Credit card issuers keep inventing new fees to replace the old ones

The Federal Reserve seems to be in a never ending game of Whac-a-Mole with the banks that issue credit cards. In October the agency had to roll out clarifications to its regulations on credit card fees after it became clear that the banks had found a way to get around the Credit Card Accountability Responsibility and Disclosure Act of 2009 and charge consumers with a slew of new fees.

Banks used to make billions of dollars a year in fees and other charges that were often levied in ways that consumers perceived as sneaky, unclear or outright deceptive. Recent legislation including the CARD Act, the Fed's Regulation Z and other rules have banned many of these practices. (That's why credit card issuers can no longer spring a surprise rate hike on you with no warning if you're current with your payments, for example.) But the problem is that those fees were a major cash cow for banks, and they're not about to give them up without a fight.

"What we've seen is with the passage of the CARD Act, essentially a lot of the nuisance fees have disappeared," Mike Schenk, vice president of economics for the Credit Union National Association, told WalletPop. "Having said that, the issuers still need to make money on the cards they issue. They're thinking of new, creative ways to make up for the legislated losses."

The real zingers fall into three main categories. Some of them we've warned you about before. For instance, credit card insurance, which claims to pay your bills if you lose your job or fall upon hard financial times, is growing in popularity. But as we've told you, it's not all it's cracked up to be. Some sneaky issuers are even automatically enrolling people in these programs when they first get their card, so make sure that any new credit card you sign up for won't make you pay for this questionable insurance.

Issuers are also increasing the percentage of a card holder's balance that equals the minimum payment. Beginning last year, some issuers switched from requiring customers to pay 2 percent of their balance to requiring 5 percent. For people who could only afford to pay the minimum, this was a devastating blow, as it more than doubled their payments. This is a boon for the issuers, though, because a higher minimum payment means they're legally allowed to charge higher late fees. Combine this with shortened billing cycles (another common trick) and you have a prescription for higher fee revenues - at the customers' expense, of course.

Finally, a growing number of issuers are embracing prepaid cards. Odysseas Papadimitriou, founder and CEO of CardHub.com, tells WalletPop that issuers like Capital One are funneling young and less-financially stable consumers to prepaid cards. Not only do they not have to worry about the risk of default, but they can sock users with fees for everything from activating and loading money onto the card, to checking the balance and even closing the account. Papdimitriou calls prepaid cards "a checking account for people who can't get approved for a checking account," and banks don't hold back from charging them for the convenience. Americans who have had their credit bruised by the recession and can't get a credit card may have no other choice but to pay this endless stream of fees.

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