Oops! Fraud, mistakes raise credit card rate
Posted: Friday, August 28 2009 at 05:00 am CT by Bob Sullivan
Millions of Americans have been told their credit card terms are changing for the worse this year. The only way to ward off the changes -- such as higher interest rates -- is to put the card on ice and stop using it.
Meanwhile, more than 100 million credit and debit card numbers have been stolen recently, and unauthorized credit or debit card charges hit nearly one in 10 consumers every year. This can make for a toxic combination.
Steve Abshagen got one of the unhappy notices from Bank of America in March, indicating his interest rate was going to jump from 9.9 percent to 14.95 percent. Abshagen was a former MBNA customer until Bank of America acquired that firm's credit card users, and the change came as a surprise. While he carries a "five-digit balance" on the card, he says he's never missed a payment. BofA hiked his rate anyway, in a change that would have cost him about $850 more per year in finance charges.
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Chase dumping former WaMu card holders
Posted: Friday, July 31 2009 at 01:22 am CT by Bob Sullivan
Steven Lobdell points out an image on Chase bank's Web site that says "Welcome WaMu customers. We're here for you."
But, apparently not for him. Lobdell is one of a group of former Washington Mutual credit card customers who were abruptly dumped by Chase in recent days. He holds two Chase cards; both were canceled as of July 15.
"It's kind of ironic, isn't it?" he said. "I think Chase is two-faced....We were good enough for Washington Mutual, why not good enough for Chase?" Across the Internet, thousands of former WaMu customers are expressing the same outrage. They say Chase is dumping them as customers, despite their solid payment records.
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Graduate struggles with mountain of debt
Posted: Thursday, May 21 2009 at 09:18 pm CT by Bob Sullivan
Sarah Fightmaster describes her fight with debt. CLICK TO PLAY
Drowning in debt, like so many young college graduates in America, Sarah Fightmaster struggles to keep her chin up while credit cards and student loans drag her down. It all started, she says, when she applied for her first credit card as a 19-year-old college student so she could get a free DVD player. In this video, Fightmaster tells her own story.
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Obama picks credit card reform over housing
Posted: Tuesday, May 19 2009 at 08:00 am CT by Bob Sullivan
When President Barack Obama signs credit card reform legislation -- which should happen any day now -- that will be a great day for consumers. The legislation represents the first significant upgrade to American consumer rights in a long time. The bill has some real teeth -- it's much stronger than the original bill that's been floating around the House of Representatives for more than a year. Clearly, the president threw all his political power behind the effort to rein in abusive credit card practices, delivering speech after speech imploring changes and even calling issuers to the White House for a stern reality check.
Too bad the president is backing the wrong horse.
While $39 over-limit fees are hideously unfair and deserving of legislative attention, the number that really needs attention is 649,917 -- the number of U.S. homes that entered foreclosure last quarter.
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College grad: ‘I wish I’d gone to prison instead’
Posted: Tuesday, May 12 2009 at 05:00 am CT by Bob Sullivan
Hernan Castillo is treading water, trying to survive under the weight of $5,200 in credit card debt and $30,000 in student loans. He’s making payments on time, but the Orange County, Calif., resident sees little hope for getting out of the warehouse job he holds and landing a job as an accountant, the field in which he earned his degree. And forget about saving money for a home or retirement. He now firmly believes the money he spent earning a college degree was a waste.
"Every day I wish I had never gone to college,” Castillo said. “It has been the biggest mistake of my life. Sometimes I wish I had gone to prison instead of college. At least I would have learned a trade or two and started being independent once I got out."
Castillo is one of thousands of student debtors who've found their way to the StudentLoanJustice.org Web site, propelled by last year’s credit squeeze and the abrupt economic downturn, according to Alan Collinge, who runs the site.
