Centerblue.org

In the last couple of months, the largest credit card issuers like Citigroup have suddenly reversed themselves on some of their most egregious fees and policies, and have practically apologized to the consumer for them. These fees had really pushed the limits and made the lives of already debt-burdened customers a living hell. Here are some examples of the issuers’ recent activities:

–”two cycle billing” (cancelled by Chase): a practice where if you don’t pay your bill in full, not only are you charged a sharply higher interest rate on future purchases, but they also reach one month in the past and charge higher interest on those purchases too.

–”universal default” (cancelled by Citigroup): a practice whereby they check your credit report every month, and hike up your credit card interest rate if you are late on ANY bill (like your car payment or electricity)!

–”over-limit fees” (partially cancelled by Chase): instead of declining purchases when they exceed a credit limit, they allow the purchase and then slap a $40 fee every month your balance remains over the limit. Chase will now charge the fee only three times, after news surfaced of a man with a $3200 balance being slapped with the fee 47 times.

–Citigroup also rejected its terms and conditions that stated they could change your interest rate and fees “at any time for any reason.”

What accounts for the sudden largesse? Did these companies see the light or get visited by the ghost of Christmas?

Not a chance. They were about to be hauled in before Congress to account for their outrageous fees, and cancelled them just before they were required to testify. That way they could say “we don’t do that anymore.”

It’s amazing what a Democratic-controlled Congress can do for your pocketbook. Now I hope Congress isn’t fooled by these companies playing possum (you know they’ll start charging these ridiculous fees the moment they think they can get away with it again). I’m not usually much in favor of overt marketplace regulation, but there is a clear failure in the marketplace when these companies can get away with so egregiously abusing people who are already drowning in debt. As such, the Citigroups of the world deserve every bit of onerous regulation that Congress can muster.