Jul 16, 2008 7:21 pm US/Eastern
No Grace Under Pressure: Credit Card Misery
NEW YORK (CBS) ―
Grace under pressure is not something you'll find when it comes to credit card companies. Some banks are reducing the grace period to pay them, leaving customers really paying, in late fees.
"It was just plain sneaky...they know what they're doing."
French teacher Michelle Thorn from Franklin Square taken to the cleaners when her credit card company suddenly reduced the "grace period," the time before it starts charging interest on new purchases, from 30 to 15 days.
"It's highway robbery. And I think that they should tell you explicitly - avoid the print, I want a phone call," said Thorn.
The law requires "grace period" changes be made verbally or in writing. Most companies put it in fine print on the back of the statement.
"The print is getting finer and finer, getting more difficult to read," said credit card user Patricia Cawley.
The average consumer has six credit cards apiece, each with different rules and regulations - full grace period, no grace period. A typical grace period means interest rates could jump from 9 to 29 percent in a single month.
"I think banks are feeling a pinch and this is one way internally they can maximize their profits," said Commissioner of Consumer Affairs Roger Bogsted.
"A 'grace period' is not the amount of time you have to pay, it is the days before you are charged interest," said Bogsted. "It's a myth that purchases are interest free for 25 days. Interest is charged immediately if you carry a balance."
So read the small print, advises Bogsted. If your bill is now due in ten days make sure you get it in the mail. But remember, you can say no to credit card companies and take your business elsewhere. Consumer advocates suggest reading credit card contracts carefully.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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