A cure for penalty rates by issuers
At some point in time, most customers would have faced a situation of having missed a credit card payment. It could have occurred due to simple oversight, or due to the misplacement of a bill, or the fact that the person concerned was travelling and hence unavailable to pay off the bill. Paying a bill late once in a while is alright. But if one gets into the habit of missing more than one payment on more than one occasion, then the card holder would see a sharp rise in the APR`s or the penalty rates.
With the new credit card rule in effect, it is possible to get one`s account back into its original interest rates and “cure” the penalty blues. As per the new provisions made by the credit card accountability, responsibility and disclosure act (2009) the issuers are expected to review the interest rates and restore the penalty rates to the original rates after six consecutive payments are made on time.
When the customer defaults two billing cycles, then the penalty APR comes into place and this can be reverted to the original rates only after 6 on-time payments consecutively (at the higher APR). This is done automatically and without any request from the customer.
However, this new rule is applicable only on the existing balance that has been overdue for more than 60 days. This would not be applicable on fresh purchases. As per the CARD act, an increase in interest rate or the new rate can come into effect after a 45-day notice period. If the card holder satisfies the requirements by making 6 on-time payments and is still left with some balance, then the pre-penalty rates have to be charged on the remaining balance but new purchases can attract fresh charges.
Most credit cards these days are variable rate cards (APR could fluctuate with the prime rate). If there is a change in prime rate during the 6-month period (while making payments on time) then the “cure” rate would vary from the pre-penalty rate.
This change brought about by the new regulation will not help cardholders who have shaky credit and the ones who are in a permanent “debt traps” since the requirements of six on-time payments would not be met. It is a small step and has limitations, as in spite of this provision customers will be paying higher rates for some period will remain in debt. There are no limitations on penalty rates as that would remain under the discretion of the companies. Even if card holders clear off payments within the six on-time payments, they will not see a break in their interest rates.
Latest Credit Card Issuers News
The digital environment is becoming increasingly common these days. This also applies to the credit sector. Most likely, you use credit card apps or at least visit your issuer’s website from time to time. Indeed, online accessibility is highly important for customers. Considering this fact, issuers seek not only to provide high-quality service but also to design a user-friendly mobile app and site interface that will help cardholders quickly find the necessary information or solve an issue.
Wells Fargo & Company has recently announced the release of tap-to-pay contactless consumer credit and debit cards. Wells Fargo cardholders are already familiar with the advantages of digital wallets and are involved in paying for purchases and initiating ATM transactions by means of their mobile phones, while tap-to-pay cards are something new.
Dog-lovers can get checks or credit cards printed with pictures of adorable pups. If you’d rather be at the beach, you can carry a credit card picturing the waves and sand. And now sports fans can order a new credit card with the logo of their favorite teams and players.
Loyal JetBlue customers have another reason to use Chase credit cards: the banking giant and credit card issuer has announced that the JetBlue TrueBlue loyalty program is the newest Chase Ultimate Rewards partner, and cardholders will now be able to redeem their reward points for travel on the airline.
Good news for American Express Platinum cardholders who live or travel in the Denver area: American Express has just announced plans to add a Centurion lounge to the Denver International Airport (DIA). And it will be huge—over 14,000 square feet—making it the second-largest Centurion lounge location.
