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Dear Consumer Action:

You recently wrote about loopholes in the Credit Card Accountability Responsibility and Disclosure (CARD) Act. My credit card company is among those taking advantage of loopholes.

I have been a credit card holder for many years with the same company, in very good standing, with never a late charge. Recently I got notice that my interest rate on purchases is increasing to 24.99 percent!

I rejected the changes and canceled the card but would like to know to whom I can complain. The government has bailed out these banks, with the understanding they would lower all interest rates, consumers would begin spending and stop the economy from falling.

Prior to getting this notice, I also got a similar one from two other credit card companies. - T.P., Northfield

Starting Feb. 22, the CARD Act will prevent credit card companies from increasing interest rates on existing balances, unless the card holder is more than 60 days late with payment. So many companies are increasing people's interest rates now, while it is still legal to do so.

Said companies' actions have angered many politicians, consumers and consumer advocates, and some have proposed pushing forward the date the act takes effect into December, but so far that has not been done. All consumers can do now is send a letter to the bank, opting out of the changes and canceling the card. Then you can pay off your balance at the old rate but cannot use the card for new purchases.

If you do not usually carry balances, it will not matter much to you. But anyone can have a period when they cannot pay off a card in full, and it is best to have a reasonable interest rate during those times. So people in that position can take their time finding a better deal, and then either close out the high-interest account or simply stop using it.

You are not alone in rejecting these astronomical new interest rates, and the companies will lose huge numbers of customers. We will not know until after the CARD Act takes full effect what the fallout from all of these changes will be, but it is possible that the banks that take the most aggressive actions to raise interest rates will regret their actions next year, as some of their best customers leave them for more reasonable companies.

To shop for a new credit card, compare offerings at the site listed with this story at:

www.PressofAtlanticCity.com

Recurring scam

Dear Consumer Action:

I just got a letter from UBI Payment Services, with a return address in Singapore. It says I am guaranteed to receive $5,000 if I return a release form and meet the other requirements.

Can you warn your readers about this scam? - W.F., Woodbine

Similar letters flooded mailboxes in our area and across the country about two years ago, and again about six months ago. It is another scam.

It may be an attempt to get your signature for forgery purposes, or it may be just another way to get personal information that the scammers will use to rip you off.

Just don't respond in any way.

Instead, give scam mail like this to your postmaster, who will send it along to investigators.

Consumer Action will respond to each properly submitted letter about a problem or question, either in this column or by letter or phone. Letters must include copies - not originals - of all relevant documentation and a name, address and phone number at which you can be reached. Send letters to: Consumer Action, The Press, 11 Devins Lane, Pleasantville, NJ 08232.

Related link

To shop for a new credit card, compare offerings at www.bankrate.com/credit-cards.aspx

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