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Chattanooga: Hidden credit card fees trouble consumers
Wednesday, May 14, 2008
Sometimes it’s just the little things that get you and when it comes to credit card fees, that couldn’t be more true, according to consumer advocates.
Those little — or sometimes not-so-little — fees, added to everything from a balance that’s over the limit to long periods of card inactivity, increase over time and end up costing consumers billions of dollars a year, said Jim Winsett, Chattanooga Better Business Bureau president.
It’s all determined by the contract, Mr. Winsett said.
“You can’t emphasize enough the importance of reading a contract agreement in as much detail, all the fine print so that you are very clear on what those fees may be,†he said. “Unfortunately credit card companies are trying to find any little thing that they can charge a fee for.â€
Some of the steps credit card companies use to get consumers to pay extra fees include something called “universal default,†under which the credit card company raises the cardholder’s interest rate if their credit score declines, even if they always pay on time, according to Consumers Union, the nonprofit publisher of Consumer Reports magazine.
Some card issuers even mail statements close to the due date to give customers less time to get the payment in, said Keith Sanford, vice president of First Tennessee Bank.
“It’s hard to transact business nowadays without a credit card,†said the vice president of the bank that issues cards through Visa and MasterCard.
Many people get credit offers in the mail almost daily, and Mr. Sanford said consumers should read them thoroughly before agreeing to anything.
“Some of those are legitimate deals, but some of them are these predatory companies that are trying to get you suckered in to start charging you fees and high interest rates,†he said. “I would suggest anybody read that fine print on that mailer and protect yourself.â€
Consumers Union also reported that late payments can raise interest rates from 7 percent to 30 percent. Instead of rejecting charges that would put an account over the limit, some companies let the purchases go through but then charge a fee of as much as $39 for the transaction.
Earlier this month federal regulators proposed rules that, if adopted, could end the unfair tactics.
The proposed reforms include no late fee if the bill was mailed to the consumer less than 21 days before the due date and would restrict the finance fees on credit cards where the fees or deposits use up the majority of the available credit on the account.
“It’s about time federal regulators offered consumers some relief from unfair bank practices,†said Gail Hillebrand, Consumers Union Financial Services campaign manager, in a statement. “This proposed rule finally acknowledges that some practices just aren’t fair. All the disclosure in the world can’t make it fair to send the bill too close to the due date, to raise the interest rate on money already borrowed, or to charge a fee for a problem caused by the bank’s practice to allow a credit hold or a debit hold.â€
The Associated Press contributed to this report.
Source: http://timesfreepress.com/
