Credit Cards » Credit Card News » Credit Companies Doing Their Best To Beat The Credit Card Bill
Date July 29, 2009

Credit Companies Doing Their Best To Beat The Credit Card Bill

It seems that the government may have made an enormous mistake giving credit card companies several months leeway to adapt to the credit card bill. Credit card companies are now doing everything they can to increase profits before they have to deal with the credit card bill. Unfortunately for credit card holders, this means more expensive interest rates and fees and drying up credit.

Credit Companies Doing Their Best To Beat The Credit Card BillThe credit card bill, signed May this year, is set to become active next year, February. Although some of the amendments of the credit card bill will become active early this August, the majority of the amendments, especially the most useful ones, will still be several months away. In the meantime, credit card holders will have to face up to a growing number of credit card billing changes that are stifling credit and raising credit card costs for them.

Recently, Bank of America, Discover and JPMorgan & Chase moved their fixed rate credit cards to a variable interest rate setup. It seems that the credit card companies have found a loophole in the credit card bill which will negate the amendments in the bill stifling their abilities to change credit card interest rates at will. The credit card bill only controls credit cards with fixed interest rates. Nothing is said about variable interest rate credit cards. As a result, credit card companies are moving the majority of their credit cardholders to a variable interest rate card.

The move to a variable interest rate credit card will mean that the interest rate will be tied to a specific benchmark, the prime interest rate. As of the moment, the prime interest rate is near the zero mark, making the move somewhat attractive for credit card holders. However, by tying the interest rate to the prime interest rate, credit card companies are virtually guaranteed that the interest rate will rise in the near future.

Many credit card holders are finding themselves trapped by their credit companies. While many do not approve of the move to a variable rate interest rate, they have no choice in the matter. Credit card companies are firmly behind this move and are not allowing their customers to opt out of it.

As this is happening, credit card companies are also busy raising interest rates and fee charges for credit card holders. It may be time for credit card holders to rethink if maintaining a credit card is still worth it. A move to a debit card is highly recommended for those who cannot live without the convenience of plastic.

Date July 12, 2009

Senate Reacting To Increased Rate Hike Trend

The current trend among credit card companies nowadays are increasing interest rates and fees. Most of the major credit companies such as Discover, Bank of America, Destiny and others have already raised and will probably continue raising their interest rates and fees. The result is credit cardholders losing the option of using their credit for purchases and financial emergencies and finding it more and more difficult to pay off their current debts.

Senate Reacting To Increased Rate Hike TrendThe situation has not gone unnoticed in Washington and the Senate is finally taking notice of the growing trend of increasing interest rates. Last thursday, Christopher Dodd, the Senate Banking Committee chairman gave notice to regulators to create a draft for new regulations that will require a review from credit card companies of their rate hikes since the beginning of the year.

Connecticut democrat Christopher Dodd was instrumental in the passage of the credit card bill. The credit card bill was a set of legislations which aimed to stop the predatory practices of credit card companies whose actions, while earning them millions of profits from credit card holders, played a large part in the current economic crisis. One of the many credit company practices that the bill will stop is the ability of credit companies to arbitrarily change credit card interest rates. With the bill in place, credit companies will not be able raise their interest as easily as they can right now. As a result, many see that the credit card rate hikes credit card holders are experiencing right now are probably preemptive moves from credit card companies looking to establish their profitability before the credit card bill takes away some of their ability to do so.

Because of these developments, Christopher Dodd recently stated that he is worried about the recent reports of credit card companies raising the interest rates of credit card holders before the credit card bill becomes active by next year. He recently sent a letter to Ben Bernanke, Federal reserve Chairman and other government regulators asking that they draft and enforce rules that will implement provisions in the new credit card law to credit card companies which will stop the current practice of rate hikes before the credit card bill becomes active.

Dodd’s provision requires credit card companies to review accounts that were raised since January 1, 2009 every six months. Credit card companies must also reduce a card holder’s interest rate if his credit risk lowers or the need for an interest hike is no longer there.

Date June 25, 2009

Hikes On The Rise For Credit Cardholders

At the moment, seeing your credit card interest rates rise could be the worst possible thing. Unfortunately, this is exactly what is going to happen to millions of credit cardholders. In fact, it has already begun. If you are one of the credit cardholders who carry a balance on your credit card and your current interest rate is below 10%, you may soon see your credit card interest rates jump to double figures.

Hikes On The Rise For Credit CardholdersMajor credit card companies American Express, Citibank, HSBC, Capital One and Bank of America have been raising the interest rates of credit cardholders numbering in the millions, citing the difficulties of the economy as their reason for doing so. The increase may affect around four million credit cardholders in the U.S., the Wall Street Journal says. So what can you do to save yourself from the devastating effects of these enormous interest rate hikes?

When you find out that your interest rate is being increased, you should contact your credit card company immediately. This is especially true for those who have maintained their balances to low levels. It is possible that your interest rate may have been hiked by mistake. Credit card companies are generally only targeting those with balances on their credit cards. Even if you have a balance on your credit card, you should still try to talk to your credit card company to exempt you from the hike. Credit card companies have been known to issue exemptions in the interest of keeping their customers.

If it happens that you can’t get out of the hike and you just can’t accept it, you can still choose to pay off your current balances using your current interest rates. Just make sure that you don’t make any new purchases. If you do, the credit card company will automatically move you to the higher rate.

Although most major credit card companies are raising interest rates, there are still other credit card companies who are offering decent rates. You should therefore shop around and see if you can find a good card for you. You might be able to move your current balance to a 0% introductory interest rate card. If you do, make sure to pay it off immediately. Missing out on one payment could mean an even higher interest rate for you to deal with. In the current economic climate, paying off any debts as soon as possible is paramount. Therefore, manage your finances as well as you can and try to avoid credit card purchases for now.