Consumers Getting Hit Hard As Credit Card Companies Overhaul Credit Policies

The credit card industry right now is in the middle of a massive change up in policies. Credit card companies are busy changing their business models, adapting to the current economic climate and preparing for the new set of legislations called the Credit CARD (Card Accountability, Responsibility and Disclosure) Act.

The Credit CARD Act was one of the quickest passed legislations in Congress. It was drafted and signed only in a matter of months early this year. The Act was an answer to growing discontentment among consumers of the predatory practices of credit card companies. When it was passed, consumers and consumer advocates rejoiced, expecting fairer treatment from their credit card companies. Unfortunately, just the opposite happened.

Activation for the Credit CARD Act was not scheduled until February 2010. This was done to give credit card companies enough time to adjust to the changes that the Act will bring. Unfortunately, for American credit card holders, legislators did not foresee that what credit card companies would do to adapt to the Credit CARD Act would be disastrous to consumers and, in some cases, would completely go against the intentions of the Act.

Bank of America, for instance, just sent notifications to some of their credit card clients informing them of a new annual fee which ranges from $29 to $99. The fee needs to be paid regardless of whether the card holder maintains a balance or not. Bank of America isn’t the only credit card company doing this either. Citigroup has also introduced a similar program, albeit with a different spin. The company will now charge some if its clients annual fees if their credit card spending does not exceed $2,400 per year. This is an odd ruling which is akin to punishing card holders who try to maintain good credit standing and avoid credit card debt.

The continuing changes in credit card policies are worrying for credit card holders but they are hardly a surprise. Credit card companies have always been focused on making a profit and it is no surprise that the adaptation of credit card companies to the Credit CARD Act would prioritize profits even at the cost of hurting consumers.

Linda Howland who serves as the Executive Director of Consumer Credit Counseling Services in Rochester said, “Be careful what you wish for. People wanted this legislation; but they don’t realize what it’s going to do”.

Faced with the limitations that the Credit CARD Act will bring, credit card companies are looking at everything that could potentially bring them profit. “So they’re looking at options that they have and fees are definitely one of them, interest rates are one of them”, Linda Howland explained.