Despite Congressional Talk of Changes, Credit Card Issuers Continue to Increase Rates and Fees
The recent mortgage crisis seems to have diverted attention away from credit card reform, and credit cards issuers continue to make subtle changes to increase their revenue through fees. These increases show a bold industry going after every cardholder dollar it can, despite the recent Congressional investigation of credit card practices.
Discover has just announced that it is increasing its cash advance rate from 20.99% to 22.99%.
"As we saw with the recent expansion of the balance transfer fees, adding or increasing a fee is like catching a cold. It starts with one issuer and spreads quickly to the others," says Bill Hardekopf, CEO of LowCards.com. "I expect the increases to continue.
"Members of Congress gave speeches about protecting consumers from credit card fees, and the issuers said they would make changes, but meanwhile the companies continue to find ways to increase fees or adjust their terms to get another dollar from their cardholders," says Hardekopf. "What will Congress do now? Credit card reform and
protecting U.S. consumers from unfair credit card practices was a big priority in May. I hope that this issue hasn't already fallen off their radar.
"Cash advances have become almost a legal robbery of consumers. Chase now charges over 28% for cash advances. On top of the high rate, issuers charge a 3% transaction fee with no limit. The average cash advance amount for a MasterCard is $1,560, so in the first year, you could pay almost $500 for a $1,560 cash advance loan.
"Default rates are still climbing to even more punitive levels. Just six months ago, we were alarmed because some issuers were charging 30% for the default rate; now Chase is charging over 32%. Not long ago, the maximum for a balance transfer was generally $75 for everyone. Now many cards have dropped the maximum cap."
Discover is also increasing its late fee at the end of the month. It is currently charging $15 on balances up to $500, and $39 on balances over $500. For billing periods ending after October 1, it will charge $19 on balances up to $250 and $39 on balances over $250.
Others are squeezing more out of the late fee by adding a third tier. For example, Chase now charges $15 on balances up to $100; $29 on balances between $100 and $249; and $39 on balances over $250.
"These are more examples of knowing your credit card terms and conditions. If you are shopping for a credit card and will carry a balance, don't just compare the advertised rates. Write down all of the fees in the terms and conditions, then compare the cards," says Hardekopf.
Discover has just announced that it is increasing its cash advance rate from 20.99% to 22.99%.
"As we saw with the recent expansion of the balance transfer fees, adding or increasing a fee is like catching a cold. It starts with one issuer and spreads quickly to the others," says Bill Hardekopf, CEO of LowCards.com. "I expect the increases to continue.
"Members of Congress gave speeches about protecting consumers from credit card fees, and the issuers said they would make changes, but meanwhile the companies continue to find ways to increase fees or adjust their terms to get another dollar from their cardholders," says Hardekopf. "What will Congress do now? Credit card reform and
protecting U.S. consumers from unfair credit card practices was a big priority in May. I hope that this issue hasn't already fallen off their radar.
"Cash advances have become almost a legal robbery of consumers. Chase now charges over 28% for cash advances. On top of the high rate, issuers charge a 3% transaction fee with no limit. The average cash advance amount for a MasterCard is $1,560, so in the first year, you could pay almost $500 for a $1,560 cash advance loan.
"Default rates are still climbing to even more punitive levels. Just six months ago, we were alarmed because some issuers were charging 30% for the default rate; now Chase is charging over 32%. Not long ago, the maximum for a balance transfer was generally $75 for everyone. Now many cards have dropped the maximum cap."
Discover is also increasing its late fee at the end of the month. It is currently charging $15 on balances up to $500, and $39 on balances over $500. For billing periods ending after October 1, it will charge $19 on balances up to $250 and $39 on balances over $250.
Others are squeezing more out of the late fee by adding a third tier. For example, Chase now charges $15 on balances up to $100; $29 on balances between $100 and $249; and $39 on balances over $250.
"These are more examples of knowing your credit card terms and conditions. If you are shopping for a credit card and will carry a balance, don't just compare the advertised rates. Write down all of the fees in the terms and conditions, then compare the cards," says Hardekopf.
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