Excessive Bank Account And Credit Card Charges Attacked As Unfair And Possibly Illegal

One missed credit card payment, or going overdrawn without permission, and suddenly a 30 charge can be incurred. Bank charges can seem unfair and too harsh given the frequently tiny amounts of unauthorized borrowing involved. Now it seems that the law could be in agreement.

Following on from an investigation launched in October 2003, eight major credit card companies were told in July 05 by the Office of Fair Trading (OFT) that the charges they levy for late payments were “disproportionately high”, and that charges need to be adjusted to better reflect the costs of managing late payment. Throughout the investigation, the credit card firms continued to maintain that the late payment charges they imposed were fair.

The legality of these charges are being questioned by a Scottish law firm, supported by the Scottish Citizens Advice, who are encouraging consumers to challenge the right of banks to charge such high penalty fees. With current high street credit card typical APRs ranging from 5.9% to 29.9% this is up to 25.4% points above the present 4.5% Bank of England base rate, and banks cutting the interest rates on current and savings accounts, many consumers see the levels of the bank charges as an additional means of revenue generation by the banks through excessive penalization of consumers beyond the actual costs involved.

“The law says if someone breaches their contract, for example you go over your overdraft without permission, the bank is only entitled to recover its actual loss,” Mike Dailly, Principal Solicitor at the Govan Law Centre told BBC Money Box, “If you get an automated letter from your bank for going over your limit, that costs about 50p. So why should someone get a 36 letter for that transaction?”.

In a previous press release, the OFT stated that it, considers that, in a consumer contract, a default charge is likely to be disproportionately high if it is more than a genuine pre-estimate of the damages that the card issuer would win in court if it sued the cardholder for breach of contract.

A representative of the British Banker’s Association told the BBC that the banks were not charging customers more than the actual cost, citing that the charges were to cover additional costs incurred due to a need for human intervention, to extract the item from the day’s work, to research the customer’s recent credit profile, and then a managerial decision as to whether to return the unpaid item.

The Glasgow based Law firm states that, The legality of bank charges has yet to be ruled on by a senior UK court but these will not be enforced if they are found to be ‘penalty’ or ‘unfair’ charges. Until a final ruling is made by the courts, they have drawn up a letter citing both Scottish and English case law along with the regulations which apply throughout the UK to help customers get their charges refunded.

Disclaimer:

All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986. You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.

Useful resources:

Credit card rate comparisons ( http://www.moneynet.co.uk/credit-card/index.shtml )

Current and savings account interest rate cuts further information ( http://news.ft.com/cms/s/faed1a82-8e9c-11da-b752-0000779e2340.html )

Have you ever been attracted to a credit card because it promises you an outstanding interest rate that seems just too good to be true? Most of us have at some stage jumped for one of these attractive offers. There are a growing number of credit card providers out there that will offer you 0% deals on either balance transfers or purchases, and sometimes they just seem too good to resist.

Particularly if you have a large outstanding credit card balance that you are currently paying a lot of interest on, these offers will be very tempting. In fact, many 0% balance transfer offers will save you hundreds of pounds on interest that you would otherwise have had to pay on your credit card balance. But no matter how attractive such offers may appear at the time, you should only ever take on another credit card if you have taken the time to review your finances and are satisfied that it is the right financial move for you at this time.

To look at a typical example, suppose you have one thousand pounds outstanding on a credit card that charges 10% APR. This means that over the course of a year, this balance will cost you 100 pounds in interest charges. Now suppose you find a credit card that offers you 0% on balance transfers for six months. Well it is pretty obvious that 0% is better than 10 and if you were to take up this offer, assuming there are no balance transfer fees, then how much will you have saved over the six month interest free period? The answer is 50 pounds. However, what will the interest rate revert to once the interest free period has come to an end? This is something you should be thinking about before you opt for the credit card, and not when the interest free period is about to expire and everything is more urgent. Suppose, for the sake of our example that the interest rate reverts to a rate of 25%. This means that over the next six months you will pay 125 in interest.

