New fees created by credit card companies to exploit customers

The fact that customers should be really careful with credit cards and the way they should be used is in focus again. The government has recently brought about a lot of reforms to address the growing concern against the various kinds of fee levied by credit cards. The recent legislations were aimed to limit the fees that credit card companies would be allowed to charge and the amount they charge. However, it isn’t really possible that credit card companies would take these reforms without changing anything, especially to make up for the lost revenues.

Two types of fees that have been regulated by the government include the late fee which cannot exceed 25 dollars after the new legislations. Similarly the over limit fees too cannot exceed an amount of 28 dollars. As per estimates from experts, the limits on these two kinds of fees alone would result in a loss of around 5.5billion dollars in revenue this year. This loss of revenue has lead to some repercussions in terms of credit cards and some new types of fees would be levied to make up for the lost revenue.

The first of the new fees is the balance transfer fee which was around 3% before the reforms with a cap of 75 dollars. Currently some of the cards have raised it to 5% with no cap. The card replacement fee is a new kind of fee that would be charged on the credit card customers for a lost or stolen card and this would be between 10 – 20 dollars. There is an increase in the average annual fee on credit cards especially those with reward programs and loyalty points.

An average rise in the interest rate on outstanding dues on credit cards has also been observed. While the average rate was 10.7% in 2009, it has now increased to 13.6% in 2010. Some of the credit card customers ensure that they don’t have any outstanding due at the end of the month and pay off the bills consistently. Such customers usually don’t allow the credit card companies to take undue advantage of them. However, a lot of credit card customers, end up caught in the web of new terms and regulations introduced by the credit card companies and end up paying extra due to one fees or the other that has been introduced to counter the losses from the credit card reforms.

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