5 Great Changes To Your Credit Card… 5 Predictions Of The Industry’s Backlash
More changes are coming to your credit card, but at least this time, these changes won’t cost you in interest rate hikes or credit limit cuts.
The Federal Reserve announced new rules regarding credit card fees, in effect August 22nd, as the final set of changes to the CARD Act.
These reforms tighten up some loopholes on fees and aim to protect cardholders from unfair practices. Let’s take a look at the changes that will impact your plastic soon:
- Credit card penalties will be limited to $25. However, if you had a late payment or charged over the credit limit before in the last 6 months, issuers can raise the second penalty fee to $35; if they want to raise the fee even higher for other repeat offenses, they can try to justify to regulators why they should charge more than $35.
- So-called “inactivity fees”, or penalties for not using the credit card for an extended period of time, will be banned.
- Your credit card issuer will no longer be able to charge you more than one fee for any single event or transaction, such as multiple charges on a single late payment.
- Issuers will have to re-evaluate any interest rates raised after January 1st this year, and potentially lower the interest rate if the reason for raising the rate no longer applies. Also, if an issuer does increase your rate, they will have to explain why.
- Penalty fees will no longer exceed the dollar amount incurred by the violation that resulted in the fee—meaning, if a customer is late on a credit card payment that has a $20 minimum, the resulting late payment penalty fee (typically $39) cannot exceed $20 too. Or another example, if a customer goes over a credit card limit by $3, the resulting over-the-limit penalty fee cannot be more than $3.
But, these changes may also incite the wrath of credit card issuers, meaning there may be some more loopholes and new fees that will spring up:
- Rewards programs, a popular area for issuers to trim the fat to recoup losses, may take a bigger hit of cutbacks. Before that happens, make sure you use your rewards you’ve accrued wisely because they may lose value soon.
- There also may be a rise in annual fees as well as “processing fees”, which applicants pay before their credit card is activated. A few issuers are already beginning to charge processing fees.
- Generous credit card offers may get harder and harder to come by, although some issuers will still offer appealing cards in order to beat out the competition.
- Interest rate hikes still do not have a cap, so issuers can raise them sky high.
- Issuers may go a round-a-bout way of recouping losses by attacking other financial products, like leveling fees on checking accounts or lowering APYs on savings accounts and CDs.
Keep an eye on your credit card statements for any new changes, just so you don’t get hit with new credit card company tricks. But for now, at least these changes will save consumers money and spare them some credit card stress.
Similar Posts:
- New Credit Card Rules: Brace Yourself for the Backlash
- Consumer Debt Reduced
- Fed Places a Cap on Credit Card Penalty Fees
- New Penalties for Credit Card Over-the-Limit Charges
- Bankrate Releases Study on Credit Card Fees
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