Ohioans have a chance to fight back against unfair credit practicesWritten by Jim Harpen | | firstname.lastname@example.org
Even as we Ohioans pay closer attention to our wallets, chances are good that we are being pick-pocketed by questionable practices employed today by many financial services corporations. It is the fine print that gives our credit card companies the power to change terms and rates arbitrarily, the hidden fees we pay every month, and the daily costs of contracts and financial services that nickel-and-dime us in ways that keep us from getting ahead.
Credit cards are a useful convenience, but some credit card providers are among the worst offenders when it comes to treating their customers unfairly. And more and more of this so-called “gotcha capitalism” is hitting families where it hurts. But now we have a chance to tell our stories to someone who will listen and actually do something about it. Three federal agencies, led by the Federal Reserve Board, have just proposed new rules to prohibit some of the most unfair consumer credit practices, such as:
Unfair time constraints for consumers to make payments. This is the practice of sending out your monthly credit card bill just a few days before it is due, and then socking you with late payments and fees when you miss the due date.
Unfair allocation of payments among balances with different interest rates. When your credit card balance has multiple interest rates, some companies first apply payments to parts of the balance with the lowest interest rate. It ensures that it will take longer to pay off the portions with the higher interest rates, which means that you will pay a lot more interest along the way.
Unfair application of increased interest rates to outstanding balances. Many companies find reasons to increase the interest rate on your outstanding balances even though you are faithfully making the minimum payments on time.
Unfair fees for improperly finding consumers have exceeded credit limits. When a seller does not know in advance how much to charge for goods or services they authorize you to purchase (such as when you insert your credit card to pay for gasoline and then fill up your tank), they may place a “hold” on your account for a set amount even though you do not end up spending that much. If the “hold” stays on your account for several days, as it often does, you may be deemed to exceed your credit limit even though you never spent that much money, leading to unfair fees and charges and maybe higher interest rates.
Unfair balance computation method. “Two-cycle billing” is the practice of charging interest on balances based on the average daily balance over the course of two billing cycles, which may result in higher interest charges to you.
Unfair financing of security deposits and fees for issuance of credit. Some companies first charge a fee for the credit card, then finance the fee and charge interest on it. The proposed regulations would not allow finance charges on fees or security deposits that total more than 50 percent of your initial credit limit.
Deceptive firm offers of credit. Companies that make “firm” offers of credit by advertising specific interest rates or credit limits would have to disclose in advance the factors that determine whether you actually qualify for those terms, rather than have you sign up and then find out later you did not qualify for them.
The proposed rules are just that: proposed, but not yet final. No doubt the opponents will be making their voices heard. Please join me today to let the federal government know that we support these proposed changes that will help to end some of the worst practices of “gotcha capitalism” by credit card companies. Visit our web site, www.YourMoneyNowonline.org, to submit your comments by August 4, when my office will gather up and submit them all on behalf of Ohioans. We believe that hearing the stories of your and my personal experiences will help persuade the federal regulators to do the right thing. Add your voice to the growing chorus of opposition against unfair and deceptive credit practices and urge them to put consumers first.