The Credit Card Act of 2009 was supposed to introduce credit card consumer protection. One of the proactive measures taken in the Credit Card Act was the introduction of a 45-day written notice on behalf of the credit card company prior to raising interest rates. Credit card consumers also would then have the option to opt-out of a interest rate increase. Customers would have be late for a credit card payment by 60 days before the credit card provider could charge some ridiculously high “default” interest rate. Sounds really helpful for consumer protection.
So did the Credit Card Act of 2009 lead to credit card consumer protection?
Not all the way. Just yesterday, Credit Shout wrote about how if you miss a payment with CitiBank, the Credit Card Act won’t help you. That’s right. It won’t help.
What’s the loophole with the Credit Card Act?
Introductory rates and “special offers” are exempt from this 45 day written warning. CitiBank offered it’s customers a so-called “special” rate of 8.99%. Any customers that were late on their payments, were charged with the default rate, without any advance warning, certainly without any written warning. Since “special” rates are exempted from the 45-day written warning rule, this is perfectly legal.
A few months ago I wrote about what the credit card acts means to you. I was fairly skeptical at the time and I really didn’t know what to expect going forward. It would’ve been far too ambitious to view the Credit Card Act as backing ultimate credit card consumer protection. We are now slowly going to see some of the loopholes come out when it comes to credit card consumer protection. Only time will tell how helpful the act truly is.
Here’s the thing, even the best credit card customers can miss a payment by an hour or a few days. Not everyone has their finances fully automated. Some of us prefer to go through our credit card balance with a tooth pick before we transfer any money over.
I’m not going to be an idiot and state the obvious. Everyone knows that they need to pay of their credit card debt. More importantly, we all know that we must make our credit card payments on time. All I will say is to please be cautious. Read over anything that your credit card company sends you. It could contain really important information. If you’re unsure of what something means, then contact customer service or seek third-party assistance.
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The funny thing is when these retailers try to pass along the costs to the customer. There have been times where I have no cash on me, so I had to resort to credit card. Then the retailer tries to charge me extra for the credit card fee that they incur.
That’s actually illegal according to the contract they signed. They are more than welcome to markup their prices beforehand, but they can’t penalize someone for using a credit card (can’t legally…obviously they can try as your experience shows). Retailers are also allowed to give discounts for using cash, but cannot put up signs that say you have to purchase a minimum amount to use a credit card…these are all contractual agreements they signed.
Does the bank make this money, or is it Visa/MasterCard?
Debit card swipes throw the fee to the bank (who pays Visa, MC, etc monthly) and credit card swipes are split between the bank and company. At least that’s how my bookstore boss described it.