Tuesday, April 14, 2009

PEW Promotes Standards for Safe Credit Cards

The PEW Charitable Trust reviewed current credit card practices and has issued a report with suggested practices for making credit cards safer. The survey uncovered the following facts.

  • 100 percent of cards allowed the issuer to apply payments in a manner which, according to the Federal Reserve, is likely to cause substantial monetary injury to consumers.
  • 93 percent of cards allowed the issuer to raise any interest rate at any time by changing the account agreement.
  • 87 percent of cards allowed the issuer to impose automatic penalty interest rate increases on all balances, even if the account is not 30 days or more past due. The median allowable penalty interest rate was 27.99 percent per year.
  • 72 percent of cards included offers of low promotional rates which issuers could revoke after a single late payment.
  • 92 percent of cards included a fee for exceeding the credit limit, including 100 percent of all student cards. The amount of the overlimit fee is $39 on most accounts.
  • 84 percent of cards included binding arbitration agreements, limiting cardholders’ legal rights to settle disputes with the issuer in court.

Read the full report here.

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