Some large US banks offering credit cards to
consumers are instituting new credit card fees for current users who may not
even be aware of these changes. CNBC’s Carmen Wong Ulrich, warned viewers of
these new hidden credit card fees on Monday morning’s Today Show on NBC.
These firms have enacted new charges in a time when top line revenue and margins are being stressed. Default rates are currently at around ten percent, which is double what they used to be. Last year, for the first time, debit card use was higher than credit card use. In the current economy, people are trying to be conservative with the use of credit. In response, banks are trying to figure out new ways to generate revenue from their customer base in an effort to help their bottom line.
The new fees target customers who pay off their
bill in full every month. Credit companies do not make any money on interest
for these customers and have decided to charge them with an annual fee of
$29-$99 to try to make up for some of the lost revenue. While the fee is being
termed as “experimental” by some credit card companies, it is going into effect
immediately to see how it works. Should customers complain or terminate the
relationship with the card company, these new fees will most likely be dropped.
Another new fee is aimed at those customers who
do not keep a high enough balance on their credit card. One method is to require
an additional fee for customers who have a revolving balance of less than
$2,400. This penalty will be in the form of an annual fee of $29-$39.
The last of the new fees is intended to target
people who have cards but don’t use them regularly. Many individuals have
multiple cards to build their credit, but perhaps only use one or two. The
cards that are not used may be subject to a new "non useage" fee.
In this situation, where turning off these cards could hurt your credit, it is
important to weigh the cost of having the card.
In
light of these new developments, it is important make sure you keep your eyes
open for these new charges. If you do come across one, find out specifically
what it is for and why you are being charged. Only about 20% of credit
card companies are enacting these new penalty fees, so shop around! There are
still plenty of cards that do not have these fees and are not penalizing the
customer for being financially responsible during these difficult economic
times.
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