It's a big day for consumers: Sweeping reforms regulating the credit-card industry go into effect today. Among them: Your card issuer won't be able to increase the interest rate on an existing balance or charge you fees for over-the-limit transactions without your permission. (The Fed summarizes the changes here.) All major victories for cardholders.
But if you think the world of credit cards is going to be all rainbows and unicorns now, think again.
Banking analyst Ron Shevlin summed it up nicely on American Public Media's Marketplace show Monday morning:
I would characterize what the future's going to look like here is the airlinification of the credit card industry. They've kind of nickeled and dimed consumers to death.
If buying an airline ticket was ever a pleasant experience, it's hard to remember — because now, it's fraught with a bevy of increasing fees, poor customer service and a general feeling that airlines have nothing better to do than to come up with creative ways to break into your wallet. (Want to check a bag? It'll cost you. Paying that fee at the airport? It'll cost you even more. Need a blanket on your flight? You got it -- after you pay 8 bucks.)
So that not-so-warm, not-so-fuzzy feeling you get when dealing with the airlines? Prepare to experience it (even more) with your credit card issuer. Let's face it: The relationship between cardholders and their banks was never all that great. But now, I have a feeling it's going to be downright hostile. Card issuers are finding ways to get around the new rules by setting all sorts of new traps. And I don't think there's any end in sight.
Last week, I wrote about how one issuer, Citibank, is imposing a new annual fee on some of its cardholders (myself included). And judging by your comments, the frustration is reaching a fever pitch. Paula from Los Angeles wrote:
Screw the customer any way you can is the credit card companies' motto these days.
Added David from Watson, Oklahoma:
We all need to find ways to hit the banks where it really hurts. They make a small fortune on their cards already. I'm also sick of hearing them snivel about their credit losses. Give me a break!! Who bombarded every warm-bodied American with credit offers? It certainly wasn't me, and I should not have to pay "for their increase in the cost of doing business" now. They can well afford to pay for their own misdeeds.
Paula and David are not alone. That's just a sampling of the frustrated and angry comments we received — on just one bank's new fee.
So can anything be done? In this month's MONEY I wrote a piece on how you can spring yourself from these credit card traps: By dumping your big bank and going with a smaller issuer or credit union instead. That's because these issuers are more likely to be focused on the customer relationship and less on the bottom line. Remember, there's still one major difference between banks and airlines: When you need to fly from Point A to Point B, you often don't have a huge number of carriers to choose from. But credit-card issuers? They're as plentiful as stars in the sky.
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