Credit Card's Big Day

By Dian Vujovich

Circle your calendar: February 23 is the date the new Credit Card Act of 2009 becomes official.

It’s a non-date for those who pay their credit card balances off every month. But for those who carry a balance from one month to the next a few of the big changes include:

• All payments you make must first go to pay off the charges that carry the highest interest rates. Like the 30 percent the institution charges for say cash advances.

• Gone are the days when banks can simply decide willy-nilly to change their customer’s fixed-rate interest charge. Any rate changes now require notifying the cardholder of any changes 45-days in advance and in writing.

• And banks will have to let their cardholders know, as in “disclose”, how long it will take for them to pay off the entire balance if only minimum payments are made.

There are, however, a number of gaps in what the new Act doesn’t cover. From Creditcards.com (http://tinyurl.com/yev8wxg) : “Issuers can still raise interest rates on future card purchases and there is no cap on how high interest rates can go. Business and corporate credit cards also are not covered by the protections in the CARD Act. If credit card accounts are based on variable APRs (as the majority now are), interest rates can increase as the prime rate goes up. Credit card companies can also continue to close accounts abruptly, without giving cardholders advance warning…..”

How about that “no cap on how high interest rates can go” part? In case you missed it, a South Dakota credit card maker and issuer of the Premier Bankcard introduced two cards last fall. One carried an unbelievable 59.9 percent annual percentage rate. The other, a whopping 79.9 percent.

Both are targeted at the sub-prime, or riskier, market. Those rates ought to be outlawed. Loan sharks offer better terms.

I think it’s criminal how banks have behaved toward their credit card client base. After learning about the new laws coming down the pike they set out to stick-it to their customers long before the Act was to become law. It has also been criminal of Congress to allow those actions.

But lots of things in the banking and finance arenas are criminal these days. Most of the crimes committed by mucky-mucks who are then rewarded for their unconscionable actions while the average guy and gal pays their debts.