Credit Card Term Changes Abound As New Law Approaches

Recently, credit card holders of Gander Mountain credit cards got notified that every time they get a printed statement, they will get charged a “processing fee” of $1.

Gander Mountain is a chain of stores selling sporting goods and the card that they issue is from the World Financial Network National Bank. World Financial Network National Bank is also a unit of Alliance Data Systems Corp. out of Dallas. They decided to charge the fee, they say, to offset the costs that they are getting from implementing the new credit card rules.

In a written statement, the company cited the new requirement of the Credit CARD Act which forces credit card companies to include more credit information in the credit card’s terms and conditions. They say that the resulting increase in postal expense, production, environmental impact and even the increase in the amount of paper is the cause for the new fees.

Whatever benefits that consumers expect to see from the Credit CARD Act is easily offset by the many other things that issuers can change which the Act does not touch at all. For instance, credit card companies have already began watering down their rewards programs and charging fees for credit card accounts that see little to no activity.

Credit card companies are also going to loser revenue from charging overdraft fees – those fees that get charged on consumers who go over their credit limits unknowingly because they are allowed to since they are enrolled in an overdraft program which they are enrolled to automatically on account activation also unknowingly. The new rules will basically just require credit card companies to not enroll card holders in these overcharge protection programs unless they actually specify to be enrolled in it.

Fed estimates of the income that credit card companies see from overcharge fees puts it at around $25 to $38 billion per year. That is a considerable sum to lose and credit card companies are not going to just stand by and let it go either. To make up for their overcharge fee profit losses, credit card companies are beginning to push consumers to using debit cards instead which is more profitable for them than if consumers use cash, paper checks or any of a number of new checking account products that banks are offering.

So far, the new credit card legislation has triggered several innovations among credit card companies, most of which are geared towards replacing lost profits and generating new profit avenues. Not a lot of it is going towards actually making consumer experience with credit cards safer, less expensive and generally fairer for them, unfortunately.