The most recent issue of Money Magazine had an interesting article about protecting yourself from new “credit card traps.” In it, they highlighted a number of changes that banks have introduced to improve their bottom line in the face of recent credit card legislation.
Three of the big fees changes that they highlighted were:
Fees because you’re not spending enough. Some Citibank cardholders are apparently being hit by annual fee of $30-$90 if they spend less than $2400 per year on their card.
Fees because you’re not swiping enough. Some FigthThird cardholders are being hit with a $19 fee if they don’t use their card for a year.
Fees… Just because. Bank of America has introduced annual fees of $29-$99 on a variety of new and existing cards.
I received a letter from them pertaining to my At&T Universal card, which I’ve had since 2004. Never one late payment – very solid customer for them. On Apris 1st I will be billed an annual fee of $60. If I use the card for more than $2400 by next March 31, my fee will be refunded. So they get a 365 day loan from me, and basically hold me hostage so that everytime I reach for my wallet, I will be reaching for their card.
Two words: NO WAY!
I have not yet received a letter pertaining to my other Shiticard, but no matter – I am dumping both of them.
My recommendation is to dump every card from the BIG 5: Shiticard, Bank of UnAmerica, Chase, American Express, and Capitol Offense One.
@DB: No clever name for Chase or American Express?
It will be really important to keep an eye on the fine print with banks trying to find new ways to make up for the money they’re losing. We’ve got a series of blog posts up on the topic: http://www.lifetuner.org/blog-.....ne%20print
As a result of the CARD Act reforms that went into effect on February 22, credit card companies are projected to incur $12 billion in annual losses. But we all know that credit card companies are far too imaginative to let this happen. The reforms require the credit card companies to give you 45 days notice before rate increases, and those increases cannot be applied to existing debt unless you miss payments for 60 days. In addition, there have been new restrictions placed on how they can market to college students under 21 years old.
This all translates to nothing more than a bump in the road for card companies. Old methods of revenue generation will be replace by new ones in the form of lots of fee’s. Best bet is to clear your debts and watch your statements for any suspicious changes.
Here’s the thing. Getting your credit card from a major bank is a risk, and of course you’re going to start paying higher fees. I think more people should shop around for better rates from smaller banks or loan groups, read the fine print, and move on from there. Also, don’t get sucked into card amounts you know you’d never be able to pay off; that’s dynamite you don’t want to deal with.
Just a warning – received statement from HSBC card supposedly eight days after the close of the billing cycle. Payment is due 10 days before next cycle which was moved from the 18th of the previous month to the 12th of the next month, and, if it truly took eight days to get to me, then ten days to get to them means I have to pay it on the day it is received – a new way to try to get some new fees and raise interest rates. I documented, wrote them and am in process of writing my attorney general. Anyone else encountered this?
I just got a notice of a $39 annual fee starting up for US Bank. It is a travisty in this country that a multi-billion dollar profit industry is permitted to charge a fee simply to maintain the card – offering no “premier” benefits in exchange (they also are not offering to refund the fee if a $$$ annual usage is met). I don’t care about canceling the card, which I will do, but I do think it is outrageous that my credit score will be hit by closing out the account! It’s a legalized hostage situation: either pay the fee being levied or cancel the card and take a hit on the credit score. I don’t care how “little” my credit score drops as a result, it still feels like “play our way or get slapped” to me.
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