Card Abuse, Fees and Rate Hikes

Washington, DC: Two new surveys released recently by the government indicated that reforms have led to the near elimination of credit card rate hikes and over-limit charges as well as a reduction in penalty fees, the Washington Post reports.

The Credit Card Accountability, Responsibility and Disclosure Act, which took effect on February 22, 2010, was designed to prevent some of the most vulnerable credit card customers from paying excessive fees and interest rates, according to the news source.

Elizabeth Warren, a special adviser for the Consumer Financial Protection Bureau, said that the changes have been successful for the most part.

“Much of the industry has gone farther than the law requires in curbing re-pricing and over-limit fees,” she said. “Leaders in the industry deserve credit for moving in the right direction.”

However, some card issuers have warned that the new protections offered to vulnerable clients could actually lead to higher charges and interest rates for good customers, according to the news source.

According to Bloomberg, total credit card late fees dropped to $427 million in November 2010, which was down significantly from the $901 million in January 2010.

Despite recent laws passed to protect consumers from credit card abuse, abusive practices reportedly continue to pose a problem. Some abusive credit card practices include credit card rate hikes, credit card fraud, credit card late fees, and credit card over limit fees and credit card annual fees. Some credit card companies are also accused of illegal marketing practices.

CREDIT CARD ACT

In 2010, the Credit CARD (Card Accountability, Responsibility and Disclosure) Act went into effect. The act was designed to limit the amount of credit card abuse customers faced, but some companies are accused of continuing with abusive practices.

Under the Credit CARD Act, companies cannot automatically allow a card to go overlimit and cannot raise interest rates for one year after an account is opened. Once the year is up, lenders must give the cardholder 45 days’ notice before issuing a rate hike

CREDIT CARD ABUSE PRACTICES

Because the credit card companies could lose some of the revenue once generated by fees or interest rate hikes prior to the new laws taking effect, they are looking for other ways to increase their profits. Some companies are accused of illegally marketing optional products associated with credit cards. For example, Discover Financial Services faces a lawsuit alleging customer service representatives phoned Discover clients under the guise of alerting them to optional credit card products but then signed the customers up for those productsóand charged them related feesówithout the customer’s knowledge or consent.

Other companies have taken to increasing balance transfer fees, charging cardholders if their accounts are not used frequently enough and eliminating grace periods on purchases.

Historically, credit card abuse lawsuits involved predatory practices such as unannounced rate increases, unannounced credit reductions, overlimit fees triggered solely by annual fees, and pre-approved and other special offers that are not honored. Some of these predatory practices are prohibited under the Credit CARD Act, but consumers should be aware of their rights to ensure credit card companies follow the CARD Act.

CREDIT CARD ANTITRUST LAWSUIT

Some states, filed a lawsuit against Visa, MasterCard and American Express, alleging those companies violated antitrust laws by preventing merchants from encouraging customers to pay for their purchases with credit cards that have lower merchant fees. If the allegations are true, the companies could be guilty of restricting competition among credit card companies. Visa and MasterCard have reportedly agreed to settle the lawsuit, without admitting wrongdoing. American Express, however, is reportedly fighting the lawsuit.

Having the option of using credit cards that offer lower merchant fees could result in lower prices for consumers.

Credit Card Abuse Legal Help

If you have been a victim of any unfair practices by your credit card company, including substantial rate increases, unfair penalties or broken promises, and would like to take a stand by participating in an action against them, please visit www.www.lawyersandsettlements.com to submit your credit card complaint to a concerned lawyer who will review your claim at no charge.

As Atlanta was host to 2011’s Black Enterprise Entrepreneurs Conference and Expo, I had both the honor and pleasure of sitting in on ‘A Conversation With’  Earl Graves, Sr., and Earl “Butch” Graves, Jr.  Mr. Earl Graves, Sr. spoke of his time as administrative assistant to the late Senator Robert F. Kennedy – from 1965 to 1968.  Mr. Graves – after Kennedy’s assassination, formed his own management consulting firm that advised corporations on urban affairs and economic development.   Mr. Graves has received nearly 70 honorary degrees from colleges and universities, and is indeed a living legend.

The whole conversation was fascinating.  The father and son team spoke of the challenges and successes of the business; as well as painted a clear picture of its future. The father and son duo told the funny story about coming up in the Graves household.  Butch Graves received once received a “C” for a grade…and that would be the only “C” he’d ever bring home.  Earl Graves’ standard for his family, was absolutely above average.  Thus was his high standard upheld for business and everything else in his life.  And now that Earl “Butch” Graves, Jr., is the President and CEO of Black Enterprise, it is clear to see that Earl Graves, Sr. has perpetuated excellence.

As a people, we should likewise always seek to be well above the average, and not accepting of what is normal, or standard  -  in anything. We should seek to operate in excellence in everything we do.   We often talk about operating in the spirit of excellence but forget that the root of ‘Excellence’ is excel.  And in order to excel, we must take action.  Webster’s definition of the word is:  to surpass others or be superior in some respect or area; do extremely well; to outdo.

We must learn not to accept the ‘norm’, or the ability to do the norm.  What we should accept, is that we have the ability to normalize excellence and make it the new normal.  By all means, we should not be deemed excellent by the things that we have.  Excellence is the mindset that feeds lifestyle and produces mental wealth.  Earl Graves, Sr., is a respected man with a standard of excellence from 1970 until now.  I am honored to have been in his presence and see excellence in him, his marriage, his family and his business.  Likewise, we need to make a conscious effort to outdo what has been done.   Be superior.  Break former records and set new ones.

Community and corporate goals mean nothing if we are individually defeated.  It takes a group of individuals to make a community.  So, in the spirit of community, let us begin to not only teach, but consistently drill into our children and our people, that we are NOT average.  Teach by repetition. Speak excellence and do it.  Do excellence and continue to speak it. Then perhaps we can begin to excel mentally, modify our behavior and eventually perform better and excel – with family, in business, and throughout our communities.

‘Each One Reach One’ is a very catchy phrase and sounds cute.  But some of us are in a position to reach a whole lot more than one person.  Some of us as individuals can speak to a whole generation through various media.  As I cannot challenge you to be in a place where I may not be, I hereby hold myself fully accountable for my position of excellence (or lack thereof) – in thought, in performance and in habit; and I challenge you to do the same.   If we can just change the way we think, then we can think change into action and excel  – which will cause others to do likewise.

If each one can reach one, I know that someone can reach many.

Now, tweet that!