Some Warnings about the New Credit Card Laws

Last week we reported about the new credit card regulations that go into effect today. Any cardholder could be lulled into complacency about something called the "Credit Card Bill of Rights" but just because the regulations offer new protection for consumers, it's not a fool-proof system. 

You've heard, "If you build it they will come."  Well, when it comes to credit card companies, it's "If you put up a wall, they'll figure out a way to break it down."

Card companies will find new ways to charge you even with increased regulations.

What may happen with more regularity is that credit card companies will find new ways to charge a fee, especially on something that may look attractive on the surface.  A recent article by Robin Sidel in The Wall Street Journal on new credit card fees states:

"Consider the new offer from Citigroup Inc. The bank will give cardholders a credit of 10% on their total interest charge if they pay on time. That sounds enticing, except that if you don't pay on time, your interest rate is 29%."

As The Wall Street Journal is a business-minded rag, they come on the side of the credit card companies--pointing out how in an age of limited revenue for banks, they don't need something else that cuts into their bottom line.  The flipside to that argument to is that credit card companies have been (ahem!) ripping off consumers for a while now, so this writer comes down on the side of consumer protection. Given that more people may be forced to use credit due to the economic downturn, rate increases could hurt everyday people.

The underlying point, however, is that credit card companies want the revenue and so they'll find ways to get it back.  Sidel goes on to say:

"The biggest new tactic may be one of the oldest: raising rates. As long as credit-card companies inform you ahead of time and don't make any sudden rate changes, they are mostly free under the law to charge whatever they want. They can raise the rate on new purchases made as long as they provide 45 days notice that they are doing so."

In other words, the fine print may be less fine, but you still have to read it because you could be susceptible to new charges.

The New York Times reports on another fee that remains even with the new regulations: overseas credit card fees. 

"But here's one fee that the new law didn't limit, even though it has offended scores of consumers for at least a decade and adds up to hundreds of millions of dollars every year for the credit card companies: the foreign transaction or currency conversion fee.

Most big American banks hit you with these fees of up to 3 percent of every purchase when a merchant processes your credit or debit card purchase outside the United States. International travelers are most affected. But those shopping on the Web from their homes may also pay."

(**Bold print added, as that could have wider repercussions...) 

As the article points out, people who are traveling to foreign countries are more likely to afford the extra 3%.  However, if you're buying something in the U.S. from, for example, a U.K.-based site, you could still be charged for the fee--so be careful when shopping internationally. 

In sum, the Credit Card Accountability Responsibility and Disclosure Act of 2009 is by and large a good idea, but don't for a second think this means you can be less vigilant about scouring your credit card bill for new charges.  If there's some way to charge you extra, credit card companies will figure it out.

How do you feel about the new credit card regulations?  Have you seen any new fees as a result of the new law?