|by Jason Steele|
Just over a year ago, I signed up for a Frontier Airlines Visa through Barclay’s bank. It was a great offer, with 40,000 bonus miles, potentially enough for two award tickets on Frontier Airlines. The annual fee was waived the first year, so I kept the card after I had earned the bonus miles. At the end of the year, I called to cancel when I received notice of the annual payment. At that time, I had made a typo, and paid my bill a dollar short. When I canceled the card, I realized that I still had a balance of a dollar after the annual fee was removed. To my surprise, the representative informed me that I did not have to send the dollar in, and that they would close the account with a zero balance.
Guess What Happens Next
A month passes and I get a bill from Barclay’s for $24. They had taken the dollar, charged me some kind of minimum interest charge of a dollar for three months (don’t ask me how) and added a $20 late charge. Very frustrated, I called them immediately upon receipt of the bill. Again, I was told that the balance would be forgiven, as well as the late fee.
Wait A Second…
I remember reading that the CARD Act put limits on the amount of late fees. Specifically, a late fee cannot be more than the amount owed. According to the web site of the Federal Reserve Board; “…your credit card company cannot charge a late payment fee that is greater than your minimum payment. So, if your minimum payment is $20, your late payment fee can’t be more than $20.”
I am no lawyer, but it appears that Barclay’s may be violating the CARD Act. Of course, I have no case, since they immediately credited me the fee and my balance (or so they say), but I am no left wondering how many people are getting caught up in this.
If This Happens To You
Any time you get a late fee, you should call your bank and ask for it to be waived. Unless you do this very often, your bank will almost certainly grant your request. Certainly if you ever receive a late fee that is greater than your minimum payment, you should also point out your bank’s potential violation of the CARD Act. If you are in a really bad mood, you may also wish to alert Federal regulators.
The CARD Act of 2009 has been the greatest piece of consumer finance legislation in my lifetime. Familiarize yourself with it’s provisions, and you will never be taken advantage of again.