Unfair Credit Card Practices

The never-ending list of unfair credit card practices ignited a chain reaction that resulted in the creation of the Credit CARD Act of 2009.

Mainly done by credit card companies, these practices are all set to one goal: to generate as much profit as possible by imposing all types of transaction and penalty fees on unsuspecting cardholders.

The unfair credit card practices of companies that top the list include exorbitant penalty fees and finance charges. Late fees, over-the-limit fees, and interest rates remain the foolproof ways for credit card companies to increase profit. First, they charge you for transactions you make on the card. Next, they charge you for missing your date. Finally, they charge you for going over the limit instead of just preventing this from happening. The unfair credit card practices are actually not the fees but how they are imposed. Even if you send your payment on time, credit card companies still charge late payment fees when your payment was not processed by the due date. When you forget to write one of their requirements at the back of the check, they return your payment and charge you for it, and since your payment wasn’t processed on time, they add an additional late payment fee to your balance. Imagine the fees that you’ve racked up for that simple error. Moreover, when you’ve gone over your credit limit for these penalty fees, they again charge you with over-the-limit fees. Tiring to hear, I know, but these are just the most obvious unfair credit card practices that they do.

Missing a due date creates a snowball of unfair credit card practices that most credit card companies perform. First, they increase your interest rate to a default rate, which is the highest that they impose. Second, they lower your credit limit. Third, they report you to credit bureaus. When another creditor sees this activity in your credit history, your other credit cards start following suit.

Other unfair credit card practices include double-cycle billing and the confusing use of credit card terms. However, thanks to the recently passed and implemented Credit CARD Act of 2009, cardholders are now protected from unfair credit card practices of card issuers and banks. Major provisions from the act include protection against random interest rate increases, confusing due date, unfair penalty fees, and misleading terms. It also gives cardholders the right to set limits on their credit cards in order to prevent over-the-limit fees. It even mandates card companies to fairly allocate and credit payments and to limit excessive fees that they impose. This historic act is aimed at preventing the unfair credit card practices that credit card companies have been doing for the past few decades.


Source: Credit Cards For People With Bad Credit Rating

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