Before the CARD Act went into effect near the end of February, banks and other card issuers were making all sorts of dire predictions about what they'd be "forced" to do if regulations kept them from making outsized profits at the expense of ordinary Americans. Well, the results are in, and it turns out the sky didn't fall after all.
Bankrate recently looked at dozens of credit cards and crunched the numbers to see how many issuers were slapping on annual fees, inactivity fees and other annoyances that banks had warned everyone would become the norm if the CARD Act went into law. The full results of its study are online, but the short version is that things are pretty much unchanged when it comes to credit card fees.
First, here's the bad news: Card issuers are lowering credit limits and raising interest rates. In fact, we told you about Chase cutting off 15% of its riskiest customers just the other day. Bankrate suggests using a card at least four times a year if you're worried about your issuer dumping you.
Fortunately, though, widespread annual fees and inactivity fees haven't swept the market. "Banks don't want to lose customers by making them angry," Ed Mierzwinski, consumer program director at advocacy group U.S. Public Interest Research Group (PIRG), told WalletPop in an interview. Only a few cards charge annual or inactivity fees, according to Bankrate's research. In other words, if your bank slapped you with one of these fees, feel free to close that account and shop around, because most issuers aren't going down that path.
Many banks will still charge you if you want to transfer a balance or get a cash advance, but not all of them do. For what it's worth, the vast majority of credit union cards in the Bankrate survey didn't charge for a balance transfer or even for a cash advance; the percentage of bank cards charging for this was higher and the rates can be as high as 5%. What's more, there are still even a handful of zero-percent balance transfer rates out there, although they're rarer than they once were.
Mierzwinski pointed out that the threat of greater regulation generally makes banks prophecize doom, although their dire predictions don't come to pass. "Banks routinely deceive Congress with threats of Armageddon," he said. "I'm not surprised." Mierzwinski added that PIRG supports the creation of a Consumer Finance Protection Agency to keep banks in line, even though banks are predicting still more horrible consequences if such an entity were to be created.
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