As if consumers need any more evidence that credit card companies have none of their interests in mind, we have documented proof of the different strategies lenders are taking before their Congress-imposed new rules for regulating their relationship with cardholders come into force. Being in-the-know on the new rules to the game will help every household safeguard against abuse by lenders. Consumer-Action.org several new laws coming on board and the ways in which lenders will definitely try to circumvent them:

• “Retroactive rate increases:  The Credit CARD Act prohibits rate increases on existing balances unless the consumer is over 60 days late.  Citi is evading that rule by purporting to charge 29% APR, but promising to refund 10% the next month if customer pays on time.  In effect, this allows a 10% retroactive rate hike if the consumer pays even one day late.
• Over limit fees: The Act prohibits over limit fees unless consumers agree to have over limit transactions approved.  But companies are continuing to approve over-limit purchases without the consumer’s opt in, are demanding that the over limit amount be paid in full, and then are charging an over limit fee but calling it a late fee.  This tactic can also push the consumer into becoming 60 days late and subject to a retroactive rate increase.
• Up-Only Variable rates: The Act allows retroactive rate increases caused by changes in a variable index outside the company’s control.  But Barclays, Wells Fargo and US Bank, among others, are using variable rates that only go in one direction – up – or are picking the highest rate in the previous 90 days.
• Double-cycle billing:  Bloomingdale’s has purportedly eliminated its “grace period” and charges interest from the date of the purchase, but it will refund that interest the next month if the consumer consistently pays in full.  There are no refunds if the consumer pays only part of the balance, avoiding the Act’s rules against “double cycle” billing and against imposing interest on the portion of a balance that was paid off.
• Marketing to college students:  The Fed’s proposed rules would allow banks to evade congressional intent to restrict credit card marketing to college students, who often sign up for over-priced credit cards after being enticed by free gifts. The proposed rule would allow continued distribution of free gifts, provided that the gift wasn’t conditioned on filling out an application.
• Minimum payment and opt out protections:  The Act protects consumers who get rate increases from big changes in the minimum payment and gives them the right to close the account and pay it off over time.  Yet companies are evading these protections by changing the minimum payment first and then seeking a rate increase.  Chase has jacked up minimum payments for customers with favorable low APRs, in part to entice them to switch to higher APR accounts.
• Right to earn back non-penalty rate:  The Act gives consumers who have been 60 days late and who are subject to a penalty rate the right to earn back the lower rate by making minimum payments on time for 6 months.  But companies are reserving the right to first demand payment in full and then impose the penalty rate, defeating the protections.”

The message from consumer advocacy groups is clear: be on-guard against credit card companies, even in the new regulatory environment.

Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.