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Credit card hackers find new, rich targets
Posted: Friday, January 23 2009 at 05:00 am CT by Bob Sullivan
Few noticed on Christmas Eve when the news broke that electronic payment services firm RBS WorldPay had been hit by hackers who stole personal data on 1.5 million consumers. After all, that's small potatoes these days. But when Heartland Payment Systems announced on Inauguration Day that it had suffered a serious security breach, some experts noticed a pattern -- and not just the companies' standard penchant for releasing bad news on days while the public is distracted.
"I have heard that the payment processers are the main target for hackers now," said Avivah Litan, security expert at consultancy firm Gartner.
Heartland has not released an estimate of the number of accounts impacted by the attack, but Litan said it might be the biggest data leak ever: The firm handles 100 million transactions every month for 250,000 clients. Heartland has said it was alerted by Visa and MasterCard to a pattern of fraud on its networks last fall, but only discovered the security hole in its network last week . That gave hackers access to potentially hundreds of millions of transactions over several months.
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Feds: Banks must stop misbehaving ... in 2010
Posted: Thursday, December 18 2008 at 03:35 pm CT by Bob Sullivan
Calling many credit card company tactics "unfair," "unreasonable," and "deceptive," federal regulators on Thursday unveiled sweeping new rules aimed at protecting consumers. They then invited card issuers to continue those unfair tactics for the next 18 months.
A 300-page report by the Office of Thrift Supervision described bank misbehavior in great detail, at times using stinging language. It then laid out updated federal regulations that will bar many such practices.
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Credit cards at the tipping point?
Posted: Tuesday, October 14 2008 at 05:00 am CT by Bob Sullivan
Dire times are coming for consumers who hold credit cards and the banks that issue them, according to a report released Tuesday.
The report by the research firm Innovest Strategic Value Advisors, titled "Credit Cards at the Tipping Point," predicts that fallout from the credit crunch will lead to a sharp increase in credit card defaults in the coming year, making $1 out of every $10 owed on credit cards impossible to collect. That will force banks to write off nearly $100 billion in credit card debt, it said.
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Mortgage meltdown to hit credit card users
Posted: Tuesday, October 7 2008 at 05:00 am CT by Bob Sullivan
Credit card debt and mortgage debt are two sides of the same coin on the American personal finance landscape. And now, it appears they are poised to become a two-headed monster. Consumers with credit card debt can expect to feel the walls closing in on them in the coming months, as card-issuing banks search for creative ways to cut back on risk and raise cash.
On Tuesday, msnbc.com reported on a new policy at American Express that allows the firm to penalize consumers based on where they shop and which bank holds their mortgage. Given the tenuous state of the credit card-issuing business, expect other issuers to follow suit, if they haven’t already. Experts say consumers also should expect their credit limits to be lowered for what might seem like arbitrary reasons and their balance transfer fees to climb.
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Credit Card 'Bill of Rights' inches forward
Posted: Tuesday, August 5 2008 at 05:00 am CT by Bob Sullivan
Legislation that would ban many unpopular credit card company tactics has been passed by a congressional committee, opening a path for the so-called "Credit Card Holders Bill of Rights" to be considered by the full House of Representatives.
The bill, which was approved by the House Financial Services Committee last week, would prohibit many triggers that cause consumers to pay fees and higher interest rates. For example, it would stop card issuers from imposing higher rates retroactively on outstanding balances in some situations. The legislation was approved by a healthy 39-27 majority despite spirited lobbying against it by the banking industry.
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Time to speak up about new credit card rules
Posted: Tuesday, July 22 2008 at 06:00 am CT by Bob Sullivan
Hate hidden fees and other “gotchas” from credit cards and banks? You have until Aug. 4 to sound off about it.
In May, the Federal Reserve proposed a sweeping set of rule changes that would ban a wide set of consumer-unfriendly bank practices. The rules would prevent credit card issuers from charging retroactive rate increases on outstanding balances, for example, and ensure that bills are mailed at least 21 days before the balance is due. It would also make it harder for banks to change overdraft fees in some cases, and clarify a wide set of bank practices that sometimes seem like booby-traps designed to cost consumers.
