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Sunday, February 21, 2010

Credit Card Reform - Review Fees

With new regulation of credit cards going into effect on Monday, credit card companies are ramping up direct mailings and marketing of cards to offset potential revenue change.  Planning and understanding the credit card costs can pay dividends.  Abraham Lincoln states:

 “If I had eight hours to chop down a tree, I'd spend six hours sharpening my ax” ~ Abraham Lincoln

The following are fees that may be added to the consumer:

  • Average annual interest rates - 30% interest rates and higher
  • Rate increases - late payments after 60 days rates rise significantly
  • Annual fees - currently 35% of cards charge a fee and is expected to grow
  • Application fees - fee to apply for card regardless of approval outcome
  • Hybrid cards - low fees - high interest
  • Late fees - tiered rate based on balance
  • Over-limit fees - Over limit a fee charged if agreed upon with the issuer 
This does not include the fees being charged for interchange (fees charged to the retailer - 2% of purchase) which is a major profit center for credit card companies.  Evaluate the credit card you carry and review options in order to optimize the cost.

Reference:
Wall Street Journal
The Washington Post
The Star Ledger