Financial Archive
5 Credit CARD Pitfalls to Look Out for Now
November 6th, 2009. By Kristine B
With Christmas around the corner (at least according to big box retailers and your local Hallmark store) the time to think about how to pay for Christmas presents is upon us. Of course, the new credit card regulations go into effect next year, which means that banks are doing everything they can to maximize profits today. This week, Pleading Ignorance looks at some of the ways the banks are maximizing their profits—so you have all the information before you decide to pay for Christmas with plastic…
What the Credit CARD Act Means to You…until it goes into effect
The Credit CARD (Card Accountability, Responsibility and Disclosure—picture the brainstorm on that one: “ok, got the “C”, “A”, “R”—what about the “D”, anyone?”) Act goes into effect in February 2010. The reason for the Act is simple—make credit card issuers more accountable for their actions and prevent them from taking advantage of consumers. That means limi
ts on increasing interest rates, limits on offering cards to people under the age of 21, longer wait times before late payment interest rate hikes and no more automatic overlimit allowances on the card. Sounds pretty straightforward, right?
Wrong! Because the Act doesn’t go into effect until February, some of the banks are—surprise, surprise—doing everything they can to maximize their profits now, so that later, when the Act is in full force, they don’t feel like they’re losing out on money.
So, what does this potentially mean for you? Here, 5 possible pitfalls to be on the lookout for this holiday season…
1. Higher Credit Card Interest Rates, Now!
The Credit CARD Act restricts how much credit card issuers can raise interest rates. Good news
Just in time for the Holidays: Higher Credit Card Interest Rates?
November 5th, 2009. By AbiK
How’re your holiday shopping plans looking? If you’re one of the millions who are either unemployed or thinking that you might be on a bit of job security thin ice (hello, J&J with 8,000 job cuts pending), you may be thinking of whipping out some plastic this holiday season just to ensure that jolly old elf—St. Nick—shows up.
So make your shopping list (and check it twice)—because that’s what your credit card issuers appear to be doing…just in time for the holidays. Yes, the banks who issue credit cards have a little list, too. They know what presents they want to find under their trees: higher interest rates, higher fees on late payments and special transactions, reduced credit limits…and the banks need to find these presents under the tree THIS YEAR because next year, it will be too late. Merry, merry!
See, next year—February, 2010 to be specific—is when the next wave of the Credit CARD Act goes into effect. That’s when credit cards will have to play by some new rules including:
Limits on Interest Rate Hikes: Interest rate increases on existing balances would only be allowed under certain conditions, such as when a promotional rate ends, there is a variable rate, or if the cardholder makes a late payment. Interest rates on new transactions can increase only after the first year. Significant changes in terms on accounts cannot occur without 45 days’ advance notice of the change.
No more Universal Default: ”Universal default,” when interest rates are raised based on customers’ payment records with other unrelated credit issuers (such as utility companies), would end.
More Time to Pay Monthly Bills: Credit care issuers will have to give card account holders “a
Worst Credit Card Ever? Hint: 79.9% APR (oh, but that is not all)
October 23rd, 2009. By AbiK
Need credit real bad? So bad that you’ll go almost anywhere for it so long as they accept your application? I’ve got the credit card for you: a First Premier credit card. But you also have to be willing to pay a price—a hefty one. I took a moment to read through the fine print over at First Premier and it’s like reading a Dr. Seuss book…”oh, but that is not all…oh no, that is not all!” (thank you Cat in the Hat)…until all hell breaks loose.
The folks at First Premier are not fools. They see a market and they pounce. With phrases like “Application responses in less than 60 seconds!” you can’t help but feel you’re beating the credit bureau bureaucracy when someone’s going to process your credit application in less than one minute flat. But then again, you also can’t help but raise an eyebrow—and you should.
I’m sure you’ve seen the reports lately about First Premier offering a 79.9% APR credit card deal. Outlandish? Yes. But such a rate is so out there that I can’t really give it any credence. Who in their right mind would take First Premier up on such a deal? No, the real eye-opener is when you go to apply for a First Premier credit card. Here’s what you find out…
The APR is listed as 9.9%. Ok. That seems pretty good. But let’s put on some readers and check out the proverbial fine print.
It’s a Fee-for-All!
Here are the fees associated with the privilege of carrying a First Premier credit card:
What the heck are Overdraft Fees & “NSF” on my bank statement?
October 21st, 2009. By Kristine B
There’s no shortage of financial news in the headlines lately, but the thing that might impact you the most is news about bank overdraft fees. So, that’s what we’re covering today in Pleading Ignorance.
So, What Is an Overdraft Fee?
Let’s back up first and answer what Overdraft Protection is. Banks either include or offer Overdraft Protection on their checking accounts to let you buy something with a check—or on your debit card—even if you don’t have enough money in your account to cover the transaction.
Ain’t that sweet? 
So let’s say you’re at the cash register trying to buy a coffee and a muffin for $4.00 with your debit card. But, you only have $3.50 in your account. Without overdraft protection, the bank would decline the transaction and you would probably suffer some momentary embarrassment. With overdraft protection, the transaction goes through and you can carry on with your life without any embarrassment about “Insufficient Funds.” (Oh, that “NSF”–that’s what it stands for: Insufficient Funds.)
Sounds good, right? Except that the $0.50 cents the bank has covered you for isn’t free. And the bank might not have told you that you were given Overdraft Protection and would be charged for it.
And guess what—the fee the bank charges you for covering that $0.50 cents is…drum roll please…an Overdraft Fee.
The thing about Overdraft Protection is that banks charge fees for overdraft transactions—the transactions that require more cash than you’ve got on hand—and those fees are high. Up to $35 per overdraft transaction (gulp). So, that $4.00 coffee and muffin suddenly becomes
Capital One: Low Blow to Low Interest Rates
October 19th, 2009. By LucyC
Capital One got hit with a potential class action lawsuit this week, and one guess what it’s about? Interest rate hikes on its supposedly low interest rate credit cards.
I would dare to hazard a guess that unless you live in a cave, you have likely seen one of the several Capital One’s ads promoting their low interest cards… you know the “what’s in your wallet?” campaign? Not a lot by the time Capital One is finished with you, from the sounds of things.
The back story is sadly, not unique, but rather the predictable narrative of deceptive business practices which appear to have become the hallmark of big banking.
Capital One, the suit alleges, raised interest rates on many card holders whose accounts were in good standing. Why?
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