Now that the CARD Act has been in place for a year, we wondered what, if any, changes consumers had noticed. Have they noticed any difference due to the new regulations? Maybe fewer aggressive marketing ploys? Stronger collection efforts? We were surprised by what we found.
Are We Worthy?
Fox News reported this week that there appears to be two mindsets, so to speak. If you have an impressive credit rating, you are the victor who receives the spoils. For those with less than ideal ratings, there’s a good chance you’re shouldering at least some of the costs of those spoils. There are many perks that go with these high credit ratings.
Everything from rewards that equate to five times the industry standard to the waiving of annual fees, if you’re an A-lister, you can be sure you’re being courted. One example is the impressive perks associated with CitiBank’s “ThankYou Prestige” credit card. These customers enjoy free airline tickets when they book their travel plans online. You’d better take advantage of it, though. The annual fee for this program? $500.
For those who might have struggled during the recession and seen their credit ratings drop to some degree, your credit card fees have likely increased; if you still have a credit card, that is. Many banks have begun dropping those customers whose scores don’t pass their worthiness test. And it’s legal. Not only that, but if you still carry a card, there’s a good chance that as your counterparts with higher scores are enjoying big rewards, you’re paying for it via higher interest rates.
There’s also a good chance that some folks have set to see any of these perks, even with their flawless credit reports. You’ve worked hard, carefully budgeted your money and used your credit cards responsibly. While that’s being applauded by your creditors, they’re also passive-aggressively punishing your responsible ways.
Many credit card companies want their customers to swipe away and for those who don’t, you might not see higher interest rates, but you will notice a lack of “attaboy” perks, too. You fall in the sub-group: excellent credit rating, but too responsible to take advantage of it. You’re a “B Lister”.
I Want Your Credit Card, but Not Your Banking Services
And still another trend is one where credit card issuers are targeting those customers who like the credit cards, but won’t go so far as to change banks for their checking, savings and even mortgage accounts. You may see as much as a $59 annual fee if you’re a Bank of America credit card holder. Just because you landed the card because it had no annual fee doesn’t mean the rules can’t be changed. It’s not limited to a few issuers, either. The majority of companies are now rescinding their no annual fee plugs.
We Can Live Without You
Finally, there exists those customers who aren’t bankruptcy bound, but who aren’t considered as all that crucial in the whole financial scheme, either. If it sounds brutal, it is. It’s doing a brutal number on your wallet, too. Fair credit scores generally netted about 19% in terms of finance rates; these days, however, those rates are now at 22.57%.
Because banks are now restricted from overdoing the fee impositions, if you are a credit risk, you’re far more likely to be declined. Credit issuers simply can’t take that risk anymore because the channels of offsetting losses are so limited.
The Flip Side
While it doesn’t appear the Credit Card Accountability, Responsibility and Disclosure Act is fair, there have been significant changes that do protect the consumer, regardless of his credit history. Your interest rates are safe the first year you open a new credit card account. Issuers no longer can entice consumers with a low introductory rate and then jack the rate up six months later. Paid late? Now, you won’t be charged anything more than $25 in late fees.
Careful, though; you do risk higher interest rates later on if you do pay late. And, too, if you’re one of the millions who can’t seem to make sense of how annual percentage rates work, your statements now show how long it will take and how much you will pay in interest by making only the minimum payments.
As with most things in life, the CARD Act has its benefits to balance the major changes that restrict so many consumers. It’s just a matter of discerning where you and your credit history fit in.