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Credit card reform is working but challenges remainby Cara Restelli, KY3 News
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SPRINGFIELD, Mo. -- Times have changed in the credit card industry. Credit card reform was intended to create a fairer and more transparent marketplace but, while in some ways it's working, it's also creating new problems. Just by glancing at their bill, credit card holders now know exactly how long it will take to pay off their card if they only pay the minimum each month, and how much they'll pay in interest. Consumer Credit Counseling of Springfield President Mike Cherry says more consumers are changing their habits because of it.
“More people are paying accounts on time and paying the full balance by the end of the month," said Cherry.
That's the plus side to the massive credit card reform law that went into effect in February. A new study by the Pew Charitable Trusts, however, finds challenges remain. For one, credit card companies don't have to disclose how high your interest rate can get if you don't pay your bill on time. Another concern: surcharge fees for cash advances are on the rise - and Cherry says more people are using cash advances, a concerning trend.
“They're looking at paying it back over 34 years and that's going to be a very excessive amount of repayment,” he said.
Finally, the report found while disclosures are on the rise, so are interest rates and fees. The lowest advertised interest rate in March was 12.99 percent, up 6 percent from July 2009 and up 30 percent from December 2008.
“Unless there is some legal situation to put a maximum on the amount they can charge, you'll continue to see fees and rates go up," said Cherry.
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