Get Your Credit Cards Under Control
New Credit Card Fees
In February of this year, credit card reform intended to protect consumers resulted in potential new fees as some issuers pass the cost of implementing the law on to you. Here are a few fees to look for:
- Annual Fees: not seen for many years, annual fees have crept back into credit card bills. Several credit card issuers, notably, Bank of America and Citibank have toyed with the idea. And while Bank of America appears to have retreated after consumers responded negatively, some experts predict that annual fees could become more common in the industry as a result of legislation.
- Inactivity Fees: if you don't use your cards, expect an annual charge of $19 as credit card issuers pass on record-keeping costs.
- Fixed to Variable Rates: under the new law it will be more difficult for credit card issuers to switch the interest rate they charge from a fixed to variable rate. As a consequence, you may be offered a (relatively) attractive promotional fixed rate of 6.99% that climbs to 19% after only 6 months.
- Balance Transfers: before you tranfer balances from a high rate card to that attractive promotional rate, be aware that you'll have only 6 months instead of 12 to pay down the balance (on 0% offers) and that 70% of the balance transfer offers have no cap on the fee charged for the transfer.
- Processing Fees: the administrative costs associated with reviewing and approving your application, creating and mailing monthly statements are examples of processing fees that could show up on future statements.
Your Options
You can of course close the account or 'opt out" but doing so may damage your credit score, especially if you've had the card for a long time. First, read the statements that credit card issuers are required to send before implementing new charges. Next, if you are going to close an account, line up new credit beforehand.
To find competitive credit card offers, go to www.lowcards.com or www.bankrate.com. For helpful hints on managing credit cards see www.moneygirl.com.