Credit CARD Act doesn't prevent new fees
So-called 'maintenance' fees aren't regulated
By Todd Ossenfort | Published: August 9, 2010
The Credit Guy
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
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:
- 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 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).
- 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!
Meet CreditCards.com's reader Q&A expertsDoes a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.
- How quickly can I raise my score after years of inactivity? – Raising your credit score after years of credit inactivity takes time and consistency. Start by opening a new credit card and using it for daily expenses, like groceries and gas ...
- Can late payment on one card cause APR hike on another? – The Credit Card Act of 2009 banned the practice of universal default, but there are some loopholes ...
- 4 options to tackle credit card debt in retirement – A good credit counselor can help you find the best possible path out of overwhelming credit card debt -- including a debt management plan or even filing bankruptcy ...