New fees keep getting reinvented by card issuers

Monday, December 6th, 2010
Updated: December 6th, 2010
The content is accurate at the time of publication and is subject to change.

There seems to be a continuous game between the credit card issuers and the Federal Reserve people. Recently in October, the Federal Reserve had to issue a lot of clarifications as far as the regulations on credit card fee were concerned. This was following concerns about the fact that the credit card issuers have managed to find a way around various rules implemented under the Credit Card Accountability Responsibility and Disclosure Act of 2009. A lot of these rules were to protect the credit card customers from being exploited by the banks who used to make billions of dollars every year in fees and various other charges which were levied on unsuspecting credit card customers. Many of the different fees levied were sneaky, and outright deceptive.

The legislations and credit card reforms were exactly passed to stop these practices by the banks. That is one of the reasons why credit card issuers can no longer make a surprise rate hike without warning the credit card customers. However, for many of the credit card issuers, those fees were a major part of the cash revenues. It was obvious that card issuers would try all sort of ways to circumvent these rules and find new ways to make up for those lost revenues. However, recent surveys have shown that since the reforms for credit cards were passed a lot of nuisance fees has disappeared. Issuers are still making money though on the new cards that they are issuing. This is by conjuring new and more creative ways to get money out of the customers.

A lot of these new types of fees fall under 3 categories. A lot of credit card customers have been warned repeatedly to guard against these new types of credit card fees. The credit card insurance turns out to be a good example. It claims to pay your bills in case you lose your financial security and have fallen into hard times. This credit card seems to be growing in popularity. However, it is not as good as it really seems to be. There are some sneaky credit card issuers who are automatically getting customers enrolled for these programs when they get the card. Secondly customers are facing higher minimum payment requirements. This means that if the customer misses it, they have to pay higher late payment charges and face higher interest rates. There is an increasing number of prepaid cards from card issuers as well which levy a lot of fees on the consumers.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

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