Consumer Reports Finds Credit Card 'Gotchas'

Newly-enacted credit card reforms were supposed to protect you against certain abusive practices by credit card companies, like gouging you with unfair fees.

But Consumer Reports warns that despite the regulations, plastic can still be perilous - or a good deal - depending on which one you choose.

Amy Greenstein is one of many Americans who is carrying less debt these days.

"I pay off my bills immediately, cause I can't stand paying the extra interest," said Greenstein.

A survey of Americans by the Consumer Reports National Research Center says the average credit card balance is down to about $3,800; that's $1,100 lower than last year.

But this doesn't mean people are happier with credit card companies.

"In fact, it's one of the lowest-rated services we've ever analyzed, right down there with computer tech support," said Greg Daugherty, of Consumer Reports.

Federal reforms now require a mandatory "minimum-payment warning" on all bills. It spells out the consequences of making only the minimum payment.

In this case, a $4,000 debt will take 24 years to pay off and end up costing more than $8,000.

"Twenty-three percent of the people we surveyed said it has encouraged them to pay off their balances quicker," said Daugherty.

But Consumer Reports says there are still credit card "gotchas" as banks try to make up for lost revenue.

"Interest rates are the highest they've been in almost 10 years, and fees have also climbed," added Daugherty.

First Premier Bank mastercard is one of the worst offenders, charging as much as 59.9 percent interest. That's on top of a $75 annual fee and a processing fee that can be as high as $95.

But Consumer Reports has found two cards worth considering that don't charge any fees.

They're the Penfed Promise Visa, which offers a 7.49 APR for three years, and the Simmons First Visa Platinum, which offers a 7.25 variable APR.

If you feel you've been treated unfairly by your credit card company, you can file a complaint with the Federal Trade Commission.

Also, if you want to get a card that offers a lower rate before you switch cards, Consumer Reports says call your card's customer service department.

If you're turned down by the first person who takes your call, ask for a supervisor and try again.