Credit Card Consumers Are Fed Up with Abusive Terms

Credit cards are great. They allow us to quickly and easily buy the things we want and need in life. They offer excellent protection from fraudulent merchants, Internet scammers and other credit card criminals. Moreover, most credit cards in the American market offer very generous rewards programs, and all you have to do to take advantage is keep your credit score high so as to maximize the odds that your credit card application will be approved.

Besides, who wants to carry huge wads of cash around every day?

Of course, there's a dark side to the credit card industry. Certain banks try to take advantage of both credit worthy and not-so-credit worthy consumers with abusive terms and conditions. Policies like Universal Default, out-of-the-blue credit line decreases and interest rate increases, double-cycle billing and, with regard to balance transfer offers, applying payments to low interest credit card-debt first.

According to a recent CommonDreams.org press release, American credit card consumers are sick of unfair terms and conditions, and they're pushing the Fed to implement new rules sooner rather than later.

Since the Federal Reserve proposed rules to prohibit unfair practices regarding credit cards, the central bank has been flooded with consumer complaints related to the terms and conditions associated with their credit card accounts. Here's a clip from the release:

"Over 30,000 Consumers Flood the Federal Reserve Board With Complaints About Abusive Credit Card Practices...Huge Public Response Shows Need for Board to Adopt Strong Protections Quickly...

...Angry consumers have deluged the Federal Reserve Board’s public comment system with more than 12,000 personal pleas for reform since banking regulators invited comments on a proposed new rule to curb unfair and deceptive credit card charges. In addition, about 19,000 more Americans have sent form letters urging action since banking regulators proposed the rules on May 2, 2008. The deadline for public comments on the proposal is August 4, 2008.

'The massive response in favor of these reforms shows that Americans are fed up with the many traps and tricks that card companies use to drive up the amount of debt consumers owe,' said Travis B. Plunkett, legislative director of the Consumer Federation of America. 'We urge the Federal Reserve Board to take heed of this overwhelming public reaction by finalizing strong rules to curb credit card abuses by the end of the year.'

The proposed rules will curb a number of unfair practices, including:

• Costly and Unjustified Interest Rate Increases. Credit card companies could no longer charge higher interest rates on balances incurred before a rate increase went into effect, unless the cardholder is more than 30 days late in paying his or her credit card bill.

• Hidden Payment Allocation Methods that Cause Debt to Escalate. Card issuers would be required to more fairly apply the payments that cardholders make to balances with different interest rates. When consumers transfer balances with low, short-term 'teaser' rates (that have higher rates for new purchases), issuers would be required to apply payments first to higher rate debt.

• Interest Charges on Paid Debt. Companies could not use 'double cycle billing,' which requires cardholders to pay interest on debts paid off the previous month during the grace period. 'The time for Americans to act is now if they want their credit card company to treat them better,' said Plunkett. 'Consumers have about two weeks to make their voices heard.' Americans can write the Federal Reserve Board about the proposal by e-mailing directly to regs.comments@federalreserve.gov and mentioning Docket No. R-1314 in the subject line.

Some examples of recent comments to the Federal Reserve Board include:

'I support reform of credit card rules and regulations…The average consumer cannot afford to have their financial welfare in the hands of the credit card businesses.'
Mary, Borden, IN

'Credit card fees are out of control and the total of all of the penalty fees, plus interest rate increases, does nothing to support the recovery of the economy or of the individual consumers who are struggling in today's economic hard times.'
Kathleen, San Jose, CA

'[They] raised my rate from 6.99% to 15.99% in August 07, for no apparent reason other than they could. In my opinion that's legalized loan sharking. I was fortunate enough to be able to pay it off. Others, I'm sure, aren't so lucky.'
Pryor, Roswell GA

'I think it is abhorrent that I make timely, substantial payments to my credit cards and NOTHING gets put towards my higher interest rate.'
Elissa, Great Neck, NY

'...charging interest on amounts which have been paid during the month should be curtailed. It's ridiculous that paying off the majority of the bill, but leaving a few dollars owed, can cause full interest on the previous month's balance to be levied.'
Ingrid, Loma, CA..."

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Help Entrepreneurs In Developing Nations Thrive with The New Advanta Kiva Business Credit Card

Advanta has just introduced the new Kiva business credit card. What's so special about this new Kiva card? Well, if philanthropy is your thing, this card might be just the right fit for you. That's because, as a Kiva BusinessCard accountholder, anytime you make a grant to Kiva.org using the Kiva card, Advanta will match the grant -- dollar for dollar -- up to $200 per month. Your grant will help entrepreneurs in developing nations.

Microfinance is a beautiful thing. A small donation can make a huge difference to a struggling entrepreneur in a relatively poor country. The future of philanthropy is in microfinance, in my humble opinion. Handouts can help deserving recipients temporarily. A grant to an entrepreneur, on the other hand, will not only improve that business owner's life, but also his family and his community.

The annual percentage rate (APR) for purchases with the new Kiva card is a very competitive Prime + 2.74%, which adds up to 7.99% at the time of this posting (NB: the index never drops below 5.25% for this card, no matter where the Prime Rate is.)

