Banks won't change til they have to

A new report says even though new laws are coming soon, credit card companies are nowhere close to complying with the stricter regulations.

In fact, the Pew Charitable Trusts found that 100% of the cards it investigated would be illegal under the new requirements:

"Since passage of the Credit CARD Act, we found that credit card issuers have done little to remove practices deemed unfair or deceptive by the Federal Reserve," said Shelley A. Hearne, managing director of the Pew Health Group, which oversees the project. "In fact, some of the most harmful practices have actually grown more widespread-not one of the bank cards reviewed would meet the legal requirements outlined in the Credit CARD Act, which is bad news for consumers."

Another observation from the report, "Still Waiting":

"Still Waiting" also provides the first comprehensive comparison of bank cards to those issued by credit unions, based on advertised terms and conditions. The analysis showed that credit unions offered much lower APRs, less punitive penalty rates and engaged in far fewer unfair or deceptive practices than their commercial peers.

You can read the entire report here.

Of course, the banks have some time to change their practices. Most of the new rules take effect in late February, and the banks are trying out alternatives. One of them — annual fees for people who pay off their balances regularly. From USA Today:

Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.

Citigroup, meanwhile, has started charging annual fees to card holders who don't put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don't use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.

I've been meaning to ask you about this. Annual fees on customers with excellent credit; inactivity fees. Fair or unfair?

By the way, if you want to get rid of your credit cards, I'd recommend hiring this guy:

http://www.publicradio.org/columns/marketplace/scratchpad/2009/10/_all_of.html