aka, How the Financial Grinches Stole Christmas…
Christmas is just around the corner. How do I know? Because one of my oh-so-thoughtful Facebook friends has already started the Christmas countdown. And, like so many people out there, my concern is with affording Christmas, especially given all the traps and fees associated with bank accounts, credit cards, prepaid debit cards and payday loans. So, to help sort things out, Pleading Ignorance is looking at the top four fees that are likely to have an impact on you this holiday season.
Why are we so concerned about fees? Well, people have complained to us over and over again that they had no idea these various fees could be charged (they’re called “hidden fees” because you’re not necessarily aware of them—like it’s some sort of game). So, while you’re out buying that super-duper, fancy-schmancy toy-thing that your child has always wanted and just can’t live without, you may find that in addition to the $50 price on the toy, you may be paying some very steep fees. That’s how the financial grinches can steal your Christmas. Here’s what they’ve got in their bag of tricks this season, and what you need to look out for…
I’ve already discussed this, but it bears repeating. Yes, some of the banks have agreed to change their overdraft fee policies. Yes, lawmakers are looking to rein banks in (although when we look at all the good it’s doing with credit cards, we have to wonder if it’s worth the effort).
The banks are being accused of automatically enrolling customers in overdraft protection, not telling them about that protection and then charging a fee for that protection (cue ominous laugh here). Even more terrible, they’re accused of reordering transactions to get the highest number of overdraft fees; processing debits before credits so that customers are forced into Read the rest of this entry »
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…
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 limits 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…
The Credit CARD Act restricts how much credit card issuers can raise interest rates. Good news Read the rest of this entry »
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 Read the rest of this entry »