Credit cards are an intricate component of the buying process for online as well as in person products and services
. There are countless credit cards companies that woo potential customers with their benefits and services. The choices can be overwhelming, but when consumers finally decide on a particular credit card company, they are signing off on pre-determined interest rates and fees associated with that bank or card company. Some consumers have been hit with a case of credit card shock as they have seen their interest rates go up without their prior knowledge or approval.
Credit card repricing came to the forefront in the past couple of years as a troubling method of making up for unproductive accounts. The practice involves these companies raising interest rates and then charging customers inflated rates, often without telling them ahead of time. The fees can sometimes be as much as two or three times the original interest rate. Many customers have spoken out against this practice.
The credit industry took a real beating in the last couple of years due to the struggling economy Americans are seeking to recover from. People were reluctant to spend money because of job uncertainties and loss, so purchases took a nosedive and these companies began to suffer. This unfortunate turn of events has contributed to credit company attempts to make up for an unstable credit situation.
The public outcry against this practice has reached the government's ears, and there has been recent legislation passed to protect against this practice. Credit companies are required to spell out all of the fees and rates in the statement so people know what they are getting. People have been surprised to see the extra charges they did not realize they were actually paying because of the way the statement was laid out.
Tougher legislation has made it more difficult for companies to lower or raise fees without notice and this has effected consumer ability to get credit as easily as before. People can be assured that when they get approved for and sign up for a card, what they see is what they will get. Credit card usage is on the rise again as the economy is stimulated by buying products and services.
Credit card shock is an unsettling practice of raising credit card fees, services and interest without giving consumers prior notice. This practice stems from the unstable financial backing of the credit industry, especially for default and low-paying accounts. These practices led to the need for prompt and effective government legislation to bring the credit card company practices under control.