While this is a very simple example, it illustrates an important point when it comes to 0% balance transfers. In the example above if the customer had stayed with his 10% card, he would have paid 100 in interest over a 12 month period. In the same period, by opting for a 0% balance transfer for six months that then reverted to 25%, he ended up paying 125.

The point to remember is that just because a credit card offers you 0% does not mean it is the best deal out there. Look at the long term rates that the card will offer you, and compare these to the rates you are already getting from your credit card. If your existing rate is better than the rates that you will get from the new card once the introductory offer expires, then maybe you should remain loyal to the card you have.

So while this is going on you will not be spending on the new credit card, but you will be safe in the knowledge that you are saving the interest payments on the old debt.

Excessive bank account and credit card charges attacked as unfair and possibly illegal

One missed credit card payment, or going overdrawn without permission, and suddenly a 30 charge can be incurred. Bank charges can seem to be unfair and too harsh given the frequently tiny amounts of unauthorized borrowing involved. Now it seems that the law could be in agreement.

Following on from an investigation launched in October 2003, eight major credit card companies were told in July 05 by the Office of Fair Trading (OFT) that the charges they levy for late payments were “disproportionately high”, and that charges needed to be adjusted to better reflect the costs to them of managing late payment. Throughout the investigation, the credit card firms continued to maintain that the late payment charges they imposed were fair.

The legality of these charges are being questioned by a Scottish law firm, supported by the Scottish Citizens Advice, who are encouraging consumers to challenge the right of banks to charge such high penalty fees. With current high street credit card typical APRs ranging from 5.9% to 29.9% (source http://www.moneynet.co.uk/credit-card/index.shtml ) this is up to 25.4% points above the present 4.5% Bank of England base rate, and banks cutting the interest rates on current and savings accounts (see http://news.ft.com/cms/s/faed1a82-8e9c-11da-b752-0000779e2340.html ), many consumers see the levels of the bank charges as an additional means of revenue generation by the banks through excessive penalization of consumers beyond the actual costs involved.
“The law says if someone breaches their contract, for example you go over your overdraft without permission, the bank’s only entitled to recover its actual loss,” Mike Dailly, Principal Solicitor at the Govan Law Centre told BBC Money Box, “If you get an automated letter from your bank for going over your limit, that costs about 50p. So why should someone get a 36 letter for that transaction?”.
In a previous press release, the OFT stated that it, considers that, in a consumer contract, a default charge is likely to be disproportionately high if it is more than a genuine pre-estimate of the damages that the card issuer would win in court if it sued the cardholder for breach of contract.
A representative of the British Banker’s Association told the BBC that the banks were not charging customers more than the actual cost, citing that the charges were to cover additional costs incurred due to a need for human intervention, to extract the item from the day’s work, to research the customer’s recent credit profile, and then a managerial decision as to whether to return the unpaid item.
The Glasgow based Law firm states that, The legality of bank charges has yet to be ruled on by a senior UK court but these will not be enforced if they are found to be ‘penalty’ or ‘unfair’ charges. Until a final ruling is made by the courts, they have drawn up a letter citing both Scottish and English case law along with the regulations which apply throughout the UK to help customers get their charges refunded.

Disclaimer:
All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.
You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.

Useful resources:
Credit card rate comparisons ( http://www.moneynet.co.uk/credit-card/index.shtml )
Current and savings account interest rate cuts further information ( http://news.ft.com/cms/s/faed1a82-8e9c-11da-b752-0000779e2340.html )

Author:
Michael Hanna

About Michael
Michael is a keen writer, and internet marketer living in Scotland:

Contact details:
E-mail: samqam@googlemail.com
Phone: 0131 561 2251
Michael’s Website: Taxi Belfast

0% Balance Transfer Credit Cards – Too Good to be True?

On the surface, 0% balance transfer credit cards are incredibly enticing, especially if you have outstanding credit card balances. But there are a few details you need to understand before taking the balance transfer credit card plunge.

