Plastic issued by Credit Unions may be the best option in the wake of steady reports showing that major credit card issuers continue to raise rates. Even though the credit unions can change terms at will, they tend to charge customers less.
A study of 400 credit cards offered by the top banks found practices that will be outlawed once credit industry reform laws take effect in February of next year, according to the Pew Charitable Trusts, the independent nonprofit.
The organization’s Safe Credit Cards Project issued the report today, which also found that advertised credit card interest rates rose an average of 20 percent in the first two quarters of 2009, even as banks’ cost of lending declined.
The call for a freeze, seen as a drastic political move by some, comes in the wake of Congressional uproar over the hiking of rates by some card issuers before new credit card reform takes effect in February. A key House panel last week voted to push up the start-date of the new laws to Dec. 1.
U.S. Rep. Barney Frank is putting out a warning to credit card issuers: don’t abuse the grace period between now and the February 2010 take-effect date of reform laws that will restrict how and when issuers can raise rates or modify consumer policies. Frank, who chairs the House Financial Services Committee, is leading the charge among a group of U.S. lawmakers to push up the enactment date of the reform legislation to Dec. 1 from Feb. 22, 2010.
It seems that a kinder, gentler credit card industry is starting to emerge as the U.S. edges closer to credit reform slated for full effect in February 2010. Some major credit card companies are opting for simplicity and newer options designed to help the consumer manage debt loads in the current financial crisis.
Cardholders now have 45 days to reject proposed rate increases. Consumers who opt to reject a rate increase within 45 days will have two options at the bank’s discretion.
Some credit card issuers have raised interest rates, minimum payments due and lowered credit limits ahead of new laws that take full effect in February 2010.