Subprime Credit Card Fees Increase As New Law Takes Effect

Though the credit card company would never tell you that the subprime cards are called fee-harvesting cards, the name is appropriate. These are the credit cards offered to people who have credit problems like low credit scores. They are loaded with fees of all types, and there is even a fee to get one of these cards. [Read more]

What the Credit CARD Law Does Not Do

There has been a lot of talk about the new Credit CARD Act that took effect on 22-February-2010. There were high hopes among consumers that the new law would rein in the excessive fees that make it difficult to pay off card balances when making minimum payments. Unfortunately the law only goes so far. For many the law is too lax because it does not limit the amount of interest rates and fees that can be added. It only limits when they can be changed.

The Consumers Union has expressed the opinion that the law is an important first step in establishing rules that limit the credit card company’s ability to use tricks to capture consumers in unmanageable debt. The new law addresses billing, disclosure, marketing to college students, and the infamous introductory offers that come in the mail.

There are things the new law does not address though. The credit card companies can still raise interest rates as high as they want and can add new fees too for opening, closing, or making account changes. They can still reduce account credit limits too without giving the card hold any warning.

A plethora of fees that will show up on consumer accounts are expected. In many cases the addition of new fees started months ago. The financial institutions have been crafty too. For example, Fifth Third Bank began charging $19 when a card is not used for 12 months. In other words, it is a fee for not charging. Banks are charging for printed statements, cash advances, minimum account charges, paying online and more.

The Credit CARD law clearly does not limit fees and that means the credit card companies are free to replace as much of the revenue lost through new regulations as desired with new fees. In the opinion of the Center for Responsible Lending the card issuers are able to do pretty much what they want still.

What else does the new law not do? It does not prevent credit card companies from raising interest rates on new purchases. Though interest rates cannot go up on purchases already mad, the new rates can be as high as the company wants to charge. For example, First Premier Bank offered a credit card with a 79.9 percent interest rate. You have to speculate as to the type of customer who would accept such an exorbitant rate.

The law also does not stop the credit card companies from lowering credit card balances which can lower a credit score. The Credit CARD Act does not apply to business credit cards. That means many small businesses will still face the same problems as before when working with the lenders. The law does instruct the Federal Reserve to study how businesses use credit cards.

The next step according to consumer advocates is to extend the law to include limits on fees and interest rates. Though that could happen, it probably will not happen anytime soon. The credit card companies are already expected to lose revenues during a time when the economy is struggling to recover. It is unlikely Congress will address in the near future what the Credit CARD Act does not do.

U.S. Homeowners Still Trying to Tread Mortgage Waters

Much of the U.S. recovery relies on the restoration of normal operations in the housing industry. The numbers indicate that normalization could still be a long way off though. One out of every 5 homeowners is living in a house that is called “underwater”. [Read more]

Consumers Apply for Fewer Mortgages

During the first week of February the number of mortgage applications dropped. This was not particularly good news for the economy because it means that the demand for new homes is falling even as the recovery tries to find stronger footing. The falling demand for mortgages occurred despite the availability of some of the lowest rates seen on 3-year mortgages since December. Mortgage application figures include new mortgages and refinancing requests. [Read more]

Go One Place for Free Credit Reports

There are plenty of advertisements on television warning consumers about the problem of identity theft. There is one with singing pirates or singing medieval men that make identity theft almost sound like fun. One identity theft commercial has a policeman who explains he had his identity stolen. The implication is that if a policeman can become a victim then anyone can become a victim. [Read more]