Some consumers seem to get in trouble overnight with credit cards. Seemingly broke and deeply in debt, some desperate card holders are constantly on the lookout for a quick fix for the credit problems. A 0% credit card balance transfer
might appear to be the perfect solution. Many among us desperately jump at such offers without much forethought. 0% deals on balance transfers or purchases might seem irresistible even to the most credit worthy person. But especially if you have a large outstanding card balance (or balances), a 0% credit card balance transfer will seem especially lucrative. And to no surprise, there is no shortage of these type of balance transfer offers currently available in the marketplace.

Regardless of your credit circumstances, you should exercise caution and thoroughly investigate all aspects of any credit card offer that you consider. Despite the obvious attractions of a balance transfer credit card, it is worth giving a second thought before you cut up your old credit card to make room in your wallet for the new one. Companies often fail to clarify the fine print, hiding those rather unpleasant details which could cost you dearly in the long run.

Let us start with a very typical credit scenario. Imagine having a $10,000 outstanding balance on a credit card with a 10% annual APR, translating to $1000 in finance charges on a yearly basis. On the other hand, imagine securing a credit card that offers you 0% on balance transfers for the first year of membership. Transferring your card balance to a 0% balance transfer offer would cut down your annual interest expense by $1000. Exciting, isnt it?

But did you bother to check what the interest rate would be after the introductory interest-free period? The rate might turn out to be significantly higher than your existing card, and you do not want to be caught on the wrong side of a high APR. Forewarned is forearmed. You will need to plan ahead and not just a day or two before the interest-free period comes to an end. Some consumers might be surprised to discover that when an introductory APR offer expires that the rate of interest can revert retroactively to an APR of 23% and beyond. If you do not pay off your balance systematically and end up with a large balance when the introductory offer expires, many times consumers are stuck paying out an outrageously high APR because they did not pay down their card balance at all. So above all, make sure to plan on paying off that balance before the introductory period expires or you may regret it.

0% Balance Transfer Some Pointers

When considering balance transfers credit cards, help yourself by asking these questions:

- What will be the interest rate once the initial introductory 0% balance transfer period is
over?
- Is it comparable to my current APR or will it be significantly higher? What is the net difference?
- Particularly if you plan to carry a card balance over time, what will be the long-term net effect of the difference in APR’s?
- Do I want to get into the habit of switching from one 0% balance transfer card to another?

If your current credit card offers a better long-term ongoing APR than the new one, it makes more sense to stick with what youve got, especially if you have the means to pay off your card balance without incurring large finance charges. A balance transfer card most certainly has its own pros and cons but if you wish to use balance transfers to your advantage, make sure that you understand the net benefits of the card over the long term.

Most people want to apply for a credit card online and get the best deal available, including a low interest rate, a reliable credit company, and some sort of reward program like a travel credit card offers. The Bank of America credit card is a card you can trust. They are available online at http://www.bankofamerica.com, and one of the most popular travel credit card they offer is the Bank of America MilesEdge card.

This card offers a great value for a low interest rate and the best rewards you can get in travel credit card. Plus, with the Bank of America website, you can apply for a credit card online and receive it within a matter of days.

Features:

Every Bank of America credit card offers great features, including the following:

Great security and protection in the form of fraud protection. When someone uses your card to make an unusual purchase, you will not be held responsible for unauthorized charges. In addition, if any of your purchases are stolen or lost and you used the Bank of America credit card to buy them, you can report the loss within ninety days and get refunded for the purchase price charged to your travel credit card.

Online banking services at the Bank of America website ensure that using your MilesEdge card will be convenient and hassle free. You get online bill paying and viewing so that you never have to wonder what will appear on your bill this month, what interest you are being charged, or what charges have been paid for in previous months. You can check your balance and your amount due at any time. You will also receive online customer service and ways to manage your account. And if you apply for a credit card online, you can set all this up when you finish with your application.

The Bank of America customer service is another great feature. When you use your travel credit card anywhere in the world, you are assured that it will be accepted wherever you go. And no matter where you are, customer service is available to you twenty four hours a day, seven days a week. The professionals on the customer service line are there to protect you from credit card fraud and from day to day inconvenience.

