Consumer Advocates Seeing Many Consumers Burdened By Credit Card Term Changes

It seems that consumers are getting surprise after surprise during every billing cycle of their credit cards. This is because credit card companies are busy changing their credit card terms to adapt to the current economic climate and to the upcoming changes that the Credit CARD Act will bring. Although credit card companies have begun easing off in their almost-per-cycle credit card term changes, for consumers credit cards have now become a very expensive and risky financial tool.

The upcoming new credit card regulations in the form of the Credit CARD Act and the continuing increase of the country’s unemployment rate is making consumer credit borrowing a high risk for credit card companies. As a result, credit card holders, even those with excellent credit records, are getting hit with huge, generally unpleasant surprises in their credit card accounts.

The most common changes that have been introduced seems to be the hiking of interest rates. However, it’s far from the only one. Credit card companies are also introducing credit cuts, fee rate increases, new fees and increasing the minimum payment rates.

The term changes that credit card companies are organizing are also considerable. Greater Atlanta’s Consumer Credit Counseling Service manager for the group’s debt management team, Dick Reed said, “We are seeing many, many card issuers increase rates to the 27 to 30 percent range”.

Consumer advocacy organizations are seeing a huge rise in clients, an indication of the kind of impact these credit card term changes are having on consumers. For instance, the Chase bank, one of the major banks in the U.S., raised their minimum payment rates for a few of their customers to 5% from the previous 2% of the borrower’s outstanding balance. “Chase has brought us a lot of clients. People just can’t afford that”, Reed said.

Credit card companies first began introducing widespread credit card term changes around one year ago, at the start of the economic slump. The changes were an unpleasant surprise to credit card holders, many of whom had maintained excellent credit payment records. For those who had not kept up with their payments or who had lost their jobs, the changes were an additional and particularly heavy burden.

As Ed Mierzwinski puts it, “The credit card company will not be your friend or help you. In fact, they will try to hurt you”. Mierzwinski is a credit card expert for the Washington based consumer organization U.S. PIRG.