Higher Credit Card Fees Introduced By Banks
More bad news for credit card holders I’m afraid. Banks and credit card issuers are rolling out new fees to offset the rising tide of delinquencies and charge-off. The fees come in various forms and it looks like they are targeted to just about anyone who is able to pay.
J.P. Morgan Chase has just announced that it will tack on a $120 annual fee to some of their low interest rate credit cards. American Express joins in by raising late fees on some of its business credit cards. These are but two examples, and most certainly not the only ones.
It is estimated that credit card issuers stand to gain $20.5 billion in penalty fees in 2009 alone. No small piece of change is it? Penalty fee income last year was tagged at $19 billion.
It seems as if credit card companies are trying to get ahead of the curve before federal regulations take effect next year which will limit their ability to arbitrarily raise rates and fees.
Chase and American Express are by no means the only credit card issuers raising fees on cardholders. The fact of the matter is is that all credit card issuers are now experiencing difficulties with sharply increasing delinquincies and charge-offs.
Even cardholders that pay their bills on time are feeling the squeeze. For example, in January of 2009 Chase & Co. issued a $10 a month fee on approximately 400,000 of its cardholders that carry balances.
The justification for the charge was that they carried large balances for at least two years and had made little progress in paying it off. In many of those cases those cardholders were making minimum payments from month to month.
I find that to be quite ironic. I had always thought that these were the type of people that were the absolute bread and butter of the credit card industry. The very same people that carry balances from month to month also pay quite a bit of money on interest. In credit card parlance they are known as revolvers.
It just goes to show you that when times are tough, everyone is fair game.
Related Information:
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