According the Wall Street Journal, Bank of America has sent a letter to the Chairman of the House Financial Services Committee vowing to cease rate and fee increases until new credit card laws take effect in February. This moratorium comes after Bank of America embarked on a nearly year long spree of rate and fee raising. However, Bank of America has not acted alone. Nearly every major credit card company has been engaging in these practices which include seemingly arbitrary rate increases, credit limit cuts, and increases on fees for balance transfers, cash advances, and international transactions.
At present, no other major credit card issuer has stepped up and promised to halt similar tactics, many of which will no longer be permitted once new credit card laws take effect. However, recent data collected by Smart Balance Transfers seems to indicate that credit card companies have become less aggressive in their attacks on consumers as the volume of credit card complaints we receive has fallen substantially.
Unfortunately, the damage has already been done. Apart from the unprecedented slashing of credit limits, credit card companies have done everything from tripling interest rates to tripling monthly minimum payments as a way to get back the money they have lent out to consumers at low rates. Many of these tactics have pushed consumers to the brink, perhaps contributing to record high default levels that are killing the profits of credit card issuers.
While Bank of America’s decision to play nice is a step in the right direction, one of the major problems facing consumers with credit card debt is the lack of available 0% and low rate balance transfer offers as well as more stringent application standards. This has prevented many consumers who have been hit with rate increases from securing lower temporary rates. Hopefully, credit card companies will return to the business of lending money soon. Otherwise, the real problem facing consumers-and our economy-will be the lack of low cost credit available to consumers.
Sources: http://online.wsj.com/article/SB125487928754069787.html?mod=article-outset-box
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