3 On Your Side: Credit Card Fee Loophole
PHILADELPHIA (CBS) -- The Credit Card Act passed by Congress last year was supposed to protect consumers from being hit with high fees and rising interest rates. But apparently it's still a work in progress. As 3-On Your Side Consumer Reporter Jim Donovan tells us, some credit card issuers found a loop hole allowing them to continue to charge excessive fees.
When credit card reform was passed into law last year, there was a collective sigh of relief from consumers who were faced with sudden interest rate hikes and excessive fees. But it seems that some credit card companies have found a way around that.
"What some of the companies were doing was charging an enrollment fee that was rather excessive," says Adam Levin of Credit.com.
According to Levin, the companies argue that the law prevented them charging fees to existing customers and didn't refer to potential customers.
Levin says, "They were calling it a processing fee, and enrollment fee, a variety of different terms but at the end of the day the Fed said, 'not going to happen'."
So now the federal government is proposing new rules by which credit card companies would be barred from charging sign-up fees or other charges that take effect before the account is technically opened.
By the way, another change that the government wants to make involves credit card companies that offer to waive interest rates for six months. Those companies would be barred from ending the promotional period early and charging higher fees, unless customers fall more than 60 days behind on payments.
Reported By: Jim Donovan, CBS 3
