Inactive Credit Cards May Now Cost Card Holders Money

Credit card companies are now busily looking for ways to change the way they run their business to cope with the slow economy and the new credit card legislation. Of the two, the new credit card legislation poses a bigger threat to credit card companies as it will overhaul several popular practices in the credit industry which will cost credit card companies their profits.

Because of the ongoing credit card term overhaul credit card companies are doing, consumers are finding new surprises with their credit cards almost every week. High interest rates, low credit limits and whatnot have become commonplace among credit cards. Now, a new fee is being introduced which aims to keep credit card holder card usage up courtesy of Fifth Third Bank.

A lot of consumers keep inactive credit cards for a variety of reasons. Some may be keeping their inactive credit cards open because they are wary of using credit but don’t want to impact their credit score. Others may be doing so because their card is connected to the overdraft protection plan of their checking account. With this latest attempt of credit card company Fifth Third Bank to up credit card usage among card holders, card holders who keep inactive credit card accounts may need to review their strategy.

Now, card holders who carry credit cards from Fifth Third Bank with the MasterCard or Visa logo may be eligible for the new maintenance fee that the bank is issuing if their Fifth Third Bank credit cards are dormant. The fee will cost card holders with dormant credit cards as high as $19 every statement cycle. With this new fee, Fifth Third Bank card holders with dormant credit cards will need to reconsider whether holding on to their credit cards is really worth it.

Most financial analysts advice that card holders should try to keep their active accounts open as this will increase their overall available credit. With a higher available credit limit, card holders have a higher credit score owing to the more advantageous ratio between available credit and credit debt. However, with First Bank’s new rules, credit card holders need to figure out if keeping the card is really worth it.

Canceling a credit card is not that simple for First Bank card holders eligible for the new dormancy fees. First, some card holders have their dormant credit cards connected to their checking account’s overdraft protection. In such cases, they can check if they can use another, more active card instead. Secondly, closing a dormant credit card with a large credit limit can seriously impact the card holder’s credit score.