Just as average Americans are beginning to see more budgetary benefits from 2009's landmark credit card protection legislation, the Credit CARD Act, they can also expect to see some not altogether unexpected side effects from their credit card providers: additional fees and higher rates.
In fact, while the CARD Act demands that card companies review customer files and lower rates where applicable to good payment history, according to a recent report from Marketplace's Stacey Vanek Smith (of American Public Media), the changes can come at a cost.
“Millions of people saw their interest rates get jacked up and their credit limits slashed during the recession. To try and address that, Congress' CARD Act said if a bank raises someone's interest rate, it has to review that customer's account after six months to see if that rate increase was ‘appropriate.’”
Bank of America so far is the only card company who's admitted publicly of lowering rates, cutting rates on roughly a million cards last month.
But as Ron Shevlin, banking products analyst for the Aite Group, told Vanek Smith, these cuts are largely “smoke and mirrors.” “If I were a cardholder, I would not be holding my breath expecting a rate decline from my credit card issuer…. Although a million customers sounds like a lot, the best estimates I've seen put the total number of credit card customers that Bank of America has at about 60 million. So, in effect, about 2 percent of Bank of America customers saw an interest rate decline.”
So while it’s apparent that at least one of the "big four" banks is cutting some high-value cardholders' interest rates by as much as half, Bank of America is still adding $59 annual fees to customers who can least afford them (i.e., ones who are least likely to be able to get another card from a different card company).
"The divide that's dividing the haves and have-nots has gotten even bigger," Curtis Arnold, founder of CardRatings.com, told AOL’s WalletPop. "As we come out of this credit crunch, my concern is it's almost like a disappearing middle class. That's a concern to me as a consumer advocate, because millions and millions of consumers fall into this category," he says.
And while there are indications that some customers are having their rates lowered as a result of the CARD Act, it’s normally only by a percentage point or two. Furthermore, as WalletPop out it, “since banks don't have to publicize the details of who's been granted a lower rate, it's possible that they could be going to people who don't generally carry a balance. This would, of course, make for good press without really helping any of the Americans struggling to pay their bills.”
So what will help? Without more protections from credit card fees and interest rates, will you still be drowning in debt this year? Are you worried about the state of your credit over the next 365 days and beyond? Trying to figure out how to reduce your debt—credit, debit or otherwise—and get back on track in a New Year? Knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond all of the things “in store” in 2011. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-919-646-2654, or make an appointment online at www.billsbills.com.