Credit Card “Minimum Balance” Controversy
| May 19, 2010 |
So do you carry a balance? If so, recent moves by issuers could be affecting you without you even realizing it. This is because it has recently been reported that some issuers have decided to continue some of the practices that they performed long before the coveted Credit CARD Act was signed into law. Although it is legal for issuers to do such a thing, in the eyes of consumers it is just the thing that would be expected from big banks.
According to an article on Yahoo Finance entitled "Carry a balance? Banks may be gaming your payments", when it comes to what credit card issuers are doing that could cost you more, it involves the portions of cardholder’s balances that carry different interest rates. While in the past financial institutions could apply payments to any balances, they were particularly applied to those with the lowest rates first. Under the new law, banks are supposed to apply payments that are above the minimum balance owed to those accuring higher rates first. With the controversy that has started to brew, experts point out that the words "above the minimum" is where issuers are still getting over on cardholders. With this three word phrase it simply means that if payments are not above the specified amount, they can still be applied to the lowest rates costing you more money in the end.
When hearing news such as this, on all accounts this is something that cardholders have come to expect especially after the multiple drastic changes that occurred over the last year. For a while now many experts have predicted that credit card issuers would try something to increase revenue, but were not sure on what it may be. As is the case now, many cardholders are reluctant to use their credit cards and remain wary of issuers.
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