BofA, Citi and others try to “help” credit card holders, but is it a real help?

Banks and other financial institutions issuing credit cards take different steps to help strapped cardholders. Bank of America, Citigroup, MasterCard, Visa, Capital One and Discover joined their forces to form a "Help With My Credit" coalition that through TV and print ads invites customers to visit HelpWithMyCredit.org or call 1-866-941-1030. Still the banks’ interest in effective help to the cardholders is doubtful despite all their tempting offers.

Callers responding to "Help With My Credit" ads automatically are patched to appropriate departments of participating credit card issuers or directed to an accredited credit counselor, says Joe Ganley, vice president at Weber Shandwick Worldwide, Cambridge, Mass. The bank coalition's Web site also provides educational credit information.

Among other things customers are also offered to visit credit counseling agencies to obtain a help to develop a plan that works best for the customer’s unique situation. Interestingly, some of these agencies are not approved by the U.S. Department of Justice Trustee in fulfillment of the credit counseling requirement for bankruptcy.

Meantime American Express and Chase say they prefer to directly contact their consumers and are not participating in the coalition’s promotion.

Commenting on the promotion Robert S. Green, a partner in the law firm of Green Welling LLP, San Francisco, noted that while it is good that the banks are promoting consumer financial literacy they still fail to mention most important aspects, saying that “this is slanted from the bank's point of view”. HelpWithMyCredit.org speaks about the features and benefits of some credit cards but customers are not informed about some provisions made by the card issuing companies that free them from liability which may prevent cardholders from protecting their rights.

While cardholders are lured into the participation by insurance as a good deal they are still unaware of the fact that fraud protection programs generally are overpriced.

The "Help With My Credit" campaign was launched just at a time when the Congress is preparing to pass credit card consumer protection legislation that definitely touches the interests of financial institutions.

It should be recollected that some major provisions in the new bill include the following regulations:

• Prohibit "universal default," a practice through which issuers use a consumer's history with another creditor to raise interest rates 
• Prohibit "anytime, any reason" hikes in rates 
• Prohibit charging interest on debt that has been repaid 
• Require 45 days of notice before any rate increase 
• Require full disclosure in statements of payment due dates and late-payment penalties 
• Prohibit issuing credit cards to consumers under 21 unless they show they can repay the debt, or complete a certified financial literacy course 
• Prohibit double-cycle billing, a practice in which charges are computed based on outstanding balances in billing cycles before the most recent cycle 
• Limit certain abusive fees and penalties, such as charging interest on credit-card transaction fees, or charging a fee to allow a consumer to pay a credit-card debt