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rant

credit cards

Every couple of months one of my credit card statements includes a "change to the terms of your credit card agreement." This is of course written in about three pages of small-print legalese, to discourage anyone from actually reading it. And it always describes the changes as "Delete the third sentence of the second paragraph of Section 29.3a and replace it with the following," as though you actually had the third sentence of the second paragraph of Section 29.3a handy for comparison; again, the object is presumably to prevent anybody from actually knowing what is changing.

So I decided to read this month's change to terms. I do not have the third sentence of the second paragraph of Section 29.3a for comparison, but at least I can read the new sentence. And if I read it right,

1) previously, if you lost track of time and sent in your payment-in-full for January's bill one day late, you would pay a service fee of $xx, plus interest for January's balance, plus interest for February's balance. Under the new regime, you'll pay a service fee of $xx, plus interest for January's balance, plus interest for February's balance, plus interest for March's balance, even if you pay in full by the due dates for both February and March.

2) previously, if you lost track of time and sent in your payment-in-full for both January and February one day late each, you would pay a service fee of $xx twice, plus interest for January, February, and March. Under the new regime, you not only pay a service fee of $xx twice, but you go into "penalty interest rate" (prime+23.99%, which as of this week would be 27.24%), and pay that rate on every balance for the next year.

3) previously, if you completely forgot to pay January's payment at all, you would pay a service fee of $xx, plus a different service fee of $yy, plus interest for January's and February's balances. Under the new regime, you not only pay the service fees, but you go into "penalty interest rate" as above for the next year.

It's always been a good idea to pay off your credit card balance in full every month; my mother made that clear when I applied for my first credit card 25 years ago, and I've done that ever since, except when I had a really big extraordinary expense, or on those rare occasions that I misplaced my bill. Of course, the credit card companies don't make much money on people like that; they'd much rather I paid part of my balance every month, plus fees and interest. I gather the credit card companies (not just this company; they're all doing this) have reacted to the recession by raising fees and interest rates, so if you ever fall on the wrong side of the wall, you'll be stuck there forever paying fees and 27% interest rates.

I just visited the bank's web site to look up the complete terms applicable to my card. Surprise! I can't find them anywhere! Lots of pages about benefits, points and the redemption thereof, how to apply for a new card, etc. but not one about what fees, interest rates, and penalties apply to my current card. Since the site is otherwise quite well-organized and informative, I can only assume that this omission is an intentional attempt to keep customers from knowing the legal terms to which they've tacitly agreed.

Comments

All the credit card companies are burning the midnight oil to screw you harder before new legislation restricting these practices goes into effect.

Read all your changes of terms, Some are instituting annual fees for people who pay their credit cards every month.

new legislation

Oh, I forgot to mention: the preamble to all this says "We want to explain changes we are making to your account, some of which are necessary to comply with new Federal Credit Card Regulation."

As far as I know, there haven't yet been any new Federal Credit Card Regulations -- only proposals for them. (I could be wrong there...) So this stuff is actually "necessary" if you accept the additional axiom that the bank has to make the same amount of profit as it was planning on before people started talking about new regulations.

oh, forgot the link