Credit card issuers are at it again.

For years, the financial institutions behind the plastic in your wallet have used a host of methods both subtle and brash to up your costs and their profits. But now that the Obama administration's CARD Act is fully in effect, banks' ability to make money from such fees and penalties has been cut -- sometimes dramatically.

Is it any surprise that the banks are pushing back, looking for creative ways to recoup those lost fees?

"They were making a ton of money on people overspending, but with the economy and new rules, they are shaking people down to recover for fees they shouldn't have been charging in the first place," says Ira Rheingold, executive director of the National Association of Consumer Advocates.

Admittedly, some banks are in a relatively precarious position. According to industry consultants and insurance brokers Marsh & McLennan, it costs most banks between $200 and $300 a year to maintain a checking account -- the price of staffing, overhead, ATM and computer systems, and FDIC insurance premiums. (That number, though appears to be derived using a rather sketchy accounting trick: It assigns every overheard cost a bank incurs to be, well, a bank -- as a cost of maintaining checking accounts.)

Still, until recently, banks could offset those costs (however assigned) with fees from overdrafts and merchant account transactions. "Today, banks are expected to earn, on average, between $85 and $115 in fees per year, per account," says Thomas Fox, community outreach director at Cambridge Credit Counseling Corp. "But that's hard to do if the customer maintains a low balance. When that's the case, a bank may actually lose between $85 and $185 per year, per account. These challenges have opened the door to new pricing structures."

The Illusion of an Unlimited Credit Line

One such new maneuver comes from J.P. Morgan Chase (JPM), which recently removed the credit limits from many of its Freedom MasterCard accounts, replacing them with what it calls "credit access lines." The upshot: Unless a cardholder opts out of the change, he can spend significantly more than he would have been able to before, under circumstances when once he might have been charged an over-limit fee, or seen his card declined.

For some people, this may be good news.

"It does give consumers more flexibility," says Kim McGrigg, a spokesperson for the nonprofit Money Management International. "For example, if you need more borrowing power this might help you avoid opening another credit card account. It also eliminates the fear of having charges denied or having to pay over-the-limit fees."

For the undisciplined, though, it could be a recipe for debt disaster. "Some people associate the amount they are allowed to borrow with the amount they can afford to borrow. They are two very different things," points out McGrigg.

Would you opt-in for a credit access line?
Yes, this would be a big help for me.1 (20.0%)
I am not sure, would be tempted.\n1 (20.0%)
No way, this might get me in trouble.1 (20.0%)
I don\'t want anything to do with credit, I am in over my head now.1 (20.0%)
1 (20.0%)
No preset limit means no warning from our bank that you're overspending your means. It also means that you have no clear idea when Chase will say you've hit your limit. Some card users have reported an issue in which the lack of a spending limit means your available credit looks lower to reporting agencies like Experian, which can hurt your credit score. (Chase has responded to this claim that it "report[s] credit access lines to credit bureaus in the exact same way we report credit limits/credit lines to the credit bureaus.") And any charges that exceed your old credit limit come due in the next billing cycle, making this limitless card not quite the convenience it appears at first glance.

What's behind Chase's changes? "We are committed to helping customers maintain or gain greater control over their spending," says Steve O'Halloran, public affairs director for Chase Card Services. "A credit access line provides customers with spending flexibility when they really need it." The card also added new, free features, including personal identity theft protection and travel and emergency assistance services. The bank did, however, end the card's roadside assistance program.

National Association of Consumer Advocates' Rhinegold isn't buying it. "This has nothing to do with customer convenience but the bank's profits," he says.

Kathleen Day of the Center for Responsible Lending agrees that it's just another trick to get people to spend more. "It's bad behavior like this that's why the Consumer Financial Protection Bureau is needed," says the consumer advocacy group spokeswoman. "It's this mindset that people are mad about. Some banks just don't get it."

Your Opt-Out Options

While Chase made headlines with its change, this credit access line "feature" has become common, particularly on high-end or travel cards, says Linda Sherry, director, national priorities for Consumer Action.

Though people can opt out, knowing they can requires them to actually read the letter announcing the changes. So, if you've gotten a letter from your credit card issuer and set it aside, pull it out. If the changes it offers sound like a bad choice for you, write a letter to the creditor rejecting them. "It is so important to take the time to read the correspondence you receive from your creditors," says McGrigg. "There is a lot of important information in the fine print."

And if you're really offended by your credit card company's tactics, shop around. Look at what kind of deals you can get from credit unions, advises Rheingold.

