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Credit Card Applications » News » Other » New Fees Still Lurk Amid New Credit Restrictions

New Fees Still Lurk Amid New Credit Restrictions

April 15, 2010
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As consumers welcome new credit card restrictions, there are still a good number of people who won't join the bandwagon. As a matter of fact, there are those card holders who are now "opting out" of credit cards.

Why? All exclaim, "higher charges and new fees." As such, people who patronize these cards are in for a burdensome future as card companies have altered terms to workaround new rules set for implementation on Feb. 22.

Since credit card companies complied with the Fed in sending notices to customers 45 days before enforcing increased rates or changing the amounts that cover annual or late fees, cardholders have ditched that plastic altogether.

This has been a growing phenomenon. As the American Bankers Association would describe it - the power, they say, rests with the consumer.

Credit card companies have long gotten away with their hidden rate increases, despicable billing, and unbelievable fees, consumer groups claimed. These practices led to legislation that resulted in the Credit Card Act of 2009, which was signed into law last May.

However, the enactment of new restrictions under the law has a trade-off.

Credit card companies have presented a new array of fees, such as inactivity fees, and the resurrection of dormant charges, such as annual fees.

Despite this, new restrictions can still help consumers as it assures no interest rate hikes for one year from the time the account is opened. In addition, the new law assures that payment due dates are consistent each month.

This rule change benefits consumers who seek to settle their mounting debts. Starting in March, an added amount paid to the minimum payment due should be applied to that part of your debt that carries the highest rates.

As such, borrowers can pay off debts sooner, and pay less.

Some cards have begun marketing these benefits to consumers. Mailers from leading credit card companies have indicated payments that correspond to the minimum due are set aside to cover the lowest APR balance. In this case, there will be a far greater chance to reduce the highest-rate debt.

However, these rules won't eliminate high fees. In fact, these rates can even go up. Card companies can increase these rates on existing balances once payments fall behind for more than two months or when cardholders violate debt management plans.

The new rules also ban fees for purchases beyond the credit limit. This is unless the cardholder permits the issuer. Experts say issuers would naturally encourage cardholders to "opt in" so that purchases won't be denied and save customers the embarrassment at a store cashier.

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