Just like there once was a limit to how much the banks could charge in interest on credit card loans, there once was a limit to the fees that they could charge you as well.
Then, a court decision, Smiley vs. CitiBank went in CitiBank’s favor and it removed all of the limits on fees.
Back in the 1970s and 1980s, a late payment fee was usually around $5 and all that happened when you reached your limit was that your card stopped working.
Today, the high late payment fees hover around $39 per occurrence and are expected to creep up to $49 pretty soon. Today, your card still works past the limit for a little bit so that when your statement cycles, you can be charged an over-limit charge.
All fees and charges go on your balance and can result in even more fees and charges. All of this is perfectly legal because thanks to Smiley vs. CitiBank, there are no limits to dollar amount of fees and the number of fees you can be charged.
Today, compared to twenty years ago, fee income for credit card companies has more than doubled. This is where the credit card companies really make their money today.
Thanks to Smiley vs. CitiBank, there have been no aspects of the credit card loan interest and fee rates that have been regulated by law since 1986.
This means that these credit card companies can charge us whatever they want to, when they want to and it is all nice and legal...
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