The Wall Street Journal has posted an article that discusses how some credit card companies are attempting to bypass The Credit Card Accountability and Responsibility Disclosure Act of 2009 (also called the Card Act). The Card Act forced credit card companies to to give customers more notice about changes in interest rates and restricts “certain controversial billing practices such as inactivity fees.”
To make up for loss in revenue the Card Act has caused, some of the biggest credit card companies in the US have started to go around the new rules to slap customers with other types of fees. It’s estimated that the Card Act will eliminate about $390 million in fee revenue per year. Banks are having to get more aggressive to combat such a huge loss.
According to a July 22 report from Pew Charitable Trusts, a nonpartisan research group, the industry’s median annual fee on bank credit cards jumped 18% to $59 between July 2009 and March 2010. At credit unions, annual fees soared 67% to $25. During the same period, the median cash-advance and balance-transfer fees jumped by 33%.
All of these increases are perfectly legal, of course. Banks and other issuers would have a difficult time extending credit to consumers, even at high interest rates, if they couldn’t augment those revenues with fee income. “We’re coming out of a deep recession that issuers are still working through,” says Peter Garuccio, a spokesman for the American Bankers Association.