Credit Card Accountability Now!
One day, 4 years ago
I receive a pre-approved credit card offer. <cue excited squeal> My 20 year old self had never signed up for a credit card before so I call the phone number on the letter. I speak with a very nice customer service person. He explains that for the first 3 months I would have 0% APR on purchases and balance transfers. After 3 months I would pay interest on purchases, but I wouldn’t have to pay interest on balance transfers for 6 months. Awesome! I ask some more questions that I’d prepared, and it looks like I have all the relevant information. So I sign up for the card, use it to pay some bills, and transfer $500 to have some just-in-case cash since I won’t have to pay interest for 6 months. Brilliant, right?
**** Fast forward 3 months ****
I’ve only purchased $75 with my card because I know if I don’t want to accrue interest I need to pay this down before my statement comes (electronically to save paper, of course). I pay the $75, but the statement has accrued interest. WHAT!? There must be a mistake, so I call customer service. Another very nice customer service person tells me that my payments pay down the balance transfer first and then card purchases. WHAT!? You have got to be kidding… but he’s not. Awesome. I didn’t even know to ask that question. What a nasty trick! Why hadn’t the first customer service person made this clear to me? Does this happen to other people? Am I just incompetent? I feel angry, hurt, and duped. I pay back all the balance transfer and the purchase amounts, and sit down with a pint of ice cream…
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What do we want? Credit Card Accountability and Disclosure!
But first a message from my favorite fake news pundit
The Credit Card Accountability and Disclosure Act (CARD Act) aims to:
- Prevent Unfair Increases in Interest Rates and Changes in Terms
- Prohibit Exorbitant and Unnecessary Fees
- Require Fairness in Application and Timing of Card Payments
- Protect the Rights of Financially Responsible Credit Card Users
- Provide Enhanced Disclosures of Card Terms and Conditions
- Strengthen Oversight of Credit Card Industry Practices
- Ensure Adequate Safeguards for Young People
- Enhance Penalties for Non-Compliant Credit Card Companies
- Provide Gift Card Protections
- Encourage Transparency in Credit Card Pricing
- From US Senate Committee on Banking, Housing & Urban Affairs
A more detailed, but very reader-friendly explanation of the bill can be found here.
The CARD Act would have protected me in various ways.
- As a 20 year old, a person over 21 would have to provide a signature for the card.
- I may not have even received that offer by mail because the bill would restrict pre-approval offers to those under 21.
- Payments would first be applied to the credit card amount with the highest interest rate.
- Terms of the credit card would be disclosed in plain written language and in plain sight.
Small business lifeline…
Many small business owners put business debt on their personal credit cards. Not only does this mean an APR of up to 30% on their debt and the potential for sudden, baseless terms changes, but it also can hurt their ability to access other business working capital. Lending institutions, banks, SBAs, and even ACCION USA, look at credit reports to process loan applications. A person with business credit card debt of $65,000 (which I’ve seen before) probably has a low percentage of available credit and already has a big monthly payment (whose terms could change any day). Plus, after you spend over 35% of the cards limit your credit score starts decreasing. Oy gevault!
Help is on the way
These are some great tips gems of advice
Credit Card Tips in a Recession
Also important
Make your voice heard in the Senate! Go here to add your name to the petition of people supporting the CARD Act. Or contact your senator directly. Find your senator here. If you want me to email you a letter to send to your senator leave a comment (I’ll see your email address on the back end so you don’t have to write it in the comment) and I’ll send you one. Couldn’t be easier.
Let’s show those credit card companies what we’re made of!
Tags: CARD Act, Colbert, credit cards, small business