Beware Of New Credit Card Fees

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In response to the 2010 new credit card legislation enacted by the Obama Administration, it did not take long for new types of credit card fees to be introduced by banks. Let's learn about new credit card fees to keep on your radar when shopping for a credit card. Whether you have good credit or bad credit, convenient online services are now available which make it easy to get matched to a credit card that fits your credit profile and spending habits.

New Look For Inactivity Fees
Inactivity fees (a penalty fee charged for not using your credit card for a specified amount of time) have been banned by the new credit card law. To get around this ban, some creative card issuers started to charge an annual fee that can be waived if you reach a certain spending amount. This won't fly under the new credit card law. However, instead of waiving an annual fee based on spending, the banks may suspend your cash back rewards or rewards points accumulated (these are not protected under the new law). For example, Citibank's Dividend Platinum Select Card allows your Dividend Dollars to expire if you fail to make a qualifying purchase at least once every 12 months.

Fee Caps Circumvented
The new credit card law prohibits annual fees from exceeding 25% of the credit line. For example, if you are rebuilding your credit and start out with a small credit line of $250, the annual fee you pay can not be higher than $62.50. Credit card issuers are bypassing this rule by charging "processing fees" which do not count toward the 25% cap. Read the fine print carefully about every fee that you may be subjected to in the credit care disclosure document.

Rebate Cards
The Credit Card Act stops all the card issuers from jacking up rates on your existing balances unless you are at least 60 days late in making your required minimum payment. But the smart bankers have devised a creative way around that provision and it is called the rebate card. Rebate offers are exempt from the Credit Card Act, and the bank can revoke them at any time. Here is the bottom line: when a bank decides that they are going to revoke a cash rebate, this is really a back door way of raising your interest rate, but it is legal under the new law.


About the Author:
Nathan Randall, editor, DailyDollar Newsletter provides free daily advice on money matters plus coupons and discount codes. FYI...you can now access the DailyDollar Newsletter via iTunes podcast, YouTube video, and on Facebook and Twitter too.



Article Originally Published On: http://www.articlesnatch.com


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