The past twelve months saw unprecedented increase in the interest rates of credit cards. As new regulations imposed low caps on card fees, many issuers decided to compensate for their losses by cranking up their interest rates to historical heights. Thus, we became witnesses to Annual Percentage Rates of 36 percent, 47 percent and even 79.9 percent, which was charged by First Premier Bank (source: Huffington Post). Of course, these gigantic rates were masked by a decrease or complete waiving of the servicing, transaction, and annual fees, but these reductions were trifle in comparison to the sums which card holders had to pay in interest. Yet, for some card companies this wasn’t enough. They have found new insidious ways to hide the outrageous interest rates charged on their credit cards. Here is what the chain retailer Macy’s did to cheat its card holders about the company’s interest rates.
As Terry Smiljanich reports in an article published on the Consumer Warning Network website, Macy’s sent to one of its ‘Platinum Star Rewards’ account holders a statement, with a front page conspicuously noting that the interest rate charged was 24.5 percent (which is already quite steep). Almost as an aside, the front page also contained the notice that a $2.00 ‘interest charge’ has been collected with the explanation that, ‘if you pay off your New Purchase Balance of “x” amount of dollars by “y” date, the Initial Interest Charge of $2.00 on the Revolving Account is to be refunded on your next statement.’ (source: Consumer network).
This ‘initial’ $2.00 interest charge is in itself unfair, as credit companies should not have the right to collect card holders’ money in advance, keeping it for a month even if with the intention of refunding it later upon proper debt payment. But there is more to the story. A fine print note at the bottom of the second page informed the card holder that, ‘As a result of the Minimum Interest Charge of $2.00 being applied to your Revolving account, the Annual Percentage Rate charged on the account is 47.04 percent.’
In other words, on the grounds of this interest charge, the provider found a way to increase the APR applicable to the card holder almost twice. If this is not a daytime robbery, I don’t know what it is. Unfortunately, Macy’s is not the first company involved in such shameless scams, and it is unlikely to be the last.
Apart from high interest rates, credit card providers make use of other practices they should be ashamed of. Some issuers mail the card statements as close to the due date as possible. On top of that, many of them specify a day and time when payments must arrive. If you are late by one minute, you will be charged with a late fee.
The truth is that credit card companies do not care about their customers, even though it was with taxpayers’ money that many of them were bailed out of the recent economic crisis. Unless a new strong legislation forces them to behave, they will always look at us only as means of profit. And since no stricter laws are forthcoming in the near future, it seems that we have only ourselves to rely on in the battle against credit institutions’ pillages. This is why, we should approach card offers with an extra care and always do a through research before we decide on a financial product or sign a card contract. Only then, we will be able to escape the snares which credit card companies set before us.
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