Card Act provides solid footing for students, for
now
A panacea for consumers? Not so fast
While advocates say the new Credit Card Accountability Responsibility
and Disclosure Act offers strong protections for consumers, there are
still things credit card holders should be wary of.
1) According to MassPIRG, the law did not include an interest rate cap,
meaning there is no maximum credit card companies can charge in
interest.
2) MassPIRG also warns card holders to pay close attention to higher
penalty interest rates on bills 60 days past due — some as high as 35 or
40 percent.
3) Some consumer advocates worry that banks will implement new or larger
fees, such as annual fees, on balance transfers and on overseas
transactions.
Sweeping protections for credit card holders nationwide went into
effect yesterday — particularly for college students, who local
advocates urged to take notice of changes that could save them thousands
of dollars. Though the same advocates worry new avenues will also
emerge for credit card companies to recover their bottom lines.
The CARD Act requires credit card bills to show how long it will take
customers to pay off their balances if they only pay the minimum each
month, while bill due dates can't fluctuate between months. Further
protections include requiring a co-signer for those under 21 or proof
they can pay their bills. Companies also can’t set up shop on campuses
and entice students to sign up with freebies such as hats, T-shirts and
electronics.
Consumer advocates worry, however, credit card companies are already
working on methods to bolster profits in other ways, like increasing
interest rates and implementing new fees. Nicole Cousins, a junior at
Boston University, said credit card debt is a common problem for college
students. “They seem to think credit cards are just an endless fountain
of money,” she said.
The average college student graduates with $3,000 in credit cards debt,
and undergraduates in the Greater Boston area collectively owe $500
million in debt, according to the state’s Office of Consumer Affairs
& Business Regulation.
“I think a lot of students are thinking in the moment and not in the
long term,” said Emmett Hardiman, a 19-year-old student at UMass-Boston
where MassPIRG passed out leaflets to students yesterday about the new
law.
Greg St.
Martin
