This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Card Issuers Sneak In Hikes to the Indebted

ARLINGTON, Va. ( TheStreet) -- You may or may not be fully up to speed with the changes instituted by last year's credit card law, the CARD Act, but you're most likely aware that as a consumer you have some new rights because of it.

Unless your job revolves around personal finance, though, how are you to know whether your credit card company is operating outside the legal and ethical parameters governing the new credit card landscape?

When it comes to your credit card, it's best to read the fine print. Some issuers have tried raising fee increases for the indebted.

For one thing, you might not realize the significance of a notice that the annual fee on your credit card is going up. But make no mistake about it, this type of action is alarming because it might break the intent of the CARD Act provision making it illegal for credit card companies to increase the interest rate on a credit card balance unless the account holder is 60 days delinquent.

You see, there is also no effective difference between interest rate increases and fee increases when they are applied to indebted accounts. Both increase your account's finance charges as defined by Regulation Z: Truth in Lending. Both increase the cost of debt. Both punish consumers unfairly with revolving balances.

Unlike debt-free consumers, indebted customers cannot always switch to a different issuer when faced with increased rates or new fees. Therefore, when credit card companies arbitrarily increase the cost of consumer debt, they're merely profiting from their customers' lack of mobility.

JPMorgan Chase (JPM) tried this stunt before the CARD Act took effect and was forced to recall the fee under pressure from the New York attorney general and repay customers it had already charged. Now, Bank of America (BAC) has announced it will apply $59 membership fees to about 5% of its customers based on risk profiles, thereby ensuring that the fees will be applied to indebted accounts.

Large banks are known to follow in each other's footsteps, so before Wells Fargo (WFC), HSBC (HBC), Citi (C) and the like decide to follow Bank of America's lucrative lead, the Federal Reserve must close this loophole, as it did when other gaps surfaced between the CARD Act's intent and its practical application.

In the meantime, if you get hit with an annual fee increase, bring this to the attention of the Federal Reserve and Consumer Financial Protection Bureau.

>To submit a news tip, email: tips@thestreet.com.

Follow TheStreet.com on Twitter and become a fan on Facebook.

Odysseas Papadimitriou is CEO and founder of CardHub.com, a website dedicated to helping you find the best credit card, charge card and prepaid card.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs