the visible hand

it is the theory which decides what can be observed – einstein

Caveat emptor: deceptive credit card terms and conditions

Posted by ecoshift on July 31, 2007

It does seem that the ethical basis of solicitations coming to my mailbox, both analog and digital, have been in decline for a number of years. It is no longer safe to assume that there is a moral baseline, or regulatory environment, that ensures even minimal protection of customer interests.

As far as the credit card companies go, they can change the terms that apply to an existing balance at whim. Read the fine print. Here’s the line from the most recent offer to cross my desk: Rates, fees and terms may change: We reserve the right to change the account terms (including APRs) at any time for any reason, in addition to APR increases that may occur for failure to comply with the terms of your account.

Given the level of revolving debt that many people carry and diminished access to bankruptcy protections for ordinary citizens that line is really quite cheeky. Imagine loaning your buddy 10k and asking him to sign an agreement that allows you to change the terms of the agreement on the outstanding balance any time you feel like it.

Caveat emptor indeed…

Credit Card Buyer Beware – New York Times Editorial
Published: July 31, 2007

The federal agencies that are supposed to regulate the banking and credit card industries have failed utterly to keep pace with deceptive and unfair practices that have become shamefully standard in the business. As a consequence many hard-working Americans who pay their bills are mired in debt — and in danger of losing whatever savings they have, and perhaps their homes. Congress, which sat on its hands while the problem got worse and worse, needs to rein in this sometimes predatory industry…

A bill introduced by Senator Levin would limit “penalty” interest rates to an additional 7 percent above the previous rate. It would also prohibit retroactive penalties and double cycle billing, and it would limit the amount of fees companies could charge customers who exceed their credit limit.

Passing the Levin bill would be a good start. But Congress needs a comprehensive approach to this problem. Lawmakers need to ban deceptive card offers outright, strengthen federal oversight and toughen truth-in-lending laws.


One Response to “Caveat emptor: deceptive credit card terms and conditions”

  1. […] a link to my previous credit card post. Caveat emptor: deceptive credit card terms and conditions « the visible hand As far as the credit card companies go, they can change the terms that apply to […]

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