You can transfer a credit card balance at 0% Intro APR and the interest-free period will last 15 months! That's pretty darn strong. If you don't payoff your transferred balance by the time 15 billing cycles are up, the "goto" APR will be 7.99%, which is also very competitive.

A couple things I should point out before you decide to take the plunge:

• From the terms and conditions:
  

  
  "...Balance transfers must be from another business credit account..."

  
  
• Again, from the terms and conditions:
  
  

  "...Finance charges on balance transfers and cash advances begin to accrue on the date we process the transaction..."

Visit www.kivab4b.org for more info about how the Kiva program works. You can also visit the blog at www.b4bcommunity.org for the latest Kiva-related news.

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Credit Cards for Illegal Aliens

Should illegal aliens be allowed to get a credit card from one of America's biggest and most reputable banks? Today's YouTube.com clip is a clip from a CNN news story. Your comments are welcome.

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Preparing For Rough Times Ahead

Credit Crunch

The global credit crunch that began last year and has caused misery in financial markets around the world is not over. In fact, many economists believe that we haven't even reached the beginning of the end. That spells trouble for many consumers and business owners looking for credit these days -- and possibly for the rest of 2008.

Banks are cutting back, even on accounts held by their most credit worthy customers. Credit lines are being reduced, and interest rates are being raised, even for certain borrowers who've never been late with a payment. The excuses the banks are using these days include, "You aren't paying down your credit card balance down fast enough," and, "Your debt to credit limit ration is too high." Banks are even looking at the what consumers are buying when determining whether or not the consumer is going to be hit with an unfavorable change in terms. In other words, your credit card company may change the terms and conditions on your credit card account simply because it doesn't like what you are buying!

I have about $4,000 worth of business-related credit card debt on one business credit card; it's an account with which I'm still riding out a introductory zero APR period, so I'm not getting slammed with interest charges. I'm worried about the state of the U.S. economy and the state of my business. Business has been slow, and I'm thinking that I may have to tap into more credit lines to keep things going. I receive a lot of snail-mail credit card offers each and every week, and many of these offers are for business credit cards. I usually glance through these offers quickly then dump them into the shredder. Lately, however, I've been paying very close attention to these offers, since I just might open up one or two more credit accounts.

I'd like to transfer the $4,000 balance on my current business credit card to a new card with a 0% balance transfer offer, so that I can continue to finance my operations without paying any interest. However, lately, the deals I've been getting via snail mail haven't been that great, and I'm certain the reason these recent offers have been lousy is due to the weak economy in cahoots with the credit crunch. This is very disappointing to me, because, historically, those snail mail credit card offers included the most consumer-friendly credit terms and conditions. It was not too long ago that I was seeing offers of 0% intro APR on transferred balances for 15, with no balance transfer fee. Here's what I've been seeing lately:

• A business credit card offer from Bank of America - 0% intro APR on transferred balances and balance transfer convenience checks until December 31, 2008, with a balance transfer fee of 3% (minimum transfer fee is $10.) Once the interest-free period ends, the APR converts to the standard purchase APR on this particular account, which is fine. But here's the kicker: the balance transfer fee "will post to your account as a cash advance fee and will receive the Standard cash advance rate." So, in other words, if I transfer $4,000, I'll be charged a balance transfer fee of $120, and that $120 will be treated as a cash advance. You probably already know this but cash advance fees are always very, very high. For this particular card it's a minimum of 19.99%. This offer was shredded real fast.
  
• Snail mail business credit card offer from Washington Mutual Bank (WaMu) - 0% intro APR on transferred balances until August 1, 2009 -- that's 13 months! The balance transfer fee is 3% of each transferred balance, with a minimum transfer fee of $5. The "go to" APR -- the APR the remaining transferred balance would be subject to once the interest-free period ends -- would be the Standard purchase APR, which happens to be a reasonable and competitive 9.99%. And, once again, here's the ugly part: "Balance transfer fees are added to the purchase balance and are subject to the APR for purchases." OK, granted, this is better than the Bank of American offer I described above where the balance transfer fee is treated as a cash advance, but I'm still not buying it. My credit rating is very high and I see no reason why I should have to pay finance charges on a balance transfer fee, like I'm some sort of subprime borrower. If the offer is stellar, then I don't mind paying a balance transfer fee, as long as the fee is a one-time, flat fee with no finance charges attached.

I'm not interested in transferring my business card balance to a consumer card, even though I'm very confident that I could find a better deal than the recent business credit card offers I've seen. I've worked very hard to get my FICO® credit score above 800, and transferring thousands of dollars to a new or existing consumer credit card would bring my score down.

That's all I have to report from the wonderful yet perilous world of credit card balance transfers for now. Stay tuned!

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New Business Credit Card from American Express

If you fly with Delta Airlines a lot, then today's news may interest you. American Express recently announced the launch of a new line of business credit cards aimed at consumers and small business owners who fly with Delta Airlines often. The cards are the Delta Reserve Credit Card and the Delta Reserve for Business Credit Card. Here's a notable quote from the April press release:

"...The Delta Reserve Credit Cards are now the most elite Cards offered in the line of American Express and Delta co-branded cards..."

