New Fee Added on Some Credit Cards
As we approach the enactment of the first phase of the Credit CARD Act next week, credit card issuers continue to make changes that could have a significant effect on consumers.
In September and October, some cardholders can expect more fee increases, some may lose reward points because of a late payment, and more cards will be introduced with high annual fees.
"We feared issuers might make some of these changes and now we see them starting to take place," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. "These changes will continue as issuers try to find new ways to generate revenue and do anything they can to regain profitability. Many households can expect changes so we should all pay attention to the white, non-descript envelopes that we receive in the mail and the stuffers in our monthly credit card bill. This is how issuers notify their customers about changes to the terms of their credit card."
Here are some changes that have recently been announced:
* Starting in September, American Express Blue and Blue Sky cards will cancel the points that cardholders earn in the month they have a late fee. Points are not available for redemption until your account is again in good standing, and you pay an additional $29 fee for each month of points that you want to recover. (Note: in most cases, a consumer would have to spend $2,900 to have earned $29 in rewards.) Citibank has also added this policy of cancelling points, but has yet to add a reinstatement fee.
"Cancelling reward points is a very concerning change," says Hardekopf. "This opens a door to adding new fees to the reward program and holding reward points hostage. If this works, others could follow and find additional ways to introduce new fees for rewards."
* American Express just notified customers of upcoming changes that it says are being made in response to the current business and economic environment. It is raising the cash advance fee from 21.24% to 25.24% after October 1. The notice also said that it was raising the APR on any balance that has a penalty rate because of a late payment. In addition, they are increasing the late fee.
* United and Chase credit card services are offering new cards that may point to the future of reward cards. They are aimed at the "savvy traveler" who wants added comfort, more reward miles, and a chance to earn elite status more quickly. The annual fee ranges from $130 for United Mileage Plus Select Visa to $375 for United Mileage Plus Club Visa. While you
earn more for United purchases, you still only earn one mile per $1 spent
on all other purchases.
"Reward cards are the first cards that seem to be adding annual fees. We expect new reward cards to follow these United and Chase cards, which
are advertised as offering a little more than the typical reward card and marketed to those with the best credit," says Hardekopf.
* There is one positive change for some cardholders. Discover and American Express are eliminating the over-the-limit fees. American Express announced this will occur in October; Discover said this will take place soon.
In September and October, some cardholders can expect more fee increases, some may lose reward points because of a late payment, and more cards will be introduced with high annual fees.
"We feared issuers might make some of these changes and now we see them starting to take place," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. "These changes will continue as issuers try to find new ways to generate revenue and do anything they can to regain profitability. Many households can expect changes so we should all pay attention to the white, non-descript envelopes that we receive in the mail and the stuffers in our monthly credit card bill. This is how issuers notify their customers about changes to the terms of their credit card."
Here are some changes that have recently been announced:
* Starting in September, American Express Blue and Blue Sky cards will cancel the points that cardholders earn in the month they have a late fee. Points are not available for redemption until your account is again in good standing, and you pay an additional $29 fee for each month of points that you want to recover. (Note: in most cases, a consumer would have to spend $2,900 to have earned $29 in rewards.) Citibank has also added this policy of cancelling points, but has yet to add a reinstatement fee.
"Cancelling reward points is a very concerning change," says Hardekopf. "This opens a door to adding new fees to the reward program and holding reward points hostage. If this works, others could follow and find additional ways to introduce new fees for rewards."
* American Express just notified customers of upcoming changes that it says are being made in response to the current business and economic environment. It is raising the cash advance fee from 21.24% to 25.24% after October 1. The notice also said that it was raising the APR on any balance that has a penalty rate because of a late payment. In addition, they are increasing the late fee.
* United and Chase credit card services are offering new cards that may point to the future of reward cards. They are aimed at the "savvy traveler" who wants added comfort, more reward miles, and a chance to earn elite status more quickly. The annual fee ranges from $130 for United Mileage Plus Select Visa to $375 for United Mileage Plus Club Visa. While you
earn more for United purchases, you still only earn one mile per $1 spent
on all other purchases.
"Reward cards are the first cards that seem to be adding annual fees. We expect new reward cards to follow these United and Chase cards, which
are advertised as offering a little more than the typical reward card and marketed to those with the best credit," says Hardekopf.
* There is one positive change for some cardholders. Discover and American Express are eliminating the over-the-limit fees. American Express announced this will occur in October; Discover said this will take place soon.
