Regulation CC Section:
"Prohibits" reimbursement of Credit, Loan, and Finance Balances to a "Bank Entity" leaving only "Nonbank Consumers" able to receive reimbursement, as specified on Pages 85 and 86.

The 21st Century Act states on pg. 85 and 86 that "Only Nonbank Consumers can suffer losses and File for
Re-credit or Re-claim on any Accounts under the Federal Reserve System" also “Any Second or Third Party Presenters utilizing a Banks Documentation, Contracts and/or Agreements to seek Claims shall be considered to be that Bank under the Rules and Regulations”, the Expanded Definitions also includes Credit Cards and Home Equity Lines of Credit.
Also on Pages 100 and 101 "In any Financial Claims the Indemifying Bank (Parent Bank) must be Identified".

(Left-Click to Search Link)
21st Century Act: Final Amendments to Regulation CC http://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040726/attachment.pdf

This Federal Law signed January 1, 2006 makes it "Fraudulent" and therefore "Illegal" for the 3 Major Personal Credit Reporting Agencies: Equifax, Experian, and TrasUnion to allow the Banks and the Banks "Third Party Presenters" to place any claim of "Negative" or "Potentially Negative" Accounts on your Personal Credit Based upon the fact that they have no "Legal Grounds or Claim" to the Money.

This is an "Unfair Practice" that diminishes our Financial ability to support ourselves and adversely affects our ability to gain work in many areas which breaks "Antitrust Laws".

These Rules also back claims of: "Aiding and Abetting" Racketeering and Extortion (of Finance Accounts and Personal Credit Reports), Pandering (of Credit and Loan Accounts, and Conspiracy to wit), Theft, Fraud, Federal Mail Fraud, and Telephone Harassment. Also "Threatening of the U.S. Financial Infrastructure", which is a "Capital Crime".

In order to engage the Federal Trade Commission to act against this injustice we must File many Claims, as these Reports must be Filed by a large number of people in order for the Federal Trade Commission to pursue
"Legal Action".

(Left -Click to engage Email Address)

antitrust@ftc.gov

This is way easier than "Occupying Wall Street"!

March 11 2012 at 6:27 PM Report abuse rate up rate down Reply