Credit cards don’t guarantee fairness

If a new report is any indication, it’s tough to find a credit card out there that isn’t trying to pull the wool over your eyes.

The Pew Charitable Trusts undertook a survey in 2007 of the 12 largest issuers of general credit cards in the country. All told, these companies accounted for 88 percent of consumer credit debt in the country, and 400 separate credit cards, according to a Pew report on the survey.

The survey found that every single card had at least one practice that could be considered “unfair and deceptive,” and was allowed to apply payments in a manner that the Federal Reserve said is likely to cause “substantial monetary injury” to a cardholder. Some examples cited in the report:

•93 percent of cards allowed the issuer to raise any interest rate at any time by changing the account agreement.

•87 percent of cards allowed the issuer to impose automatic penalty interest rate increases on all balances, even if the account is not 30 days or more past due. The median allowable penalty interest rate was 27.99 percent per year.

•72 percent of cards included offers of low promotional rates that issuers could revoke after a single late payment.

•In one year, issuers raised rates on about a quarter of all open accounts, resulting in about $10 billion in additional fees and charges.

That last figure has probably gone up considerably in the past year, as credit card companies have increased interest rates across the board. New laws passed by Congress will limit some of the practices identified, but not until 2010.

In the meantime, here is the Pew Center checklist for what ought to be done to create a “safe” credit card:

•Cardholders would be charged only the interest rates they agree to pay; late fees are a temporary penalty.

•Fees would be responsible and transparent.

•Cardholders would have sufficient time to review and pay bills.

•Payments would be applied first to balances carrying the highest interest.

•Double-cycle billing, which allows interest charges on balances already paid, wouldn’t be allowed.

•Cardholders would get an adequate opportunity to evaluate proposed changes.

•Contracts wouldn’t limit a cardholder’s right to settle disputes in court.

We can always hope.

Hot air, revisited

In last week’s column, we wrote about a reader’s concerns over the illegibility of tire-pressure guidelines on the sidewalls of tires. Several other readers then called or wrote to point out that the figure on the tire is just the maximum air pressure for the tire – not the recommended air pressure for your vehicle, and not a good idea for safe operation.

So, if you want to know the proper air pressure for your tire, check your car’s owner’s manual. Some vehicles also have the figure on a sticker inside the door.