The big credit card issuers are handing credit unions a golden opportunity on little plastic platters. They’re furiously raising rates and fees and changing rules in a desperate attempt to maximize profits before the CARD act takes effect in February. Naturally, it’s all just in time for the holidays.
The media certainly has noticed. Newsweek has been runningÂ articles about a recent Pew TrustsÂ report on credit cards. The Today Show ran aÂ segment stating that Â BofA is going to charge a new annual fee ($29-$99) to their customers who pay off their balances every month, that Citi is going to charge a new fee ($20-$39) on customers who do not carry a high enough balance ($2500) every month, and others are adding fees for cards that are not used. The show even recommended that consumers go to their credit unions for a new card.
Here are a few key findings from the 10/09 Pew TrustsÂ report, based on their research on nearly 400 credit cards issued by the largest 12 banks and largest 12 credit unions:
- One hundred percent of credit cards fromÂ the largest 12 banks used practices deemedÂ â€œunfair or deceptiveâ€Â under Federal ReserveÂ guidelines.
- 99.7 percent of bank cards allowed issuers to increase interest rates on outstanding balances
- 95 percent of bank cards permitted issuers to apply payments in a way the Federal Reserve found likely to cause substantial financial injury to consumers
- 90 percent of bank cards had penalty rate hikesÂ with the vast majority imposed by â€œhair triggersâ€ of one or two late payments in a year.
Now is the time to make sure your members and potential members know that your card is different.