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The Credit Card Act of 2009 was instituted primarily to protect credit card customers from unfair policies and exorbitant fees. However, many (understandably) skeptical consumers figure that if the law makes it impossible for credit card issuers to get their money one way, they will simply find another way.
Some credit card issuers, sadly, have proven these savvy consumers correct. Here are some policies credit card issuers have instituted, or may institute, to get more money from customers and reduce expenses in spite of the Credit Card Act of 2009.
- Inactivity fees
- Annual fees
- Minimum balance fees
- Eliminating rewards programs, including cash back rewards
- Increasing minimum payments
Citibank allegedly started charging certain credit card customers a $60 annual fee if they didn’t charge $2,400 per year to their Citibank card. There’s an easy way around this fee: Use your credit card to buy groceries each month, and pay off the balance immediately, in essence using your credit card like a debit card. Most of us spend at least $200/month on groceries—if you don’t, use the card for gas, too. (And consider posting some tips to save on groceries in the comments section, please, for the rest of us.)
We haven’t seen any examples of this ridiculous policy yet, but rumor has it that credit card issuers may charge a fee to customers who don’t carry a minimum balance. At that point, if you have no balance on a card and are the type of customer who doesn’t carry a balance, you may consider taking the hit to your credit score and cancelling the card rather than paying the fee. Why pay interest on a loan you don’t need?
The days of “no annual fee” credit cards may be dwindling. If a credit card you carry institutes an annual fee, you have a few choices:
- Pay off the card and cancel it
- Transfer your balance to another credit card with no annual fee and cancel the card with an annual fee
- If you have a low interest rate, decide if the annual fee is more or less than you’d pay in interest on another card. Either way, work to pay off the card as quickly as possible and cancel it.
- Call the company and see if they will waive the annual fee for a loyal customer; you may need to speak with a supervisor and threaten to cancel the card.
Credit card issuers may look to eliminate or decrease rewards programs in an attempt to cut costs.
Many credit card users carry credit cards only to enjoy the rewards and other perks. If your favorite credit card eliminates its rewards program, you may be tempted to cancel the card. But as long as the issuer hasn’t instituted annual fees or inactivity fees, you’re better off holding onto the card. Each card you cancel hurts your credit score and increases your debt-to-available credit ratio. Don’t cancel a card out of spite – make sure it makes financial sense.
Many credit card issuers already increased their minimum payments when the Credit Card Act of 2009 first passed. For customers on the edge, living paycheck to paycheck, an increase in a credit card’s minimum payment can seem financially devastating. But you always have options:
- Transfer the balance to a card with a lower interest rate and lower minimum payment
- Consider a home equity loan or line-of-credit to pay off the credit card
- Call the bank and ask them to decrease the minimum payment. According to credit expert Todd Ossenfort at CreditCards.com, the bank may agree in exchange for a higher interest rate. Obviously, a higher minimum payment and lower interest rate will permit you to pay the card off more quickly, but if you truly can’t afford the minimum payment, consider this option.
- If you pay for credit protection insurance, you might be able to declare “financial hardship” and see if you can get your payments stopped temporarily. This may give you enough time to find other payment options, such as personal loans.
- Look at your budget and see where else you can cut expenses. This, obviously, is the best option and will permit you to pay off your credit card balances even faster.
- If all else fails, consider debt consolidation as one way to handle your debt and regain your financial footing.
To avoid negative consequences from the Credit Card Act of 2009, make sure to read your credit card policies and statements carefully to avoid, or at least learn about, new fees.