Boo Credit Card Issuers

I knew I didn’t like some of the practices of the major credit card issuers, such as applying all payments to the portion of the outstanding balance that has the lowest interest rate, but I had never really thought about how strange it is that interest rate changes are applied retroactively. That is, if something (anything) happens and the card issuer decides to jack up the rate, that new interest rate applies to the whole outstanding balance, not just to amounts borrowed in the future. Imagine if a mortgage lender could change the interest rate whenever it felt that the borrower had become riskier. Not the way your typical loan works. I realize this is built into the contract, but I don’t think it should be, and apparently neither does congress—I read about this, among a list of other bad practices, on an article about some proposed legislation at Credit Slips: The Credit Cardholders’ Bill of Rights. Go read it, but prepare to be disgusted.

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