From our president

This monthly letter to subscribers from Consumers Union President Jim Guest highlights the critical consumer issues behind our current reports. See archived letters.

Fishing for fees

A new twist on an old saw: Now "close" only counts in horseshoes, hand grenades, and credit-card reform.

We're thrilled that years of work by Consumers Union and other groups has netted new limits on credit cards that will save consumers money and frustration. But we're not done yet. We fought hard for the regulations, which aim to stop card issuers from gouging consumers through unfair fees and policies.

But as you'll read in Credit-card gotchas, banks are getting creative in boosting interest rates and fees—those they're allowed to—in an effort to make up for revenue they're now prohibited from reeling in.

New tricks of the trade

We'll be on top of credit-card issuers to see which ones are not complying. One bank has already ignored a rule that requires statements to be mailed or delivered at least 21 days before payment is due. Another hoped to sidestep disclosure of the penalty rate for late payment by not calling it a penalty rate. CU joined other groups in immediately alerting federal banking agencies to those abuses.

Banks are no longer allowed to charge a late fee higher than $25 unless one of your last six payments was late or the bank can justify a higher fee. That's a good step, but we think $25 is too high. And consumers still have to watch out for hikes in penalty interest rates, which the law doesn't limit.

Until new "opt-in" rules went into effect this summer, you could have been surprised by hefty overdraft fees on your debit card. Now banks must get your consent for overdraft protection first. If you don't want it, charges that exceed your balance will be denied.

Be leery also of offers for "professional" cards, whose issuers take advantage of the fact that business credit cards aren't covered by the law.

We'd like your help in monitoring the banks. If you find anything fishy on your statements, such as new fees or penalties, tell us about it at www.CreditCardReform.org/story.html.

Jim Guest
President