Credit Card Issuers Introduce New Fees

This will no doubt come as no surprise to you, but a great many banks and credit card issuers are either raising existing fees or introducing new ones to their cardholders.

The whole purpose of the new fees is to offset the rising number of the delinquencies and charge-offs that the credit card industry is facing during this recession.

To give you an idea of how lucrative these fees are, issuers will take in $20.5 billion on them this year alone, compared to $19 billion last year.

Examples of late fees include case placing a $120 annual fee on some of their low interest rate cards. Another example is American Express increasing fees on business cards and Wells Fargo doing the same while also placing fees on cash advances.

So while the Federal Reserve is cutting interest rates, the credit card industry is effectively charging more to use their cards. That disconnect is quite unusual.

There are reforms on the way but they will not take effect until July of next year so until then cardholders are basically at the mercy of the credit card companies.

Another example of a fee hike comes from J. P. Morgan Chase credit cards. They imposed a $10 fee on approximately 400,000 of its cardholders that carried what they deemed to be too large of a balance for two years or more. They also raise their minimum payments from 2% of the total balance to 5%.

Until this credit card crunch subsides and the economy improves, we can expect to see more of this from the credit card issuers and from any other institution that’s in the business of giving loans.

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