Wednesday, Jul. 01, 2009

BBB encourages consumers to read the fine print

Even long-time credit card holders may be surprised

The Better Business Bureau (BBB) serving Central California continues to receive calls from unhappy consumers who have received unexpected bumps in their credit card interest rates.

Much of the talk surrounding the recently passed "Credit Card Holders' Bill of Rights" legislation concerned capping interest rates on credit card balances. Unfortunately, many consumers still don't know that cap did not make the final version of legislation which will go into effect in early 2010.

"Consumers need to carefully read their credit card agreements," said Doug Broten, president of the BBB. "There is frequently language in there that allows the interest rate to be raised-sometimes as much as an extra 19 percent-if payment is received even one day late, regardless of the payment history of the card holder."

Some of the provisions that were included in the "Credit Card Holders' Bill of Rights" are:

*Starting in 2010 charging consumers who pay by phone would be banned.

*For consumers, it would clarify the cost of big ticket items by forcing consumers to recognize how much they are paying in interest.

*Card companies would also have to provide information on consumer counseling and debt management.

*Consumers would not face retroactive interest rate increases unless payments are 60 days overdue.

*Even after 60 days, the consumer can get his old rate back by making on time payments for six months.

*Double cycle billing is also banned. Under the present rules consumers who are late can be assessed interest on a prior month's balance.

*Issuers must send bills 21 days before the due date and provide 45 days notice before changing the terms on a card.

*The new rules still allow card companies to raise interest rates on consumer's future charges.

Legislation to further help credit card holders has been sponsored by U.S. Representative Neil Abercrombie (HI), who also sponsored the initial legislation. "The Interest Rate Reduction Act" would prohibit the annual percentage rate of interest (APR) applicable to any extension of credit to a consumer from exceeding 15 percent on unpaid balances, inclusive of all finance charges.

The BBB advises consumers to shop around for the best credit card offers. Be sure to check with your financial institution or credit union to see what they have to offer.