March 12, 2010
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New CC Regs -- Fees & Penalties, Pt.2
Over-the-limit 'Overlimit Penalties'.Thanks to the new CCARDA bill, Senator Dodd has rightly withdrawn the credit card industry license to twist a fee into a penalty. A "fee" is something you elect or agree to. A "penalty" is not. New regulations now require this "fee" to actually be just that…something the credit card consumer elects and agrees to. Over the last several years the credit card issuers have made a killing in profits by twisting the meaning of "fee". Since February 22 of this year, the issuing banks must only tack on this fee if the consumer elects and agrees to it.
The other half is not a minor issue either. Does a $39 penalty for a $1 overdraw on a credit card sound reasonable? For overlimit fees, this will be less of an issue in the future because consumers will have to deliberately elect to pay whatever the fee is set at. If you don't find the amount stated in the bold print (no more "fine print" stuff allowed) to be excessive, then you're happy. If you think its unfair, you just don't say "Yes". You don't have to worry about being tricked into it (at least this is the intent of the bill). This is part of the "Full Disclosure" for credit card accounts which will be treated in another article.
'Reasonable' is only mentioned in the 'overlimit' context to contrast how bad it's been for all these years and the significance of Mr. Dodd's credit card consumer protection bill. Many of you reading this article now can still feel the sting of this abuse. The frustration alone was overwhelming. Knowing how unfair it was and the hopelessness of knowing there was nothing we could do about it.
Most of us will have already received letters from our credit card issuers, telling us how they've had a change of heart and now they're going to be nice to us by not doing that anymore. It's not like they had any choice in the matter now, is it?