Navigating Bank and Credit Card Fees
The best news we’ve heard all day! Congress is seeking faster implementation of credit card rules. The Wall Street Journal reports that House Financial Services Chairman Barney Frank (D-NY) is seeking speed up the February 2010 implementation date:
The move would stop credit-card issuers from raising rates and ban other controversial practices before the legislation goes into effect. Parts of the legislation, which required banks to give customers more time to pay their bills, went into effect in August. Banks also were also required to give customers more advance warning of significant changes to the terms of their credit cards and give them a chance to opt out of the changes. However, the bulk of the changes weren’t slated to go into effect until February.
Great news? Yes and no. Yes if it actually happens. But Congress isn’t known for moving both swiftly and efficiently at the same time. And no given it’s the end of September and any change in the date has a minimal effect on consumers. This would be awesome if it was say…May when they passed the bill in the first place.
Regardless, credit card companies and banks are looking at more creative ways to keep you steeped in debt.
- Cash advances from credit cards (3-5%)
- Balance transfer fees (3-5%) – Important to keep in mind if you’re considering switching to a lower interest rate.
- Foreign currency surcharges (3%) – Who can afford to travel?
- Balance Requirements – Free checking is going bye-bye
- ATM Fees ($2-$5) – They just keep going up and up. And this doesn’t even capture the amount your own bank charges you.
Fourteen of the 16 largest banks surveyed by CFA charge $35 or more per overdraft, either initially or after a few overdrafts in a year. In the last year alone, almost half of the banks surveyed by CFA have increased their overdraft fees. Citibank upped its fee to $34, from $30; Fifth Third Bank dropped its flat $33 fee and introduced a tiered system with a maximum fee of $37 when customers exceed five overdrafts in a year.
Lesson: Avoid Overdraft Fees. Yes, easier said than done. But the price on writing checks that your “cash” can’t cash has gone up. But don’t look toward your credit cards to pay for it. Smart Money notes:
- Higher rates for everyone (even if you pay your balances and have “good” credit)
- Moving from fixed rates to variable rates (kinda like roulette?)
- Annual AND usage fees
- More junk mail (great) and more hoops to jump through to get your meager membership rewards