NEW YORK ( LowCards.com) — The Consumer Financial Protection Bureau issued a warning to credit card companies about deceptive marketing tactics used to promote convenience checks and reduced- or zero-percent interest offers.
The bureau told banks to disclose properly the costs of these promotional offers and what would cause the reduced rates to cease. Banks that do not disclose these conditions may be cited for deceptive practices.
"Credit card offers that lure in consumers and then hit them with surprise charges are against the law," CFPB Director Richard Cordray said in a press release. "Before they sign up, consumers need to understand the true cost of these promotions. Today, we are putting credit card companies on notice that we expect them to clearly disclose how these promotional offers apply to consumers so that they can make informed choices about their credit card use."
The CFPB also issued consumers some tips to avoid interest charges and fees on low introductory rate credit cards and other promotional offers:
- To avoid surprise charges, make payments on time. Consumers are advised to pay off the entire balance before the end of the promotional period.
- Don't make purchases with the new card until you pay off the entire balance. Make any new transactions with cash, a debit card or another balance-free credit card to avoid interest charges on these new purchases.
- Compare interest rates on credit cards before applying for a new one.
A year ago, the CFPB highlighted some concerns on how well consumers understood the grace period of credit cards. In the CARD Act Report, the bureau raised questions on whether the disclosures were adequate.