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Pew Charitable Trusts was heard to comment that 12 of the largest banks in the United States are offering credit cards online that have done away with some of the most difficult practices for customers.
According to the report from the Philadelphia based organization that is a non profit one interest rates on existing balances will not be increased on account of an infraction of agreement between the customer and the credit card agency. Also the practice of payments being used for balances with lowest interest rates first has also been stopped. The study has compared cards offered between July 2009 and March 2010 advertised by various credit unions and banks numbering to nearly 450.
A lot of the changes are because of the new regulation passed recently which is the Credit card Accountability and Disclosure Act which is affecting different areas step by step. It has provisions requiring banks to apply the payments made to higher interest rate balances and also to put a stop to increases in interest rates.
A lot of these rules have been effective from Feb 22, some since August 20, 2009 and others regarding stoppage of late payments in excess have been in place from August 22.
With a lot of practices previously considered to be negative for the customers being stopped there is an increase in transparency of market operations according to director, Pew’s Safe Credit Cards Project, Nick Bourke. There have been a lot of challenges as indicated by studies about how the industry has been faring and treating the consumers in past years.
Penalty rates
The report also stated that there were widespread charges and penalty rates for payments that were missed. The penalty rate on an average rose by a percentage point to reach 29.99 and over half of the cards issued by various banks failed to disclose to the public their penalty rates according to the report. There were also not enough details about what in specific would cause these increases and how the consumers could revert back to a lower interest rate later on.
In case of balance transfers and cash advances from banks there has been an increase of the rate from 3 percent to 4 percent according to the report. Also over 14 percent of cards that were studied has an additional annual fee as opposed to 15 percent in July of the year 2009 with a median annual fee increase seen of about $59 from $50.
