February 18,2009
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News: Watch Out for no Opt Out.
Learn something new all the time. Sometimes, though…the hard way. That was certainly the case for one Amex credit card holder who was surprised when his interest rate jumped from 7% to 10%. The rate hike went back and included Pre-existing charges from before the hike went into effect. The surprised credit card holder called AMEX to complain about not being notified in advance. The agent at Amex explained that notice had been given in an earlier statement on pages 7 and 8. The lender claims to have not received pages 7 and 8 (you wouldn't notice pages missing if they were the last two pages). So AMEX sent out a copy of the previous credit card statement which did include those two pages and the notice of future rate hike. We may never know the story of the missing pages but we can take a lesson of the next event.
Conspicuously absent in the terms were the ‘opt-out' instructions. When the person called AMEX back it was explained that AMEX does not have an ‘opt-out' policy. Only a policy that states they can make changes to credit card terms anytime they like. Even canceling the credit card account does not excuse any charges. So the question is: "Is this legal?"
It turns out that it is. Of all the regulations and protections that we can find, the ‘op-out' option is not mentioned. ‘Disclosure', yes. But ‘opt-out', no. Even the House bill last year, introduced by Rep. Carolyn Maloney (D NY) which died in the Senate ("The Credit Cardholders' Bill of Rights Act of 2008") made no provision for opting-out. The only hope at this point is with the bill that Senator Dodd (D Conn) has just introduced to Congress a few days ago "The Credit Card Accountability, Responsibility and Disclosure Act" ("the Credit CARD Act", for short). Having fallen through the Senate floor last year, the new initiative is building steam this year and appears to have a very favorable chance of making it through the hurdles.
In the meantime, the only options seem to be paying the credit card off or transferring the balance out ASAP and closing the account. Otherwise, endure the pain. Be among those supporting Sen. Dodd, write letters, send e-mails, make phone calls and sign petitions.