By Ismat Sarah Mangla
(Money Magazine) — Sweeping credit card reforms took effect Monday, eliminating a host of nasty industry practices. For example, your card issuer can no longer arbitrarily increase the interest rate on an existing balance. Nor can it apply payments to balances at lower rates first.
But banks are already setting new traps. Among them: fees for not using your card and higher charges for balance transfers. Experts say this trend will continue as issuers look for ways to make up revenue lost because of the regulations. “But consumers can always take their business elsewhere,” says Ken Clayton of the American Bankers Association.
That might not be a bad idea. “The top 10 issuers, which hold about 90% of credit card balances, are more actively engaging in bad practices,” says Josh Frank, a researcher at the Center for Responsible Lending.
Smaller issuers like credit unions and regional banks tend to have better policies, adds Curtis Arnold of CardRatings.com. That’s because such institutions typically don’t view credit cards as primary profit centers, he says.
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