Tuesday, August 3, 2010

Credit card issuers get sneaky

Didn't we all know this would happen?

As soon as the government cracked down on the credit card industry, card companies found new ways to bilk the unsuspecting public.

Those bulky Card User Agreements that they send you once a year or so with lots of tiny, tiny print? You need to read that.

You also need to read this story from The Wall Street Journal detailing some of the card companies' newest tricks.

Read this excerpt to get an idea of how the companies are getting sneaky:

The Card Act also stipulates that issuers can't jack up rates on existing balances unless a cardholder is at least 60 days late. But there is a creative maneuver around that: the so-called rebate card.

Citibank rolled out rebate-card offers to some of its customers last fall, offering to refund up to 70% of finance charges when customers pay on time. The problem: Rebate offers aren't governed by the Card Act, and an issuer can revoke them suddenly and hit cardholders with high charges.

The net result is the same as raising rates—and because it is perfectly legal, customers have little recourse. "Rebates on finance payments may seem like a good deal, but you could end up with a very high interest rate suddenly," says Mr. Frank, of the Center for Responsible Lending.

Read on for the full article:


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