Credit card companies, facing losses in revenue from the new rules protecting consumers put forth today by the Credit CARD Act, are already looking for new ways to charge consumers for using their cards. One way to do this is to increase inactivity fees, forcing consumers to use the card more frequently or else pay a penalty.
Use It or Lose It (Or Pay For It)
Many people have a few cards that they keep in their back pockets but rarely use, keeping them around just for emergencies. They can be used only for travel, held as protection against unexpected overdrafts, or a variety of other infrequently utilized purposes. However, as the new rules make it impossible for credit card lenders to raise rates or place fees on these cards, they are instead starting to charge consumers for holding these rarely used cards.
In a report by Bloomberg, customers of Fifth Third Bank are being charged a $19 inactivity fee for a card that for years had no fees associated with it. These fees can be especially dangerous because they are placed on the card that consumers already rarely think about, and so it is easy to forget a payment, which could lead to penalty fees and rates. It also leads to a catch-22 for consumers trying to pay down a balance; if they use the cards, their balance goes up, if they don’t, they are hit with an inactivity fee.
How to Avoid Inactivity Fees
In order to protect yourself from inactivity fees, be sure that you know which cards will start to incur fees if they are not used, as well as how frequently they must be used. Some cards have a minimum balance that you must keep, while other simply require some sort of purchase to be made on the card within a certain period. If you are unsure if any of your cards has inactivity charges, ask your credit lender for details.
If you still want a card to keep in a drawer for emergencies only, shop around to find one that has little or no required activity. According to Bloomberg sources, some companies such as Bank of America are running tests to determine how much consumers are willing to pay for their cards, while others like Citibank are in fact offering incentivized rates that reward customers for using the card more frequently. With a little research, you will be able to find a card that provides the right rates and fees for the amount you plan on using the it.
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