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By Valerie S. Johnson
The major credit card issuers were chastised today before a hearing of a Senate investigative subcommittee for their high penalty interest rates, unfair fees, and indecipherable agreements.
Ohio resident Wesley Wannemacher testified about charging $3,200 worth of wedding expenses to his Chase credit card which escalated to $10,700 in three years due to over-limit fees, late fees, and interest charges. He paid $6,300, and Chase waived the remaining $4,400 balance after Mr. Wannemacher notified the subcommittee about his experience.
The CEO of Chase Card Services, Richard J. Srednicki, apologized at the hearing to Mr. Wannemacher, saying “we simply blew it.” It’s not clear what he acknowledges that the company did wrong (perhaps the 47 over-limit charges?).
Mr. Srednicki announced that Chase will no longer charge additional over-limit fees after a card holder has exceeded the credit limit for more than 90 days. How will this work? Suppose your limit is $1,000 but your balance rises to $1,500 for three months. You pay the over-limit fee for three months, but you’re not liable for any further over-limit fees starting with the fourth month. Now suppose you pay your balance down to $750. If you subsequently exceed your $1,000 limit, is the credit card issuer going to charge you an over-limit fee? Of course it will.
Citigroup announced last week that it will discontinue its universal default practices. Previously, if a Citibank card holder paid another creditor late, Citibank could hike that customer’s credit card interest rate even if the Citibank account was in perfectly good standing. Now, a Citibank credit card customer will be subject to increased interest rates only if the customer pays late, exceeds the credit limit or bounces a payment check.
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The major credit card issuers were chastised today before a hearing of a Senate investigative subcommittee for their high penalty interest rates, unfair fees, and indecipherable agreements.
Ohio resident Wesley Wannemacher testified about charging $3,200 worth of wedding expenses to his Chase credit card which escalated to $10,700 in three years due to over-limit fees, late fees, and interest charges. He paid $6,300, and Chase waived the remaining $4,400 balance after Mr. Wannemacher notified the subcommittee about his experience.
The CEO of Chase Card Services, Richard J. Srednicki, apologized at the hearing to Mr. Wannemacher, saying “we simply blew it.” It’s not clear what he acknowledges that the company did wrong (perhaps the 47 over-limit charges?).
Mr. Srednicki announced that Chase will no longer charge additional over-limit fees after a card holder has exceeded the credit limit for more than 90 days. How will this work? Suppose your limit is $1,000 but your balance rises to $1,500 for three months. You pay the over-limit fee for three months, but you’re not liable for any further over-limit fees starting with the fourth month. Now suppose you pay your balance down to $750. If you subsequently exceed your $1,000 limit, is the credit card issuer going to charge you an over-limit fee? Of course it will.
Citigroup announced last week that it will discontinue its universal default practices. Previously, if a Citibank card holder paid another creditor late, Citibank could hike that customer’s credit card interest rate even if the Citibank account was in perfectly good standing. Now, a Citibank credit card customer will be subject to increased interest rates only if the customer pays late, exceeds the credit limit or bounces a payment check.
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