When credit card companies were fighting a new federal law to curb some of their worst abuses, they threatened to raise other fees and interest rates if it passed.
Well it passed, and now we’re watching to see if the credit card companies will start squeezing money from their customers in other ways.
Or, as Capital One CFO Gary Perlin called it at an investor conference this week, there will be a “reinvention” of pricing and fees.
The new law goes into effect in February, and primarily protects credit card holders who have been hit with big fees and higher interest rates because they were late with a payment.
It forbids credit cards from imposing a penalty rate until customers are more than 60 days late with a payment, and requires the credit card to restore the previous, non-penalty rate once a customer has made six, on-time payments.
To recoup that lost revenue, the credit card companies have suggested a long list of ways they can impose more costly terms on all cardholders.
They’ve threatened to raise interest rates, impose annual fees on cards that don’t have them, boost balance transfer and cash advance fees, scale back reward programs and eliminate grace periods so that interest accrues from the moment a purchase is made.
Of course, the credit card companies were busy raising interest rates and fees before the new law passed.
But we’d like to hear from anyone who gets a letter that imposes significantly different terms on their cards as the effective date for the new law draws closer.
I can tell you right now that I’m going to close the first account that starts charging an annual fee, or eliminates the grace period, and start looking for a better deal.
What’s your strategy going to be?