A credit card company is not a public servant. Nor are they your employees, even in the traditional way that businesses are looked at as serving customers. Credit cards seem to fall into the category of business relationships, mutual beneficial in many cases, but also with great potential for either side to hurt the other.
Even in the best relationships, it’s important for both sides to know what the other can and cannot do. The credit card companies put people, money, and effort into knowing exactly what you can get away with and exactly what they can get away with. If you’re a credit card user, you should protect your own interests by educating yourself on what the credit card companies can and can’t do to you.
Earlier this week, a reader sent me a link to this slideshow on the Card Act and what companies can/can’t do. I’ll outline the main points below, but for details, check out the slideshow.
- Can they change a fixed interest rate to a variable interest rate? Yes. (though the CARD Act will require them to keep it fixed for the first year unless the customer makes an error.)
- Increase your monthly minimum payment? (e.g. from 2% to 5%) Yes.
- Reduce your credit limit? Yes.
- Raise fees on your card? Yes.
- Close your account without permission? Yes.
- Force a higher interest rate? Yes, but not immediately. 45 day warning and option to close account.
- Force you to accept a higher rate for an extended period? Until the CARD Act takes effect.
- Change the rewards program? Yes.
- Increase your interest rate after defaulting on another card? Until the CARD Act takes effect.
The CARD Act won’t fix everything, but it’ll do away with some practices that are sharply aimed at gouging the consumer (such as applying payments to lower-interest balances first).