Credit Card Companies Tell the Truth?

May 16, 2007

I wrote the other day about companies that had announced changes to their credit card policies to be more consumer friendly. It seems at least one of them is following through.

I didn’t realize it but one of my credit cards is currently subject to a default interest rate of 32.24%. We put most everything on our American Express Blue Cash card to earn cash back. We also have a Chase Visa we use in cases a merchant doesn’t except American Express. Due to some online bill pay problems, I had a late credit card payment on the Visa a while back.

The interest rate on the card had been raised to 32.24% after the late payment. I hadn’t noticed because I always pay off the balance but I did notice a message on the bottom of my latest statement.

“Your account will no longer be subject to this default rate upon receiving the minimum payment due on-time for six consecutive months without going over limit.”

So it looks like Chase is making this one small change to appease the government. Anyone that pays their credit card bill on time for six months in a row will no longer be subject to the default interest rate. It seems outrageous to me that credit card companies charge 32% interest in the first place but I guess the reform has to start somewhere. What do you think are some other policies or practices that credit card companies should put at the top of the list of reforms?

Ben

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Ben

Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn’t like the other kids… His addiction to personal finance has paid off for his family and now he’s helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.


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Comments

9 Responses to Credit Card Companies Tell the Truth?

  • Ben

    Good idea Kristine. It does get hard to keep track of the cycle lengths across multiple credit cards. It would be nice to have a standard, how about 60 days, another month of free money 🙂

  • Kristine

    Great post, Ben!

    One other policy that should be reformed is the billing cycle. It seems to be getting shorter and shorter, with the result being more late payments (and thus more late payment fees).

    CC companies should be forced to do a better job educating consumers about the length of the billing cycle and it would be nice to see a uniform billing cycle, instead of 20 days for one cc, 30 days for another.

  • Ben

    How about this reform? Late fees should be a percentage of your balance, not a fixed amount. This way someone isn’t charged $35 for being late paying off a $20 balance. The fee could be capped at current fee levels to prevent those with high balances from getting slammed with huge fees.

  • Credit Card Criticizer

    I don’t really know about whether all the banks do the same, or there are reliable companies. I personally hold Chase Perfect Card and once there was a late payment due to some late money posting, but I explained the problem to them and paid nothing more than usual interest.

  • Q at $1 Million to My Name

    32% would seem to be in violation of every usury law out there. I am shocked they can get away with this.

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