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Credit Cards

Breaks on the Way for Credit Card Users

Before Congress forces them to, card issuers make nice with their customers.


Credit-card issuers, reacting to a changing business and political climate, are taking some consumer-friendly steps. JPMorgan Chase has dispensed with double-cycle billing, which calculates interest on the previous month's purchases as well as the current month's. Citi recently announced the elimination of universal default, which raises your rate with one issuer after you pay late to someone else. Also gone: Citi's policy of raising rates and fees "at any time for any reason." Bank of America announced that cardholders whose rates were raised because of late payments or exceeding a credit limit would be entitled to a lower rate after only six months of on-time payments rather than 12. And Discover introduced a new card, Motiva, which rebates a month's worth of interest after six on-time payments.

Why the sudden solicitousness? Congress is raking credit-card companies over the coals, and the issuers are finally feeling the heat. Senators Chris Dodd and Carl Levin held hearings this winter, and more are likely, along with several bills. In addition to universal default and double-cycle billing, egregious late fees and mail solicitations to minors may be on the way out. Other practices that may be targeted: mailing unsolicited convenience checks, applying payments to the lowest interest rate first and imposing over-limit fees when the issuer has okayed the purchase. That'll go a long way toward keeping toxic plastic at bay.