Credit Card Study Finds Widespread Unfair and Deceptive Practices By Lenders
A study released October 28, 2009, by the Pew Charitable Trust found that that 100% of credit cards offered online by the twelve leading U.S. banks engage in practices that the Federal Reserve has defined as “unfair or deceptive.” The study examined the terms of almost 400 credit cards advertised by banks and credit unions in July 2009 and December 2008.
The federal Credit Card Accountability Responsibility and Disclosure (CARD) Act, which is being implemented in stages, requires banks to eliminate unfair and deceptive practices such as “universal default” or raising rates based on a missed payment to another lender. Some of the new regulations are already in effect; others are scheduled to begin Feb. 22, 2010.
Even though the Federal Reserve lowered the federal funds rate to near zero to encourage lending by banks, the study found that credit card rates have actually increased over the past year. Bank of America had the largest percentage increase, rising from 14.99% to 18.24% for its highest rate card. Ironically, it appears that this increase in interest rates has been in some part caused by the passage of the CARD Act, which bars rate increases without a 45-day notification. To reduce risk under this the CARD Act, banks have raised rates before this part of the Act takes effect in February.
The study concluded that these rising rates makes credit cards a potentially dangerous part of most Americans’ financial lives. If credit card debt has become a danger to your financial well-being, you should consult with a qualified bankruptcy attorney and discover the cure. Don’t rely on Congress or the beneficence of the credit card industry to make your debt disappear. Take matters into your own hand, and discharge these unscrupulous lenders from your life once and for all.