Financial Protection

Are you mad at your credit cards? Tell the CFPB.

The wants to know if you’re mad at (or happy with) how your credit card company treats you. See the link at the bottom of this post.

The credit card industry has always been very profitable and still is. But throughout the 90’s and the 00’s, the banks ratcheted down the thumbscrews on consumers.

First, they said it wasn’t enough to charge late payment penalties, they’d also need to raise your interest rate. A 36% penalty APR converts to a 3% monthly rate, which means if you make only the minimum payment of about 2%, you’re losing ground.

[Pro tip: Always pay on time. Always pay as much as you can afford.]

Then they said, let’s trick more people into paying late by randomly changing due dates and making bills due on a Sunday, so late on the Monday when the Post Office re-opened.

But that wasn’t enough, so they invented “universal default,” which allowed them to impose penalties on customers who’d consistently paid their bills on time but had their credit score decline for other reasons.

Not enough! Finally, they invoked “we can change the rules at any time, for any reason” clauses. Now they could collect fees and interest willy-nilly, from anybody.

Angry consumers demanded that Congress do something, so in 2009, the Credit Card Accountability, Responsibility and Disclosure (CARD) Act was signed into law.

What happened then? Banks’ false claims of “economic disaster” didn’t happen. The credit card marketplace is still a cash cow for the banks, but many unfair tricks and traps have been stopped.

I was there when the banks invented all these unfair practices and when the banks claimed the CARD Act would destroy the marketplace in their failed efforts to kill the bill. And I was there in the Rose Garden when President Obama signed the CARD Act. It was and is a tremendous victory for consumer protection over unfair financial marketplace practices.

Now, the Consumer Financial Protection Bureau is considering lowering credit card late penalty fees. The pre-CFPB Federal Reserve Board rules allowed penalty fees to escalate automatically each year. The fees are now up to $30 for a first offense, $41 for a repeat offense.  The big banks all seem to charge the maximum amount allowed. Funny that.

The CFPB is also required to review the Card Act every two years. It wants to know “people’s overall experiences with credit card products.” How do you feel about your credit card? Does your bank treat you fairly? What else should the CFPB do to give you more protections?

The link explains many ways to comment but here’s the easiest for consumers: Send an email by April 24th to “[email protected]. Include the document title and Docket No. CFPB-2023-0009 in the subject line of the message.”

And, of course, don’t forget that the CFPB advises any “consumers having an issue with a consumer financial product or service can submit a complaint with the CFPB online or by calling (855) 411-CFPB (2372).”

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