Skirting the Credit Card Law

Remember those old TV commercials where someone would be blindfolded and then take a swig of Coke and Pepsi and tell which one they thought was better?

We've got one of our own. But this is a little different. One should leave a good taste in your mouth, and the other should taste rotten. Guess which is which.

Example 1: Ever since the Credit CARD Act of 2009 was passed, plastic companies have been doing the obvious: They are inventing all sorts of new charges that get around the act's rules so they can replace the $390 million they are losing each year in fee revenue. One research group reported that the banking industry's median annual fee on bank credit cards went up 18% between July of last year and March of this year.

"It's a race between regulators writing ever more complex laws and credit card companies setting up ever more complex fees," says Victor Stango, an associate economist with the Federal Reserve Bank of Chicago and a professor at the University of California, Davis.

Another trick that's in play is the marketing by many banks of the new professional card. They are like corporate cards but have the same terms as consumer cards, which means they aren't covered under the card law. Last June, Chase raised its balance-transfer fee from 2% to 5%. Citigroup is now charging some customers an annual fee that can be avoided ... if the consumer spends at least $2,400 a year on the card.

Looks like Washington fixed your problems, right?

Example 2: Mary called Dave's show to shout that she's paid off $13,000 in two years as a single mom with four kids. It was a struggle, but now she's done forever and never has to go back into debt. There's no bureaucracy, red tape or gray areas. She hunted down her debt and terminated it with extreme prejudice.

Better get started on doing the same. The banks have many more charges they can think of.

Source: Wall Street Journal

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