Credit CARD Act doesn't prevent new feesSo-called 'maintenance' fees aren't regulatedBy Todd Ossenfort
Dear Credit Guy,
Can
a credit card company change your annual fee from $50 a year to $15 a month and
call it a maintenance fee? -- Pam
Dear Pam,
Unfortunately,
while the the Credit CARD Act of 2009 regulates some fees charged by card issuers, such as late fees or
over-the-limit fees, but does not restrict card issuers from setting and
charging additional fees.
As
an example, many card issuers had phased out annual fees from many types of
accounts, but the annual fee is making a big comeback with many issuers post-CARD
Act. In addition, many card issuers, such as yours, are charging fees on
accounts and calling them maintenance fees. Profitability for banks issuing
credit cards is getting tougher and tougher, and they are trying to generate
more revenue with fees.
The
basics on fees and the CARD Act are listed below:
Fees
prohibited:
- Inactivity.
- Closed account.
- Multiple fees
for one transaction (you cannot be charged both a returned payment fee and
a late payment fee for a bounced check payment).
Fees
regulated:
Fees
not considered:
- Balance transfer.
- Cash advance.
- Foreign transaction.
- Annual or
other fees for issuance or availability of credit (a maintenance fee would
fall under this category).
- Insurance.
- Expedited
payment.
- Optional
services.
- Reissue a lost
or stolen card.
So,
the answer to your question is, unfortunately, yes. Credit card companies may
change the terms of a cardholder agreement and begin charging you a monthly
maintenance fee of $15 per month. Some other changes that card issuers have
been making that you might watch out for include increasing minimum payments,
decreasing credit limits and closing accounts.
My
suggestion for you and other readers wondering what to do about changes in
their current cardholder agreements is to sit tight for now and see how
everything settles out after all the final provisions of the CARD Act become
effective August 22, 2010. The credit market has tightened quite a bit, but
persons with good to excellent credit ratings are still going to be sought
after by card issuers. I predict that competition will have issuers offering
cards with amenable terms and fees in the very near future.
One
last thought -- should one of your card issuers make a change that will cost
you more than you can afford, by all means move the balance to a different card
that has more desirable terms.
Take
care of your credit!
See related: A guide to the Credit Card ACT of 2009, 6 credit card fees you might not know about, Study: Credit card annual fees most hated
Todd Ossenfort is the chief operating officer for Pioneer Credit Counseling in Rapid City, S.D. Pioneer Credit Counseling has been a member of the Association of Independent Consumer Credit Counseling Agencies since 1997.
The Credit Guy answers a question about a debt or credit issue from a CreditCards.com reader each week.
Send your question to The Credit Guy.
Published: August 9, 2010
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