But if you decide you're disciplined enough to handle the freedom and opt in, make sure the card's credit line and usage is being reported on your credit report accurately. Check your credit score now, and again in a few months to see if it is affecting you negatively, advises Sherry.

Finally, remember: Credit is a tool of convenience, not an extension of your income.

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I can't agree with the slams on Chase. When the meltdown came, and Citi and Bank of America had to be bailed out, Chase was able to stand on its feet without a bailout. How did that affect me? Bank of America more than doubled my interest rate and cut my limit by about a third. Citi actually increased my limit, but they first doubled my interest rate (I was willing to live with that) and then jacked it up to the same as the default rate (I was not in default). I accepted the first increase; the rate was still not exorbitant. But when they wanted my rate to be as high as the default rate, I took that as a message that they no longer wanted to do business with me.
Chase, on the other hand, did increase my interest rate by about half, still a reasonable rate. They did not reduce my credit line. I would recommend Chase to anyone.

December 06 2011 at 4:05 PM Report abuse rate up rate down Reply

chase bank is a serpents pit ready to bite you in the ass and take everything you have do not trust them tear up their cards and go with a credit union or community bank. they disprespected veterans now want to pretend to hire them. they told people their credit score wasnt good enough for reg loans so put them in arm loans and some of those people had credit scores in the mid 700s they prey on minorities and the elderly leave them alone folks or u may be sorry

December 06 2011 at 1:44 PM Report abuse -1 rate up rate down Reply

These definitely hurt your credit, regardless of what they say. Since there's no pre-determined limit, the highest amount you've ever owed on the card becomes the new number to factor your score by. If your old limit was $10k but the most you ever owed on the card is $5k, credit reporting agencies now use the $5k as the new baseline, since theres no ceiling.

December 06 2011 at 12:29 PM Report abuse rate up rate down Reply
LEE Resolution

if the Dodd Frank bill isn't repealed small community banks as we know them will disappear

It's an insidious bill designed by two crooked leftists to threaten and intimidate banks into lending money to those who couldn't afford it.

affordable housing is for those who can afford to buy a house to begin with, not some out of work, no credit, so called poor put upon soul who borrows and either refuses or defaults on the loan 6 months later.

December 06 2011 at 10:32 AM Report abuse +1 rate up rate down Reply
2 replies to LEE Resolution's comment

OK, I just went and read a summary of the bill. Please explain how it threatens small banks/credit unions, I didn't see anything in there that would do so.

December 06 2011 at 11:42 AM Report abuse rate up rate down Reply


Unfortunately we have too many defaulting on their loans,and not just the poor, we have our opportunists in the middle class as well taking advantage of the housing crisis, it really sucks for those of us who have saved all of our lives and paid our dues on time faithfully making the roof over our heads a priority .

December 06 2011 at 11:45 AM Report abuse rate up rate down Reply

This article is written as if the Obama Card Act was the reason for the problem. Let's remember the greedmongers at financial institutions who made the card act necessary. It was the Obama administration that "pushed back" Nash wrote it backwards.. I am simply making a point as writers such as Nash seem to make the banks innocent victims of government regs when it wasbank greed which forced these rules in the first place.

December 06 2011 at 9:49 AM Report abuse rate up rate down Reply
2 replies to louw95's comment
LEE Resolution

The only 'greed mongers' (I bet it took a while to think that one up), I can think of sully the White House, the halls of congress (Pelosi, Reid, Fwank, Little Dick Durban, Plugs Biden (althought he's to stupid to be much of anything), Waxman (what a limp dick he is), and the rest of the power elite far left B-astards .

December 06 2011 at 10:06 AM Report abuse +1 rate up rate down Reply
2 replies to LEE Resolution's comment

The Republicans are blameless, however. How can we leftists not realize that only liberals are to blame for the economic situation in this country? Even though the "economic collapse" happened in 2008 after 8 years of Republican oversight, the Democrats were fully responsible. (LOL). The Republicans fought tooth and nail during Bush's 8 years to "straighten out" the banking mess, to no avail (tee hee). How blind can we be?

December 06 2011 at 11:11 AM Report abuse rate up rate down

Oh Karen dear, remember out of control spending Nancy Pelosi? Yes mam all the way since 2006, that's why you never put a democrat in control of the nations finances.

