Penalties Ease on Credit Cards
By: Sid Kirchheimer Source: AARP Bulletin Today Date Posted: 2007-06
Congress has held hearings twice this year to grill credit card executives on their fees and billing practices, and the added heat on plastic providers may leave you with more cold cash.
Citigroup has dropped the "universal default" penalty on all its cards. This clause allows card issuers to boost interest rates to as much as 35 percent if a cardholder is late paying any other, unrelated bill—such as a mortgage—even if the customer has never been late with a credit card payment. To see if your card carries a universal default penalty, contact your card issuer.
Citigroup also announced it would cease its "any time for any reason" interest rate increases. An "any time" policy gives a card issuer carte blanche to boost interest rates without an explanation—even for customers who have met all payment and deadline terms.
The company is reserving the right to raise rates and fees on existing accounts only if cardholders pay late, exceed the credit limit or if their payment check bounces.
While the Chase Visa available to AARP members has always used daily average balance to calculate interest, Chase Card Services is switching its other cards to that method and abandoning two-cycle billing. The change will reduce finance charges for anyone who chooses not to pay off a new purchase in full.
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