If the above quote has piqued your interest, here's a much bigger clip from the release:

"...American Express and Delta Air Lines (NYSE: DAL) are launching new premium co-branded credit cards for U.S.-based consumers and small businesses called the Delta Reserve Credit Card and the Delta Reserve for Business Credit Card. These new products will offer added value, flexibility and new benefits for Cardmembers who are most loyal to Delta.

The Delta Reserve Credit Cards are designed to cater to the needs of Delta's on-the-go customers and provides Cardmembers with a greatly enhanced travel experience through benefits such as the ability to earn Medallion® Qualification Miles (MQMs) faster, share MQMs with family and friends for the first time ever, access to the dedicated Breezeway priority boarding lane and frequent traveler security line, Delta Crown Room Clubs® access, and 24-7 concierge services. The Delta Reserve Credit Cards are now the most elite Cards offered in the line of American Express and Delta co-branded cards.

'We are delighted to expand our partnership with Delta and to offer these premium co-branded cards that reward our most loyal customers in new and unique ways,' said David Rabkin, vice president, Delta Cobrands, American Express. 'We know that affluent customers want access to distinctive services and experiences, so we continually look for ways to meet these needs. With the launch of the new Delta Reserve Credit Cards, we can deliver on that commitment.'

'The Delta Reserve Credit Card was created to offer premium customers a best-in-class co-brand card that provides them preferential treatment when flying Delta,' said Jeff Robertson, Delta's managing director of SkyMiles. 'Not only does this unique Card offer generous rewards, it will also provide loyal Delta customers an experience that is designed to exceed their expectations.'

The Delta Reserve Credit Cards offer distinct benefits and options that allow Cardmembers to:

• Achieve higher Delta SkyMiles Medallion status faster:

• Earn MQMs as a first purchase bonus;

• Earn 15,000 MQMs and 15,000 bonus miles when eligible spending reaches $30,000 in a calendar year;

• Earn an additional 15,000 MQMs and 15,000 bonus miles when eligible spending reaches $60,000 in the same year.

• Give the MQMs earned from Card spending to colleagues, friends or family – for the first time ever.

Enjoy complimentary access to Delta's Crown Room Clubs with two guests when flying on Delta.

Access to the dedicated Breezeway priority boarding lane and frequent traveler security line.

Utilize American Express' Personal Concierge Service with features such as gift buying and restaurant reservations – 24 hours a day/seven days a week.

Receive one complimentary companion certificate each year on the Cardmember's anniversary, good for either First or Coach Class travel.

Access to Pay with Miles, a new exclusive benefit for Gold and Platinum Delta SkyMiles Credit Cardmembers -- and now Delta Reserve Credit Cardmembers. Pay with Miles offers added flexibility, allowing Cardmembers to redeem miles for any available Delta seat, any time. Cardmembers can book flights on delta.com and use Delta SkyMiles to pay for all or part of a Delta ticket, with no blackout dates or inventory restrictions.
Terms, conditions, and restrictions apply to these benefits. See www.americanexpress.com/deltareserve for details.

The Cards are available for an annual fee of $450. If a Cardmember is the Basic Cardmember of a domestic American Express consumer Charge Card account or of a domestic American Express small business charge card account that has an annual fee greater than or equal to $55, the annual fee is $395.

Consumers will continue to earn Always Double Miles® (i) on every eligible dollar they spend on Delta purchases, as well as at gas stations, supermarkets, drugstores, home improvement stores, and more.

The new Delta Reserve for Business Credit Card incorporates all the above benefits of the Delta Reserve Credit Card. However, the ability to earn Always Double Miles® (ii) on every eligible dollar spent includes the following business relevant categories: Delta purchases, gas stations, home improvement stores, wireless phone bill payments, and office supplies. In addition, the Business Card offers programs and services tailored specifically to the needs of small business owners. In addition, the Business Card provides expense management reporting, an online spend tracking system and spending limits on additional cards that aid in better managing employee spending..."

Enjoy!

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And Then There Were Four...

0% credit cards

0% credit cards that don't charge a fee for transferring balances are consistently the most popular cards we recommend on this website. It is quite difficult, therefore, to see 3 great "no fee balance transfer" cards disappear from the market.

The American Express IN cards (IN:NYC, IN:Chicago & IN:LA) are no more. These cards offered 0% intro APR on balance transfers for 6 months, with no balance transfer fee. The really sad part is that American Express is one of the best banks out there when it comes to credit cards. Most other banks play "follow the leader" with their terms and conditions. American Express, on the other hand, always plays fair with their customers (based on anecdotal evidence.) Must have something to do with the fact that the company has along history of catering to wealthy, discerning consumers who actually read the terms and conditions before they signup for a card.

So now there are 4 cards left offering 0% intro APR and that don't charge a fee for transferring balances.

Of course, the hunt for the best 0% cards continues. Stay tuned.

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