Automatic payments are a great feature for many credit card users who do not want the hassle of a monthly paper bill. Each month, your payment is automatically deducted from the account that you choose, either your standard checking account or other business account. No need for stamps or handwritten checks. Plus you do not need to worry about the possibility of late payments and the fees that go along with them. If set up automatic payments for multiple credit cards, you can view your account activities all on one statement.

When youre on the go and away from home, especially if youre in a foreign country, having cash is a necessity. But if youre short on funds, you can rely on your MilesEdge travel credit card from Bank of America to give you cash at ATMs worldwide.

0% APR Credit Cards Make It Possible To Save Money

I’m sure you’ve seen direct mail offers, promotional brochures and Internet ads announcing:

“0% APR credit cards. Limited time offer. Apply today!”

You can’t beat that for a credit card. That’s just like buying something with cash. A great deal, especially if you don’t have cash on hand. But you may be wondering, “How can the credit card companies and banks make money if they aren’t charging interest?” Well, read on to find out whether or not these 0% APR credit card offers are just pulling your leg.

Deal Or No Deal

Every time you buy something using 0% APR credit cards, you pay absolutely no finance charges or interest rate charges on your entire credit card balance. Just think… you can refurnish your home, pay for your child’s college tuition or go out on a spending spree without paying a penny more.

However, most 0% APR credit cards offer only “introductory rates” at 0%. This low rate may be limited to a specific time period, such as 3 months or as long as a year. In addition, 0% APR credit cards often allow you to transfer balances (up to a specific amount) from another credit card to take advantage of the zero interest deal. Once the introductory rate period ends, then the APR can go through the roof.

Okay, so maybe you can’t get 0% interest into eternity. But, if you play your card right, you can still reap the benefits of these unique offers.

Making Zero Interest Work For You

You may already have several credit cards and can’t imagine what you’d do with another. After all… personal finance experts advise against having too many credit cards. Before getting a 0% APR credit card ask yourself, “What is the APR on my credit cards?” and “Do I carry a balance on my cards from month to month?”

The average interest rate for credit cards is around 14%. On the low end, you may have a card that charges as little as 5% interest, whereas cards for those with bad credit or no credit can be a whopping 29%. Retail credit cards tend to have a high interest rate around 19%, even if you have A1 credit. If the interest rates on your cards are up into the teens, then you definitely need to consider other options (a 0% APR credit card), unless you pay off your balances on a monthly basis.

Don’t throw money out the window and into the pockets of the credit card companies. If you have high interest cards and pay only the minimum balance, then it can take years to pay off. $1000 spent could nearly double to almost $2000 by the time it’s paid off. The best thing to do is transfer the balance to a 0% APR credit cards.

Where To Find 0% APR Credit Cards

If you have good credit, chances are you’ve already been bombarded with mail offers. You might even find these special values available through organizations you belong to or companies that you do business with regularly. Other sources include your local banks and credit unions. And don’t forget to search the Internet. It’s a great place to comparison shop for numerous credit cards. Keep in mind that you usually need to have good credit to qualify for a 0% APR Credit Card.

0% APR credit cards allow you to avoid finance charges altogether. If you are in debt, this is especially helpful in that you can pay down your balance much more quickly. But be sure you don’t end up in a situation where you transfer balances from one card only to fill the old card back up again with new purchases. If you’ve been thinking about making a large purchase but don’t yet have the funds and don’t want to take out a loan, then a 0% APR credit card will be like paying cash. Just be sure to pay off your balance before the introductory rate ends and finance charges begin.

Bank of America – A long road to the countries top credit card issuer.

Bank of America is currently the largest issuer of both credit and debit cards in the United States. It is also third in the nation when measured by assets and handles about 10% of deposits made in the country.

Open for business in 29 states, it’s a safe assumption that Bank of America is a large force in credit and banking. More evidence supporting my very vague claim can be drawn from the bank’s purchase of MBNA last year. MBNA was formerly the largest issuer of credit cards in the country.

More interesting than its acquisitions and statistics is Bank of America’s history. The bank’s roots, while wide-ranging, can be followed all the way back to the Bank of Massachusetts, which was the hot new thing on the block back in ‘84. 1784, that is.