The proposed rules are now open to public comment, but only until Aug. 4. Consumers who would like to make their opinions known about the new regulations can simply fill out a form on the Fed's Web site and leave comments there. Here's a link. Scroll about two-thirds of the way down the page and look for the words “submit comment.”
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Regulators target credit-card shenanigans
Posted: Friday, May 2 2008 at 04:00 am CT by Bob Sullivan
Federal regulators are taking a stab at reining in "unfair and deceptive" bank tactics. Three federal agencies, including the Federal Reserve, have issued proposed rules that would ban consumer-unfriendly credit card issuer practices like double-cycle billing and unfair interest rate hikes. Some unpopular bank overdraft fee policies would also be banned.
The Office of Thrift Supervision announced its proposals Thursday. The Federal Reserve Board and the National Credit Union Administration made their similar announcements on Friday.
Together, the agencies regulate most banks, meaning new rules would have wide impact. The proposal, however, faces what figures to be a testy public comment period, during which banks are expected to challenge any new rules and ask the agencies to scale them back.
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Congress debates new credit card law
Posted: Thursday, April 17 2008 at 03:19 pm CT by Bob Sullivan
A Catch-22 for consumers came sharply into focus Thursday at a testy congressional hearing on a proposed Credit Cardholders Bill of Rights, with several witnesses testifying that they were hit with hidden penalties simply for shopping around for better rates.
Banks often answer complaints about alleged misbehavior by saying that unhappy consumers can simply switch to a new bank. But Steve Autrey, a consumer from Fredricksburg, Va., testified before the House Financial Institutions and Consumer Credit Subcommittee that opening a new credit card and closing an account both hurt your credit score. That leaves consumers faced with sudden, unexplained interest rate hikes with no good options, he said.
"It's an unchallenged scheme where consumers are penalized when they choose to close their account," he said.
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New way to hike credit card rates
Posted: Tuesday, April 8 2008 at 05:00 am CT by Bob Sullivan
When the House Financial Services Committee meets again next week to discuss credit card reforms, they'll have something else to talk about -- a new way for credit card firms to raise your interest rate.
Discover announced recently that there's a new penalty for cardholders who exceed their credit limit, in addition to the $39 fee -- a higher interest rate.
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Want a better credit card rate? Just ask
Posted: Tuesday, February 26 2008 at 05:00 am CT by Bob Sullivan
If interest rates are going down, why are credit card rates going up? Consumers around the country are undoubtedly asking that question after receiving notices from many major issuers with some very bad news: their credit card rates are about to rise -- in some cases more than tripling.
But consumers don’t have to put up with it. Kevin McPhail of Austin got his Texas-sized rate increase lowered recently by calling to complain -- but only through old-fashioned persistence. His story, experts say, highlights an important lesson for credit card users: If at first you don't succeed, try, try to lower your rate again.
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The 'new' credit card vacation fee
Posted: Tuesday, December 6 2005 at 08:00 am CT by Bob Sullivan
Traveled overseas recently? Look carefully at your credit card bills. You'll probably see a new fee on your bills, a ding of a few dimes for every single charge you made. Frustrating, yes, but for once, this is a good thing.
A Red Tape Chronicle reader named Russ called my attention to the fees last week. He'd gone to Canada with his wife, as he has many times, but this time, there were surprising extra dings on his bill. For example, dinner at a restaurant for $29.96, and just below it, a 30 cent charge. Russ, who asked that I withhold his name because he works for a large bank that issues credit cards, sent me scrambling for my most recent credit card bill. And sure enough, for each charge I made in Ireland recently, there was a small charge listed below labeled "foreign tran chg." Dinner for friends $140.71, fee $1.49. Scarf and sweater $110.22 -- fee $1.09. Lunch $13.70, fee 14 cents.
What's going on here? Well, it's a bit of a good news/bad news story. But if you're traveling this holiday season, there are some things you need to know.
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