Credit card companies circling consumers like sharks

If you aren't reading the small print, your credit card company could be taking you to the cleaners.

Forget about the weak Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009.

There are some CARD Act provisions that protect you now, others that protect you beginning next year, unless Congress speeds up the effective date, but don't hold your breath.

Even when they are all in place, both the delayed effective date and missing provisions are giving credit card issuers loopholes they are jumping through like sharks pouncing on prey.

Two consumer advocacy groups say without more regulatory power from a federal Consumer Financial Protection Agency (CFPA), credit card issuers will continue to find ways to gouge consumers.

Every major consumer advocacy group in the nation wants to see the CFPA put in place to squash consumer finance and credit abuses rampant throughout the financial sector.

"The ink was barely dry on President Obama's signature of the CARD Act, when banks started hitting consumers with higher fees and charges," said Travis Plunkett, legislative director of the Consumer Federation of America (CFA).

"Congress can't write laws fast enough to keep up with these tricks and traps. That's why we need a Consumer Financial Protection Agency to monitor new developments in the credit card marketplace and take strong action to protect consumers," he added.

"Card issuers are using a variety of costly, unfair tactics that will not be eliminated under an impending new law," according to research by Consumer Action (CA) and the CFA.

Among the tactics:

• Arbitrary interest rate increases. Companies are indiscriminately raising interest rates on existing and future credit card balances, often for no apparent reason.

• Unreasonable fee hikes. Annual fees and balance transfer fees are just two of the fees that have increased to replace lost interest income.

• Universal default. Banks continue to use this discredited practice by increasing interest rates on borrowers because of a supposed problem with another creditor, even though the cardholder has a perfect payment history with their card issuer.

• Cancellations without notice. Companies are canceling cards without warning, especially those with low usage.

• Higher minimum payments without notice. Banks have been raising minimum payments, often without notice (However, if this helps you pay off the account and get out from under the thumb of creditors, the sooner the better.).

• Credit score hits. Banks are closing credit cards without warning, often to the detriment to the consumer's credit score. A closed account with a high balance can hurt your score.

• Outdated information. Banks do not quickly update their websites with current terms and conditions on their credit cards.

• Mandatory arbitration. Too many banks still require cardholders to accept binding mandatory arbitration, removing the right of due process in a legal court of law.

• Muddy opt out clauses. Banks are not transparent about if and when consumers can opt-out of changes to the terms and conditions on their credit cards.

"These arbitrary rate increases are the result of creditors' efforts to rake in extra cash using questionable practices not covered by the new credit card law," said Ruth Susswein, Consumer Action's deputy director of National Priorities.

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