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By Mike Killian, <a href="http://www.cardratings.com/?source=sadvice">CardRatings.com</a> Debt/Credit Management Reporter
Recently David Lazarus of the San Francisco Chronicle wrote an article entitled Beware MBNA Changes. As the title indicates, the thrust of the feature concerned the recent changes caused by the merger of Bank of America (BofA) and MBNA. The expose focused on the negative impact to existing MBNA credit card holders.
I interviewed a familiar advocate to our readers, Linda Sherry of Consumer Action, a national non-profit education and advocacy organization celebrating its 35th anniversary in 2006. Linda had also been interviewed for the referenced article and I was very anxious to get her input on a few concerns.
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I initially asked Linda how she happened to be interviewed for this particular article.
<blockquote><i>"I am often contacted by this reporter, who knows I work on credit card issues. He is aware of Consumer Action's annual credit card survey and the fact that we testified last year about credit card anti-consumer practices in front of the Senate Banking Committee."</blockquote></i>
I followed up by saying that I had always been opposed to so many issues discussed in this article and am just as angry about its content as any other consumer. But I added that I was unclear why MBNA and BofA were singled out since so many other card issuers are doing the exact same thing.
Linda elaborated,
<blockquote><i>"Consumers need to be very watchful following mergers that affect their credit card companies. It is our experience that following mergers, companies usually change the terms on the card and the terms rarely change for the better. Many consumers do not follow the advice of consumer advocates to closely monitor their bills for change of terms notices, so they end up missing these notices and not realizing that the landscape has changed. This usually ends up costing them money, either through a late payment fee or a rate hike following missed payments or a change in their credit scores.
I am not a fan of the "machinations" being used to whittle away the grace period and to take away its benefits. Some companies are calling this "residual interest." When you have had a balance in a previous month and in the subsequent month make a full payment of every cent that is owing, I do not believe you should be charged
interest.
Also, one late payment as a trigger for a rate hike is inherently unfair."</blockquote></i>
Realizing one of the changes includes an increase in interest for being late 1 time by only 1 day, I asked Linda if her group was anticipating an impact and if so in what form? I also asked if she had any advice for consumers.
<blockquote><i>"I think many consumers will be hit with higher finance charges under the new policies.
Again, people should expect changes in terms following mergers. Cardholders need to read the fine print. What you don't read can cost you!"</blockquote></i>
A final suggestion is that if you don't like the terms and condition of your credit card, you can always comparison shop for a more consumer friendly card.
Recently David Lazarus of the San Francisco Chronicle wrote an article entitled Beware MBNA Changes. As the title indicates, the thrust of the feature concerned the recent changes caused by the merger of Bank of America (BofA) and MBNA. The expose focused on the negative impact to existing MBNA credit card holders.
I interviewed a familiar advocate to our readers, Linda Sherry of Consumer Action, a national non-profit education and advocacy organization celebrating its 35th anniversary in 2006. Linda had also been interviewed for the referenced article and I was very anxious to get her input on a few concerns.
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I initially asked Linda how she happened to be interviewed for this particular article.
<blockquote><i>"I am often contacted by this reporter, who knows I work on credit card issues. He is aware of Consumer Action's annual credit card survey and the fact that we testified last year about credit card anti-consumer practices in front of the Senate Banking Committee."</blockquote></i>
I followed up by saying that I had always been opposed to so many issues discussed in this article and am just as angry about its content as any other consumer. But I added that I was unclear why MBNA and BofA were singled out since so many other card issuers are doing the exact same thing.
Linda elaborated,
<blockquote><i>"Consumers need to be very watchful following mergers that affect their credit card companies. It is our experience that following mergers, companies usually change the terms on the card and the terms rarely change for the better. Many consumers do not follow the advice of consumer advocates to closely monitor their bills for change of terms notices, so they end up missing these notices and not realizing that the landscape has changed. This usually ends up costing them money, either through a late payment fee or a rate hike following missed payments or a change in their credit scores.
I am not a fan of the "machinations" being used to whittle away the grace period and to take away its benefits. Some companies are calling this "residual interest." When you have had a balance in a previous month and in the subsequent month make a full payment of every cent that is owing, I do not believe you should be charged
interest.
Also, one late payment as a trigger for a rate hike is inherently unfair."</blockquote></i>
Realizing one of the changes includes an increase in interest for being late 1 time by only 1 day, I asked Linda if her group was anticipating an impact and if so in what form? I also asked if she had any advice for consumers.
<blockquote><i>"I think many consumers will be hit with higher finance charges under the new policies.
Again, people should expect changes in terms following mergers. Cardholders need to read the fine print. What you don't read can cost you!"</blockquote></i>
A final suggestion is that if you don't like the terms and condition of your credit card, you can always comparison shop for a more consumer friendly card.
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