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Full story here: http://www.newsmax.com/newsfront/us_credit_cards_mixed_blessing/2009/08/19/249955.html
Obama Credit Card Rules May Cost Consumers More
Obama Credit Card Rules May Cost Consumers More
Card companies have been gearing up for the new landscape for months, mailing consumers a spate of warnings about fee and interest rate changes. If the notices already sent are any indication, consumers may not be happy about much of the new information they receive.
Citi, for example, is in the process of informing some cardholders that it will institute an annual fee, about $30, on certain accounts.
And American Express Co. recently sent out notice it will eliminate over-the-limit fees on its consumer credit cards in October. They were dropped in response to a provision in that law that, starting in February, requires card companies to offer a way for customers to agree to pay each time a transaction triggers such a fee.
But the good news from Amex stopped there.
The letter Cynthia Vancho received last week from Amex informing her of the fee elimination also included notice that the interest rate on her card will jump to 10.24 percent from 6.99 percent. If she makes any late payments, the rate will shoot up to 27.24 percent.
And while overlimit fees are gone, Amex changed its fees for making late payments to $19 for balances under $250, and $39 for balances over that line. The prior fees were $19 for balances under $400, and $38 for balances over $400.
Vancho, who lives in Pemberton Township, N.J., sees rate and fee increases as penalizing good customers who did nothing wrong. "They're taking advantage of the situation," she said, maintaining that the hikes are being made to offset the cost of complying with the new rules. "I find it unfair for people who pay on time, pay over what is expected of them monthly and are basically good clients."
Amex spokeswoman Desiree Fish acknowledged the regulations played a part in recent rate and fee hikes. "The reason why we did it is to be responsive to the business and economic environment, which obviously included the recent regulatory changes," she said.
The company started changing rates and fees in November. Rates on certain credit cards like its Blue and Optima cards have risen on average 4 percent, while co-branded cards like airline miles cards are up an average 2 percent. "It's just part of the plan changes over the past few months that we've been making," Fish said. Citi spokesman Samuel Wang said in an e-mailed statement the new annual fees "also reflect the dramatically higher cost of doing business in our industry."
American Express and Citi are not unique. A survey by the Pew Charitable Trusts of nearly 400 credit cards offered by the 12 largest issuers in the country found that rates have gone up on average 2 percent since December. Banks are making the moves in response to an array of factors, including the regulatory changes and a spike in the number of accounts that have slipped into default as the unemployment rate has risen, said Nick Bourke, project manager of the Pew Safe Credit Cards Project.
Welcome to Obama's brand of fairness sweetheart."I find it unfair for people who pay on time, pay over what is expected of them monthly and are basically good clients."