During the better part of last month, we received more complaints about credit card companies than we did during all of last year. This was no minor feat, as everybody has a reason to complain about their credit card. Oddly, however, credit card complaints have come to a standstill since President Obama met with credit card executives on April 23rd.
Whether by force or not, it seems that Obama was able to strongly influence the policies at all the major credit card companies. Days before the meeting, consumers were complaining about random rate increases, massive fees, and customer service reps who only knew one phrase: Sorry, can’t help you.
Now, it is still too early to know if this complaint holiday will be more than a short honeymoon or something more substantial. However, two things are very clear:
- Consumers already hit with rate increases and credit limit decreases are unlikely to benefit from the new-found benevolence of credit card companies. This is an unfortunate fact for millions of people who’ve seen their interest rates double and credit limits cut in half.
- Credit card companies will no longer be as generous with 0% balance transfer deals. The days of no fee balance transfers lasting 1 year and $75 maximum balance transfer fees are long gone. So are fixed apr for life balance transfers. The next round of balance transfer changes will be increased balance transfer fees (Bank of America has already announced they are increasing fees to 4% on June 1st) and shorter 0% periods, likely to be about 6 months. Additionally, getting approved for these deals may become significantly more difficult in the near future, as credit card companies increase credit standards.
All in all, the April 23rd meeting held at the White House will probably save a few million people a few billion dollars in interest expenses. Unfortunately, it may also limit the ability of credit card companies to offer 0% APR balance transfers, thus making it harder for smart consumers to get out of debt faster and with lower interest costs.
Personally, I’m happy to have an inbox with no complaints in it. Unfortunately, I also fear that the 0% rates many have relied on to manage their credit card debt will soon be a thing of the past. In the next few months, credit card companies are likely to end long term 0% APR deals and replace them with introductory rates in the low single digits. However, it is not too late to get a 0% balance transfer credit card, and if you have credit card, you should get one now.
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