Card companies considering other strategies
A recent post on SmartMoney’s Common Sense blog noted that some companies are moving consumers from fixed rates to variable rates. Though variable rates are low now, they could see an increase in the future if the prime rate sees a jump. Linda Sherry, who is a spokesperson for Consumer Action, told the blog that many card companies made the switch before new credit card laws took effect.
According to new provisions put forward by the Credit Card Accountability, Responsibility and Disclosure Act, card companies must now give consumers 45 days of notice before changing interest rates or fees. Card holders can opt out of the rate increases and pay off their remaining debt at their old rates.
Along with switching to variable rates, a number of card companies are looking at annual fees for credit cards. Some companies are looking at putting usage fees on their customers.
“An annual fee can be a big turn-off for consumers,” the blog said. “To avoid user backlash, some issuers will get creative with how they charge usage fees.”