Despite forecasts that the implementation of the new Credit CARD Act might lead to rising credit card fees, a newly released study by Bankrate indicates that credit card fees so far are staying at levels close to those of last year.
The Bankrate credit card study examined the terms of 73 cards from 50 of the largest card issuers (40 credit cards from banks and 33 from credit unions). Overall, the study showed that the many basic credit cards have maintained low- or no-fee policies in the majority of areas. For example, only five of the 73 cards surveyed came with an annual fee, and two of those only kick in if the cardholder fails to use the card for over 12 consecutive months.
Also, the much-dreaded inactivity fee, in which cardholders are charged a fee when not using their card regularly, turned out to be rare, with a mere three cards featuring the fee. However, while inactivity fees may not have been widely implemented, cardholders could still experience another consequence for lack of card use: account closing. 13 credit unions who were surveyed in the study all reported closure timetables for nonuse, some as short as six months. And, for one bank in the study, credit card accounts could be shut down after as little as three to four months of inactivity.
Late fees, another concern for cardholders, varied considerably among the cards surveyed, ranging from $5 to $39. Policies for how and when late fees are levied also vary tremendously among card issuers: out of the 73 credit cards surveyed this year, 25 came with penalties based on the degree of tardiness or balance due, while 20 charged a fixed fee, regardless of the payment in question. For cardholders with a First Citizens B&T Classic card, the late fees didn’t kick in until the payment is 10 or more days late.
Further, while most big banks now charge a 3 to 5 percent fee for balance transfers, many smaller banks and credit unions still offer no-fee balance transfers. Twenty of the credit union cards didn’t even charge for cash advances; the highest credit union cash advance fee weighed in at 3% of the transaction amount.
As for over-the-limit fees, the new credit card law stipulates that it can only be charged to cardholders who choose to opt in for the service. Some credit card companies, like American Express and Discover, have done away with over-limit fees altogether; cardholders trying to make a transaction that would bring their credit card over the limit will simply find the charge denied. According to the Bankrate study, the over-the-limit fee on credit cards, which do provide optional over-the-limit protection, averages $32.
In addition, cardholders should be aware that at least one card issuer, Citigroup, has introduced new terms, which allow the card issuer to raise APRs to default levels for over-the-limit charges made by cardholders, who haven’t opted in for overdraft protection.
Overall, the results of the Bankrate study indicate that credit card fees continue to hold steady after the steep increases seen in 2009. In other words, most of the fall-out on credit card fees triggered by the Credit CARD Act may have happened before the new law stepped into effect. In addition, credit union credit cards and smaller bank credit cards continue to offer better terms and lower fees than most big bank credit cards.
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