Industry experts and credit analysts are advising American cardholders to prepare themselves against expected hikes in credit card fees and charges.
According to key persons in the credit business, banks and card companies are gearing up for more hefty fines, penalties, fees, and charges for cardholders. With tougher restrictions expected to take effect early next years, experts say that banks are making the most of the time left to squeeze as much profit from consumers.
To cope with these practices and an overall shift in the card companies' mindsets, analysts say that cardholders should rethink some of their habits when using plastic.
At present, most card issuers offer low interest balance transfers for consumers who want to shift to other banks. While majority of these card companies still maintain these special offers, they have also increased their transfer-balance fees. For instance, some card issuers have raised their transfer fees from three to five percent. Several banks, however, have placed caps or limits to the maximum amount they can charge clients for balance transfers. Still, most card issuers do not cap their fees. This means that cardholders who want to transfer large balances can face large charges and fees.
On the bright side, cardholders with excellent credit ratings can still qualify for special zero interest balance-transfer offers. Cardholders can also negotiate with their card companies if their rates go up.
Specialists also point out that banks will lower the rates of cardholders who pay more than the minimum and settle their debts on time.
Customers without balances also have to contend with hidden fees and charges. Banks are fond of slapping penalties for clients who exceed their credit limit. To add to this, most card companies have slashed credit limits in a bid to avoid any more losses. This means that there is a higher risk for cardholders to go over their limits.
Most banks charge anywhere from $15 to $40 dollars for exceeding credit limits. Still, several card issuers based the penalties on the amount that exceeded the cardholder's credit line. Customers can expect to see more of this in the coming months until February when banks have to ask cardholders for permission before allowing them to exceed their credit lines.
Industry experts say that the best way to avoid this is to set up online accounts for the different credit cards. This way, cardholders can better monitor their and review their cards. Setting up online accounts can also protect consumers from identity theft and fraud.