Credit Card News Roundup–Swipe Fees, Rewards and Debt
Credit Card Debt: the Helpers Who Harm
When you’re up to your eyes in credit card debt, any port looks welcome in the storm. But Friday’s New York Times told harrowing stories of those who, in desperation, had turned to businesses who promised to help them only to find themselves way worse off.
The airwaves, print media, and Internet are full of ads from companies offering to free you from credit card debt. And, the Times says, last year 425,000 Americans asked these firms for help with a total of about $11.7 billion in card balances. But there’s a good reason why, in the last six years, 21 states have brought 128 enforcement actions against debt settlement companies–all too often these are predatory scams.
And countless consumers have found themselves both poorer and in deeper trouble–sometimes bankruptcy–as a result of being too trusting when it comes to those who promise help eradicating the balances on their credit cards.
Credit Cards After Collapse of Credit Scores
Those who are already beyond the “help” of debt settlement companies often find that their damaged credit score means they can no longer enjoy the benefits of traditional credit card use. But they still need a convenient payment instrument, so they turn to prepaid credit cards.
Prepaid Cards to Be Exempt from Swipe Fees?
But, last week, the Center for Financial Services Innovation (CSFI) wrote to Rep. Barney Frank (D-MA) and Senator Christopher J. Dodd (D-CT), who are the chairmen of the house and senate committees that supervise financial services. The CFSI argued that current proposals to limit so-called “swipe” or “interchange” fees (the amount of a transaction taken from merchants by credit card companies and networks every time a card is swiped) could “substantially” harm the consumers who use these products. The letter continued:
We believe an explicit fee limit on interchange will effectively prevent millions of low- and moderate-income households from accessing a financial product that has emerged to enable poor, underbanked families to access the financial mainstream.
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