Raising Revenues by Increasing Credit Card Fees
While I personally don’t agree with many of the tactics used by credit card companies, I do give the leadership credit for being creative in finding new opportunities to make money.
Their new tactic, used to combat The Credit Card Accountability Responsibility and Disclosure Act of 2009 (see below), is to bring back annual fees that may be as much as $100 per year depending on the individuals previous payment record.
And the current administration thought they had the bankers beat at their own game.
The bankers approach is to targeting all customers. Those with high risk, low risk or carry no balances. The rational is that a bank makes no money on customers that don’t carry a balance or pay in full.
Brilliant thinking.
The bankers know pay-in-full consumers won’t cancel their accounts because they fear being labeled a possible credit risk . They understand that during the recession over 90% of small businesses use their credit cards to finance their business operations to purchase inventory, travel, and to pay bills. They too won’t cancel. High risk candidates need the card or risk losing credit all together.
Ironically, terminating a card for generating fees might also negatively impact your credit score.
If you want to read more on the story, check out. Newtelegram.com This is not the complete story. I could not find any site carrying the entire story I read in my local paper.
The Credit Card Accountability Responsibility and Disclosure Act of 2009 which is intended to halt abusive practices by credit-card issuers that keep consumers mired in debt. When it goes into effect in February, it will:
restrict interest-rate increases during the first year;
restrict rate increases on existing balances;
increase notice for rate increases on future purchases;
preserve the ability to pay off on the old terms;
place limits on fees and penalty interest;
require fair application of payments;
provide sensible due dates and time to pay;
protect young consumers;
restrict issuance fees on fee harvester cards
require enhanced disclosures.
SOURCE: Consumers Union, publisher of Consumer Reports