Perhaps more interesting than a few lame history facts would be Bank of America’s curious checking policy that landed them in court in 1999. The policy is that the biggest check is processed first, regardless of chronology. Some people (namely the sort that filed the lawsuit over this) felt that it was a technique to drive up overdraft charges. For example, say you have $11 in your checking account. Like I do. Maybe $11.50. Anyway, you have $11 and you cut a check for $0.25, for a piece of bubble gum. Then you issue another check, this time for a chocolate bar for $0.75. Then another check for a movie, we’ll say a matinee for $5.00. Finally you go home and pay a utility bill for $396.78. Clearly you will be hit with an overdraft charge. However, Bank of America would process the bill first, then the movie, then the chocolate, then the gum. You would be charged four overdraft charges. Quirky, isn’t it? Well, maybe not so much. Wachovia, Chase, and Citibank also do the same thing. The suit ended with a $9 million settlement.

That wouldn’t be the last time Bank of America would find itself in court. In 2004 the bank was accused of assisting in the fraudulent activities of a quaint little company called Enron (settled for $63 million). The same year a California jury decided the bank illegally tampered over a million customers’ Social Security Benefits. That case may cost the company over $1 billion.

But hey, you know, it’s America, half of our idols are in court all the time. We shouldn’t begrudge Bank of America for doing what banks do, which is usually finding clever ways to make more money at the everyday person’s expense.

So aside from a tainted recent reputation, the bank still does plenty of business issuing more debit and credit cards than anyone else. That’s not a combined figure, Bank of America tops both types of cards. Their recent $35 billion dollar acquisition of MBNA rounded out their line-up with a plethora of affinity and specialty credit cards second-to-none. Take a look at your card, you might not be too surprised to see who issued it.

What Is A 0% APR Credit Card? Many of us have heard about them, but has anyone every explained 0% APR credit cards to you? Well, for starters, the APR or annual percentage rate is the rate of interest credit card companies charge on outstanding payments. The amount you are charged depends not only on the rate of interest, but also on the method of calculation of rates of interest. 0% APR credit cards are credit cards that charge you no interest on credit, for a specified period of time. The best 0% APR credit cards offer 0% APRs to customers for up to 12 months. After 12 months the credit card issuer charges you at the normal rate. The card issuer assumes a risk by offering you interest free credit for such an extended period. They balance that risk by offering 0% APR credit cards to only customers with the best credit.

What Determines Your Credit?

Your credit depends on a number of factors. Your credit score, also known as the FICO score is widely used as a credit rating for Americans. Since your credit rating will determine whether you are issued a 0% APR credit card, knowing what goes into the score helps a great deal. Your credit score is determined based on five parameters. The most important among these parameters is your current debt and your history of repayment of debt.

The other three parameters for calculation of credit score are the length of your credit history, amount of new credit and types of credit used. Based on these five parameters, the individual is given a score ranging from 300 to 850. This is indicative of the credit worthiness of the person at a particular point of time. People with credit scores above 770 usually qualify for a 0% APR credit card. However scores above 700 are also considered good. 0% APR credit cards typically require, at a minimum, very good credit and often will require excellent credit.

One method used by customers to avoid interest is balance transfer credit cards. It is possible to shift from a credit card that charges interest to a 0% APR credit card using a balance transfer, provided you have the requisite credit. Once the introductory period of the card expires, people often shift to other 0% APR credit cards using the balance transfer method. Doing this however harms your credit rating and can hurt your prospects of receiving good credit in the future.

Prudence Pays

It is good to be informed of clauses like the universal default clause. This clause states that if you default on your payments to one creditor, for example a bank, it affects your credit rating and can increase the rate of interest you are charged elsewhere. Responsible vendors realize that informed customers make for the best customers in the long run.

0% APR credit cards sometimes come topped with other offers. You can find a variety credit card offers online that come at 0% APR from the best companies. Choose the 0% APR card that makes the most sense financially and functionally. And always try to maintain you good credit rating that got you your 0% APR credit card in the first place.