Fee Roundup Survey Interview with WCCO Radio Minnesota
CreditCards.com Senior Industry Analyst Matt Schulz spoke on Thursday, July 16, 2015, with John Hines of WCCO Radio Minnesota about the July 2015 Fee Roundup survey. The interview and transcript are below.
John Hines: Let’s talk about credit cards for a minute, shall we? How many you got? Two? Three? One? Are you on those that has no credit cards? How do you do that? How do you do that, I ask you? The less the better, I guess, but it’s always good to have one or two. So there is a new study out, survey from CreditCards.com, of 100 major credit cards. There is only one card in the top 100 that they surveyed that does not charge any fees. And some of them charge, oh not just two, three or four fees. We’re talking nine, 10, 12 fees. What do we make of this and how do we know when cards are charging us fees that we didn’t know that we were bargaining for when we signed up for them. Let’s get on Senior Analyst for Bankrate.com, Matt Schulz who joins us this morning. Here on WCCO. Matt, good morning. How are you?
Matt Schulz: I’m great, thanks for having me.
Hines: Sure, thanks for being on with us. So this is kind of staggering when you look at this survey from CreditCards.com that out of 100 there’s only one that doesn’t charge any fees. I guess we should probably mention that one. Which one is that? It’s the PenFed Promise Visa card?
Schulz: Yeah, that’s Pentagon Federal Credit Union and it’s their Promise Visa card. It’s the only one of the 100 cards that we look at on a weekly basis that had no potential fees. That’s obviously a big deal.
Hines: So when you’re talking about potential fees, let’s kind of break this down – what types of fees are we talking about here?
Schulz: We’re talking about everything from the more common ones like annual fees and late payment fees and balance transfer fees, all the way down to more obscure ones like a return check fee or a fee for paying by phone, for example. So there’s lots of different ones.
Hines: So the penalty fees obviously are pretty easy to avoid, right?
Schulz: Yeah yeah. The good news is a lot of these fees can easily be avoided by doing two things: 1) shopping around for a card and finding one that doesn’t have a lot of the extraneous unnecessary fees, but then also setting up auto payments once you get the card to make sure that you don’t run up against that late fee.
Hines: So they’re the easy ones to avoid, but if you get yourself into a situation, let’s talk about some of the fees that maybe are a little bit different or a little bit less easy to avoid, depending on how you’re using your credit card obviously.
Schulz: There’s one like the balance transfer fee, and balance transfers are something that can be really good if you follow the rules and you pick the right card, but you also can run into a fee where you’re charged 3% of that balance that you’re transferring in a fee. So if you’re talking about transferring thousands of dollars, that’s a lot of money potentially.
Hines: I see a thing called foreign transaction fee. A couple of my credit cards are very happy to point out to me that there is no foreign transaction fee. That’s kind of like a thing they’re very proud of and they want to make sure that I know that’s the case. So I’m guessing that means a lot of cards do have foreign transaction fees, and what exactly does that mean?
Schulz: Those fees are less common than they used to be and they’re very important to know about if you’re someone who travels overseas a lot. Because basically what that means is that if you are making a purchase in a foreign country or in a foreign currency, they’re going to charge you 3% on top of that transaction just for doing that currency conversion. And we all know that travel is expensive enough without adding 3% on top unnecessarily.
Hines: Being not too far from Canada here where we sit, I’m guessing that’s something to keep in mind.
Schulz: Yeah, very definitely.
Hines: I know that there are these other fees that occasionally pop up, occasionally you’ll hear somebody on social media – Twitter, Facebook, whatever – talking about they were charged because they got a paper statement, where they were charged because they paid their bill online which I thought was kind of just commonplace now, but I guess they’re the types of things – first of all, as a bank I’m wondering if that’s really a smart thing to do because you get nailed with that once or twice and I’m taking my business elsewhere.
Schulz: Yeah, there are lots of fees that you need to watch out for. And it’s so important that you read the terms and conditions of your card before you apply because a lot of this information is in there and a lot of it can be avoided it if you know that those fees are in there.
Hines: Again Matt Schulz is with us, a Senior Analyst with Bankrate.com here on WCCO. Alright so let me ask you this then – for a time credit card companies were ok, I mean they didn’t publicize this, but if you would pick up a phone and call a credit card company and threaten to take your business elsewhere they would sometimes work with you. Maybe not to get rid of a fee, but maybe to get an interest rate down or maybe to waive maybe an annual fee or something along those lines. Where the economy is right now, where we are right now is that something that they’re still dealing in or has credit tightened to the point that maybe they don’t have to? Where are we with that and how much power do consumers have with credit card companies?
Schulz: They have much more power than they realize a lot of times. The credit card market is incredibly competitive because the economy is back on a little better footing, people are spending a little more, they feel better about their jobs, banks are lending a little bit more. So you really have a lot of ammunition against the banks and if you see an offer that shows up in your mailbox or that you see online and you want to use that as a negotiating tool against your bank, you absolutely can. And then also if you are late with a payment it certainly can’t hurt to make a phone call and ask the bank to waive that fee, if you’ve been a good customer. Chances are you’ve got a pretty good chance that they’ll waive.
Hines: As part of these fees and these fees you may or may not know about, I guess there are some credit cards that are really tough about you have a one time late payment and they’ll jack your rate up. Is that still the case?
Schulz: Well, the rules on that have changed quite a bit over the last few years and there has to be a lot of time that passes. They have to give you a certain amount of advance notice on these things.
Hines: I thought that that was the case.
Schulz: Yeah, but one exception to that is with balance transfers where if you have a zero percent introductory rate for a year, for example, and you end up missing a payment during that time, that introductory offer can be revoked right off the bat. So that’s an important thing to know.
Hines: Ok, but otherwise if it’s just the regular rate, the rate that you signed up for, there’s a little bit more leeway than there was? Because I know for a time there, and credit card companies got hammered for this I remember, it’s like someone was late a day, they had been with the credit card company for 12 years or whatever, and next thing you know their rate is jacked up to 25%, just an outrageous amount.
Schulz: Yeah, regulations changed five or six years ago and really tightened the reigns on what banks can do as it relates to that.
Hines: So if – finally as we wrap up here – what is a good way to compare credit cards from one to another? How do you go about doing that to make sure you’re getting a good deal or there’s not something better out there?
Schulz: Well, the thing you really need to know is to know yourself and what you want from the card. And then you go to a site like CreditCards.com and if you’re looking for cash back we have a page that has dozens of those cards. If you’re looking for miles, if you’re just looking for a card to do a good balance transfer with, it’s important to know what you want from the card so you can get the most out of it.
Hines: Alright. Matt Schulz, Senior Analyst at Bankrate.com and CreditCards.com. Matt, thanks a lot. I appreciate your time.
Schulz: Thanks for having me.
Hines: Alright, take care.