New way to hike credit card rates

[meegbear]

When the House Financial Services Committee meets again next week to discuss credit card reforms, they'll have something else to talk about -- a new way for credit card firms to raise your interest rate.

Discover announced recently that there's a new penalty for cardholders who exceed their credit limit, in addition to the $39 fee -- a higher interest rate.

Many consumers might not even realize that they can exceed their credit limit, and in fact the term has largely become meaningless. Card issuers give consumers what some call a "nominal limit," which is the credit limit printed on monthly bills. But nearly all allow consumers to exceed that limit by 10 percent or more (precisely how much is a secret), and then charge fees of $30 to $40 for each month the balance exceeds that limit.

In fact, credit limits might better be called "fee triggers." And now, you should think of them as interest rate hike triggers as well. More on that in a moment.

You might recall a minidrama that unfolded during a congressional hearing on credit card practices last month. The House Financial Services Committee had planned to hear from consumers complaining about credit card firm misbehavior at the March 13 meeting, but the witnesses suddenly refused to testify. The card companies, at the last minute, had demanded that each witness sign a waiver allowing the banks to discuss the consumers' personal lives in public, saying they needed the waivers in order to defend themselves (meegbear's emphasis). Given the timing of the demand, some saw it as an intimidation tactic by the banks.

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http://redtape.msnbc.com/2008/04/a-new-way-to-ra.html

[williesgirl]

1. Banks are robbing us blind. They got rid of cashiers with ATM's and now charge for that use.

They no longer send your checks back with statements and charge if you need a copy. They charge you to download your data into Money or Quickbooks, yet only keep 6 months of your data available online. Congress should stomp on them and start now. rec'd

[rox63]

2. I use a credit union - they are non-profit

And their ATM card is usable without a fee on a network of small, local banks and credit unions.

[meegbear]

4. Me too ...

I have one credit card and was told by them that if I go over my limit, the rate goes to 28%. Thanks guys.

[rox63]

11. My only major credit card is a Visa issued by my credit union

My interest rate actually went down recently (by 1.5%) when the Fed lowered interest rates. It's a very reasonable 9%.

I also have a Home Despot credit account, because of recent work I had to have done on my home. My current balance is interest free for a year. But if it takes me longer than a year to pay it off, the interest rate will be 21%. (Yikes!) I'm definitely planning on taking no more than a year to pay that off.

[RebelOne]

5. You aren't charged for ATM use if you

use your card at the bank where it was issued.

[SoCalDem]

6. or if you use it at a point of sale .. Go to a grocery store

buy some gum, swipe your card for $50.. no charge

Go to an AM/PM, use their ATM, and you'll get charged on both ends of the transaction ..

[nykym]

3. Why didn't the commitee

just grant the witnesses retroactive imunity LOL!

[MadHound]

7. Pay off you CC, cut them up, and go to a cash only basis

Or perhaps a debit card if you don't like carrying cash or writing checks. I've never had a credit card and haven't suffered for the lack of one. In fact my credit rating is excellent, I always stick to a budget, and I don't have to worry so much about ID theft and all the rest of the baggage that accompanies credit cards.

[bighart]

8. There 2 ways to not incur the fees and interest charged by these companies.

Let's all be honest with ourselves and admit that if we are over the credit limit on our credit cards we made the decision to make the purchases that put us there. If you don't like the high interest and high fees you can avoid them by either:
1) Don't open the account in the first place
2) Don't carry a balance on the card.

The big problem is most of us have been living beyond our means and buying stuff we don't need, and in fact much of what we buy we end up wondering why we wanted it in the first place.

I have gotten myself in trouble with credit cards because it was just too easy to buy what I wanted and not have to worry about having the money at the time. Once I stopped and figured out how much more I was paying for stuff due to the fees and interest on the credit cards I was able to see that if I don't
NEED, and I mean absolutely must have it now, paying the full price in cash saves me a huge amount of money. I may have to wait 6 months or a year and save to buy whatever it is I want, but in the end it is worth it.

[varkam]

9. Yes indeed.

About six months ago I went over the limit on a card. I had always made payments, and always paid more than the minimum. I had been with this particular (let's call them BitiCank) company for over five years. What actually pushed me over the limit was their finance charge. Guess what happened? Interest rate went from 11.25% to 32.5% overnight.

:argh:

[coriolis]

10. Another trick to watch out for! (Maybe it's not new but I just recently noticed)

They will send you checks to cash or buy crap with. I got some the other day in the mail and one was already filled in with my name and $700...plus 3 blank ones and what looks like a very attractive interest rate, BUT

1. That rate only lasts for a limited time
2. There is a $15 minimum "processing fee" for each of them if you use them
3. It applies against the "cash advance" credit which may have a MUCH LOWER figure than your actual credit line
which makes it easy to exceed and then they get to charge you the big "overlimit" fees! (and raise the rates)
4. All of these little 'gotchas' are explained if you LOOK REALLY HARD to find them in the small print!