December 06 2011 at 11:27 AM Report abuse rate up rate down

Nobody forced a hysterical, ill-considered reaction, which the Card Act was. Certainly there was reason to look at bank procedures and see what changes would protect consumers better. Things like precipitous rate increases or limit cuts where there has been no default were an abuse. A rate increase for being a day late with the payment was ridiculous. It was right to address those matters, but it was done wrong, not prudently.

December 06 2011 at 4:09 PM Report abuse rate up rate down Reply

Who is the dork explaining to us "stupid people" on how to use credit cards wisely???Also, what is the deal with credit card companies eliminating your limit??Is it one of those "surprise!!!! You've exceeded your limits and now have to pay back everything over the unknown limit at a huge rate of interest or what???? A very unclear article. And the big banks ARE the bad guys..How come they haven't paid back what we taxpayers have lent them, since they are making Billions of dollars a quarter??

December 06 2011 at 8:52 AM Report abuse +1 rate up rate down Reply
2 replies to bilhee's comment

"How come they haven't paid back what we taxpayers have lent them, since they are making Billions of dollars a quarter??"
They are in compliance with the terms our dear government set for them, why should they pay back earlier than required by the terms of the loan? Do you pay all your loans off early?

December 06 2011 at 9:02 AM Report abuse rate up rate down Reply

Well, we can all drop our bank accounts and get hooked up with the "prepaid" credit cards the "celebrities" are offering. What a scam...we should all do this. You pay me $7.98 a month to help me pay for my expenses in providing you a card, then you give me whatever amount you want to "spend" on your card. I take all of the money and invest it in my favorite investment vehicles. When your "credit account" runs dry, you simply give me more money to "hold" for you to spend. What a scheme.

December 06 2011 at 11:18 AM Report abuse rate up rate down Reply

Credit cards are one the best invention of the modern day banking for those of people who are responsible with their finances. Do you know only 33% pay their balance in full? Those people get the points, perks, best credit ratings, discount offers, free access to clubs, and even cash back? It is also known that Credit/Debit card users are spending up to 20% more. Bottom line--RESPONSIBILITY. You'll always be rewarded.

December 06 2011 at 6:38 AM Report abuse +1 rate up rate down Reply
1 reply to Jimmy's comment

Shhhhhhhh! If everyone starts paying their balance in full the credit card companies will lose their primary source of income (fees and interest) and we will lose all our perks! Sheesh.

December 06 2011 at 7:10 AM Report abuse rate up rate down Reply

Joe asked- "You don't have anything better to do than complain about a bank you don't do business with who isn't getting any of your money?"

But Joe, they are getting our money. Did you miss the trillions in bail-outs? Perhaps youre under the misconception that its all been paid back. In that case you need to read page 4 of the GAO (General Accounting Office) report on the Federal Reserve, where it is reported that five Fed bailout programs still have amounts outstanding, including $909,000,000,000 (just under a trillion dollars) for the Fed’s Agency Mortgage-Backed Securities Purchase Program alone. That’s almost $3000 for every American....this is just one example. I could go into the specific crimes banks are participating in (Mortgage software that has Fraud embedded in it is just one), but space doesn't permit it.

The banks risky and outright criminal behavior cost the US economy more than you can calculate.

December 06 2011 at 5:53 AM Report abuse rate up rate down Reply
1 reply to surfthekaliyuga's comment

The bail outs were a loan, not a grant. Much has been repaid and the rest will be. With interest. However, even if it weren't, how is it the bank that is the villain with respect to bailouts? The government chose to gave them the money (against the wishes of most of America). Those banks should have been permitted to go bankrupt, that would have prevented this from ever happening again. The burnt hand teaches best. The government didn't regulate the banks the way they were supposed to within the existing laws, the government chose to give them the bailouts. I say the government is the villain, not the bank.

December 06 2011 at 7:06 AM Report abuse +1 rate up rate down Reply

With American Express you have to pay your bill within 30 days. That's the best No limit card if you really want no limit access...

December 06 2011 at 2:07 AM Report abuse rate up rate down Reply
1 reply to jragga's comment

Not really. I used to get all kinds of stuff from AMEX, I called them up and said, "wave the annual fee", never heard from them again. Why would I pay an annual fee for any credit card?

December 06 2011 at 9:04 AM Report abuse rate up rate down Reply

Credit Unions are not for profit....they are there for you...Banks are for BIG to the credit cards, your incharge of your own should know what your spending every month...for me I don't spend more than I can pay off in that brainer...

December 05 2011 at 11:05 PM Report abuse rate up rate down Reply