Gerry Clinchy
02-23-2010, 09:44 AM
http://rismedia.com/2010-02-22/as-credit-card-changes-roll-out-watch-for-attempts-to-raise-fees/
As card issuers prepared for the new rules in recent months, many have raised interest rates on customers—to the dismay of consumer advocates. At the same time, the weak economy and fears of rising defaults caused card companies to cancel accounts and lower credit limits on anyone who appeared risky.
A different twist on redistribution of wealth:
Consumers who are good managers of credit, though, might be unhappy to find that card issuers may be passing on higher interest rates and fees to them.
The anticipated results of these new credit card rules:
1. Higher interest rates for all cardholders
Because card issuers can’t quickly raise rates or change terms on their riskiest customers, they will charge higher interest rates across the board to protect against potential losses
2. An Inactivity Fee:
He says one of the most anticipated: the inactivity fee. Card companies say it costs them money to maintain accounts, and they are starting to slap a fee on unprofitable customers who rarely use their cards.
I think that a lot of responsible credit-users will therefore close out cards that they don't use very often. Better check those "change of terms" letters I just got on cards I don't use.
3. An annual fee for having the card
But card issuers are eyeing a revival. Synovate reports that 35% of card offers in the fourth quarter carried an annual fee, the largest percentage in a decade. A year earlier, 23% had annual fees.
Another reason to dump those cards I might only use once a year.
4. Skimpier "rewards". My Discover card already raised the $ amount when I can cash in the cash-back reward.
. But issuers will be launching richer reward programs to compete for the most profitable customers: good credit risks who carry a balance, pay interest and occasionally trigger fees.
As card issuers prepared for the new rules in recent months, many have raised interest rates on customers—to the dismay of consumer advocates. At the same time, the weak economy and fears of rising defaults caused card companies to cancel accounts and lower credit limits on anyone who appeared risky.
A different twist on redistribution of wealth:
Consumers who are good managers of credit, though, might be unhappy to find that card issuers may be passing on higher interest rates and fees to them.
The anticipated results of these new credit card rules:
1. Higher interest rates for all cardholders
Because card issuers can’t quickly raise rates or change terms on their riskiest customers, they will charge higher interest rates across the board to protect against potential losses
2. An Inactivity Fee:
He says one of the most anticipated: the inactivity fee. Card companies say it costs them money to maintain accounts, and they are starting to slap a fee on unprofitable customers who rarely use their cards.
I think that a lot of responsible credit-users will therefore close out cards that they don't use very often. Better check those "change of terms" letters I just got on cards I don't use.
3. An annual fee for having the card
But card issuers are eyeing a revival. Synovate reports that 35% of card offers in the fourth quarter carried an annual fee, the largest percentage in a decade. A year earlier, 23% had annual fees.
Another reason to dump those cards I might only use once a year.
4. Skimpier "rewards". My Discover card already raised the $ amount when I can cash in the cash-back reward.
. But issuers will be launching richer reward programs to compete for the most profitable customers: good credit risks who carry a balance, pay interest and occasionally trigger fees.