Act Of Congress
Written by Greg Smith, PSECU President

The Credit CARD Act of 2009 will affect any American who uses credit. The Act's intent is to put a stop to the abusive, anti-consumer credit card policies I've written and spoken about for a very long time.

Fortunately, PSECU members who use The Capitol Card® (PSECU's Visa®) will see very minor changes compared to the changes other cardholders will see. We put together a Web page to spell it all out for you. Our members have gotten a fair deal all along because that's just the way we do business. As a credit union, we are owned by our members, and we answer to them. We don't believe in high interest rates, confusing terms, and hidden fees to make money off of our members. Any money PSECU earns goes back to the members in the form of low loan rates, competitive savings rates and reasonably priced products and services. That's the way a financial cooperative works.

Two practices the CARD Act has banned are double-cycle billing and universal default. These were two large revenue sources for card issuers. Faced with reduced revenue, some of these credit card companies used the time between enactment in 2009 and implementation 2010 to gouge their customers as much as possible. They increased interest rates, decreased credit limits, and closed credit lines. Some are now even charging fees if you don't use your card.

For more than ten years, PSECU's Visa card rate has remained the same - a very reasonable 9.9% Annual Percentage Rate (APR) for purchases for all members. PSECU also offers its members the same APR for cash advances and only charge one PSECU fee - a late fee.

In addition to the CARD Act legislation, Congress and the Federal Reserve has also turned their attention to another abusive practice known as overdraft protection for checking accounts. Unfortunately, these institutions have used a service that is supposed to be to their customer's benefit to increase their profits.

  • Processing largest checks first - This rather complicated-sounding process generates billions of dollars in profits each year. By posting the largest checks first, fee income can be doubled or even tripled in some cases. For more information on this subject, type the phrase "clear largest checks first" in any search engine. PSECU posts member checks in smallest order first, thereby minimizing any charges to members.
  • Clearing ATM withdrawals using courtesy overdraft - Many financial institutions will honor your ATM withdrawal request without alerting you that you are overdrawn. Then they add a $35 - 40 overdraft protection fee to your account. PSECU always alerts the member to the status of his/her account balance and does not apply an overdraft protection fee to an ATM withdrawal.
  • Clearing point-of-sale merchant transactions using courtesy overdraft - Imagine being assessed a $35 courtesy overdraft protection fee because you were a few dollars short when you bought a cup of coffee at your favorite cafe. Many financial institutions assess such a fee without any warning. PSECU offers a courtesy overdraft program and several other ways to avoid overdrafts altogether. Our Overdraft page does a good job explaining your options.

To be clear, not all overdraft protection programs are the same. PSECU offers a very consumer-friendly program that is structured to benefit the member and not us.

As president, I strongly believe we should operate honestly and with integrity, and I believe that we do. That's why I say, it's never taken an act of Congress for us to treat our members fairly.