Credit Card Companies Keep Burning Credit Card Consumer, Hilarity Does Not Ensue
This is why you shouldn't have signed a deal with the devil in the first place. If you're suffering from credit card reflux, for the love of God cut yourself off from the plastic already. You should have listened, now you're figuring out where you went wrong. I hope.
Pete Brouwer got an unpleasant surprise in his mailbox last month when he opened his Chase credit card statement and saw that his minimum payment amount had more than doubled to $1,447 a month.
The enormous spike stems from the card's minimum payment amount going from 2 percent to 5 percent of the total balance even though the 60-year-old retired truck driver from Pacheco said he never missed a payment during the eight years he has used the card.
Brouwer is far from alone. A survey released by San Francisco-based Consumer Action found that many credit card companies are hiking up interest rates, raising minimum payment requirements and lowering credit card limits in response to credit card reform legislation passed earlier this year.
The survey also found that many credit card companies are switching customers from fixed-rate to variable-rate cards, which can result in higher interest rates because they are tied to an underlying index.
Some of the new credit card rules rolled out in August, including that card holders receive a 45-day notice of higher interest rates or other major changes. Card holders can close the account before the changes go into effect and pay off the existing balance. Billing statements must go out at least 21 days before the payment due date, up from the current requirement of 14 days. Even bigger changes are expected to arrive in February. The new rules do not ban increasing minimum payment requirements, as long as existing regulations are followed.
Brouwer said Chase told him that the only way he could maintain the lower minimum balance payment would be to agree to an 8 percent interest rate for the card's entire balance, or about 3 percent higher than his current rate of just under 5 percent.
Another GREAT piece of regulatory legislation. Thank you, Washington! And congratulations to all of you who said "OMG we need to regulate the credit card companies!!"
Meh, this is getting ugly.