Credit Card Providers Companies are Cutting Consumer Fees on Credit Cards Usage
Banks have come up with a surprising move; they are cutting fees on credit card usage. There has been a lot of discussion about greed and shifting cash from the big banks recently, particularly with disliked fees on debit card and the increasing savings account fees.
Wall Street Journal reports that the big fee on foreign-transactions has come under the chopping axe recently. Typically when a credit card is used overseas, a fee is paid to compensate the expenditure of using two different transaction networks. This is generally to the amount of 2 and 3%, in particular with Europe as it has dissimilar security protocols. This is becoming a thing of the past and users will find that some providers like Citigroup and Chase have completely eliminated this fee.
It also seems that the banks will be doing away with balance transfer fees. Some banks are already starting to act on this with clients who come under certain criteria including shifting balances in the initial thirty days of registering for a new card with the bank. This has been only implemented by Chase till now but some more banks are also working on this.
Another surprising action of the banks is the increase of rewards programs, in some sectors at least. It is true that rewards programs are being eliminated for certain clients, but new and unexpected ones are also being added. To give an example, some providers such as Capital One offer reward incentives when a consumer exchanges balances. This is also seen in airline cards, who are offering key airline miles when consumers spend a particular amount on their credit cards.
What is the reason for fees being cut and what is exactly happening here? What is the reason for the banks to offer such incredible incentives to their patrons? Are they surrendering to demands of the consumer and cutting their profit margins? No, the reason behind this move is twofold, banks are trying to attract particular type of patrons and they also want individuals to make use of credit cards in place of debit cards.
Federal legislation has limited debit card fees recently and they can’t make money on debit cards. Credit cards as the best tool for banks to maintain profits and there is no limit on swipe fees for credit cards. Credit cards let consumers accumulate a balance on which interest is charged by the bank. To collect swipe fees, customers have to keep using the credit cards and banks are offering incentive for the same to the right clients.