Eva Maria Norlyk
Back in the day, when we still lived in Credit Card Candyland, it used to be another day, another credit card offer.
Nowadays, it’s more like another day, another credit card fee.
As the economic downturn lingers on, credit card companies have been facing defaults at historic levels. As a consequence, card issuers have become increasingly creative about finding ways to recuperate losses. And while the new Credit CARD Act of 2009 put some curbs on card issuers’ ability to charge high over-the-limit fees, the new provisions seem to have only further fed the stampede to come up with a whole new set of fees.
In this the brave new world of ever-multiplying fees, there seems to be a fee for almost everything. Here is a list of some of the newest kids on the block.
The Stay-At-Home Foreign Transaction Fee
Credit card companies have long charged a 2-3% transaction fee for credit card charges made while traveling overseas. However, this year some card issuers, such as Bank of America, have added a new twist on the foreign transaction fee. Bank of America now charges a 3% fee for any transaction made in a foreign currency, whether or not the cardholder is overseas or not. The fee applies even when the transaction is made in U.S. Dollars, if the transaction is processed by a bank outside the United States. In other words, if you make a purchase online with an overseas vendor and the transaction is processed by an overseas bank, you will be charged a 3% foreign transaction fee.
The Super-Size Me Annual Fee
An increasing number of new credit cards issued come with an annual fee. However, many card issuers have also reinstated the annual fee for existing cardholders, but in a backhanded kind of way. In the beginning of the year, JPMorgan Chase & Co, introduced a $10 “monthly service charge” to more than 300,000 cardholders who had taken advantage of a low-rate 3% promotional offer until “the balance was paid off.” That’s effectively saddling cardholders, who may or may not have the ability to pay the outstanding balance off, with a $120 annual fee.
The We-Don’t-Want-Your-Business Fee
If you leave your card in the drawer, your card issuer doesn’t make any money, and credit card companies don’t like that one bit. A few months ago, card issuer Fifth Third Bank introduced a $19 “no-activity” fee, which steps into effect if a cardholder goes a year without using his or her card. Citigroup has introduced another variation of this fee, requiring some Citi cardholders to make $2,400 in purchases each year to avoid paying a $35 annual fee. For people with more than one credit card, this may not be so easy.
The You’ve-Been-a-Bad-Boy Fee
Amex Blue and Blue Sky rewards cardholders, who miss payments on their bills can expect to get newly accumulated points canceled. If a cardholder wishes to reinstate the points, Amex now charges a $29 “reinstatement fee” for each month’s cardholders wish to recover points for. Citigroup also has a announced a reinstatement fee, although it is currently set at “$0.”
To avoid paying through your nose in credit card fees, here are a few things you can do to protect yourself:
- Keep your credit score high. While some fees apply across the board, some are only applied to people with less than excellent credit. By keeping your credit score high, you can avoid being singled out for selective fee increases.
- Keep only 3-4 credit cards. Having too many credit cards is not only risky should your wallet ever be lost or stolen, but can result in multiple fees that are hard to circumvent or even keep track of.
- Consolidate Credit Cards: If you have multiple credit cards from the same card issuer, try to consolidate them into one card with a higher, combined credit limit. This way, you can reduce your number of credit cards without risking lowering your credit rating.
