Credit Card Fees, Penalties, On The Rise

A nationwide study by non-prof group Consumer Action found rising trends for credit card rates and fees. Compared to 2005

APR: 14.53%, up from 12.61%
late fee: $28, up from $27.46
penalty interest rate: 24.5%, up from 24.23%

In response to mounting criticism over universal default rates, Consumer Action found some credit card companies are doing away with universal default clauses. Instead, they substitute language that says they can raise rates at any time.

Quick, pay down your debt before it’s too late! — BEN POPKEN

2007 Credit Card Survey [Consumer Action]
(Photo: Ben Popken)

Comments

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  1. not_seth_brundle says:

    Yes… interest rates were lower across the board in 2005.

  2. Chicago7 says:

    I have to tell you, the sweetest thing in the world is not to have any credit cards. You don’t have to worry about all these sleazeball tactics, no payments, you buy less junk that you don’t need, and don’t pay fees and interest on what you do need.

  3. B Tex says:

    If you do have to have one….go with a credit union. I love mine because they do not do all this. I have been with my C U for 15 years and all these stupid fees sounds just like that comercial a while back where they fee you for using their pen, and per word. These banks are too funny. Go credit union folks.

  4. Crazytree says:

    Credit Cards are as bad for you as cigarettes.

    Just say no to credit card debt.*

    *Unless it’s at 0%, but even then handle with extreme caution.

  5. crnk says:

    Several posts on consumerist recently about how much fees have increased. Sorry, but it is called inflation. Maybe comparing the historic prices of energy, credit card fees, building products, and food should be posted together. Then we’d see that credit card fees are outpacing inflation, but not by some amazingly shocking amount that is suggested here.

  6. crnk says:

    @crnk:
    In fact, that late fee is an annual increase of just 2%, making it a much lower increase than inflation would drive alone.

  7. scott5834 says:

    @crnk: This would be inflation if they were just increasing fees in dollar amounts. As they’re also increasing APRs (a percentage), this is an increase inflation or not.

  8. mantari says:

    @scott5834: My synthetic industry spokesman would probably say something like, “The rising trend in APRs is actually a reflection of the availability of credit to more and more Americans. As we bring credit services to riskier clients, who would otherwise go without credit, this brings up the overall APR average. The credit industry is dedicated to serving the needs of its client with the interest rate that is right for each individual.”

  9. FLConsumer says:

    Here’s a novel idea — pay your balances off IN FULL each month and you’ll be charged no fees! What a concept! Don’t buy shit you can’t afford! (You know it truly is shit you didn’t need too… like the $6 lattes, extra Bluetooth headset, shoes, purse, etc.)

    @Chicago7: Maybe a life without credit cards is possible for you, but if you have a moderately complex life, credit cards are a godsend. You’re not going to carry $3k cash into Worst Buy to buy a new TV, nor are you going to be able to rent a car, order things online, book a decent hotel room, etc., without a credit card. I wouldn’t dare pay for dinner at a good quality restaurant with cash, nor would I want to carry that much on me. Again, I insist that people treat them as cash. This isn’t a hard concept to follow, especially now with online websites/management available for practically every card out there.

  10. zentec says:

    Exactly FLConsumer…when you use credit cards as you should be using them, the interest rate could be 300% and it wouldn’t matter; it’s just a short term loan until they bill you. At that point, you should have the cash ready to immediately pay off the balance in full.

  11. IRSistherootofallevil says:

    Unless it’s a temporary 0% APR thing…then what the hell, put it in savings and make some interest off of it. Every dollar you make in interest is a dollar that goes in YOUR pocket…..then when the 0% APR period ends, pay it off in full.

  12. Chicago7 says:

    @FLConsumer,

    You ever heard of a debit card?

    I bought a $2000 computer with cash. It’s not that difficult. I used to rent cars all the time. At the start, they wanted a deposit, but after they got to know me, that was waived.

    I also come from the era where some high end restaurants wouldn’t TAKE credit cards – The Palm, for example. I think that era is done now, but I don’t care – I pay cash.

    You should try it. It is extremely possible and even easy to live without a credit card.

    I will say this: I am used to carrying around a lot of cash. I go to the track on a regular basis.

  13. FLConsumer says:

    @Chicago7: I’ve heard of debit cards and refuse to use them for three reasons:

    1) It provides ANYONE with direct access to one of my checking accounts. If the card # gets stolen, the thieves will be draining MY money. Additionally, if there is a dispute over a legitimate charge, such as double-billing or incorrect billing, I’m also out the money from my account until the bank decides to do something about it. If I did the transaction as a debit transaction, then it’ll be my bank vs. the other bank’s word.

    2) There are NO laws regulating debit cards like there are for credit cards. I’m solely at the mercy of the bank with debit cards. Credit card laws are clear and up-front.

    3) Any holds/temporary authorizations immediately remove money from my account. I travel quite often, usually to larger cities. The $6/hr worker behind the rental car counter could care less if I’m her high-school sweetheart, the pope, or a con artist — she’s getting paid to follow corporate policy, so that’s what she’s going to do. Buy gas at a gas station? That’s a $75 hold for about a week regardless of what I buy. Hotels are hit-or-miss in terms of temporary authorizations.

    Dealing in cash just isn’t practical for my type of spending. I often find myself travelling away from home, away from easily accessible cash. Even most ATM accounts and machines limit transactions to $500-$1000 per day. When I routinely have 4 & 5 digit transactions on my credit card, I wouldn’t want to be carrying that much cash around even if it was feasible. Ever try to order online with cash? Probably isn’t going to happen.

    Quite often I end up doing business transactions while one the road. So I’ll be in Florida, the manufacturer is in England, and the customer is in Arizona and the courier/shipping service is based out of Tennessee. There might be a way to pull this off as an all-cash deal, but it certainly isn’t worth the time and money (high currency exchange rates) spent to make it happen, especially in my line of work where time is measured (and billed) in seconds and 30 seconds is a VERY long time.

    Let’s get into the real benefits of a good credit card — cash back, concierge services, and no hassles.

    1.5% off all purchases goes a long way. Nice little “bonus” check at the end of the year, especially with all of the reimbursables for work. “You want HOW MANY video projectors for the new office?!” as I smile and realize I’m getting $45 cash back for every single one they order. I absolutely salivate at the chance to do a whole new office or studio.

    Concierge services are offered on some credit cards, but used by very few people. ‘Tis a shame as they really come in handy. Lost in a city you’ve never been in before? They’ll help you find a hotel, good restaurant, even get you reservations for a restaurant where reservations are often difficult to obtain. Screw up and almost miss a special date for a special someone? They’ll take care of it. They even helped me with my Christmas shopping this past year. No fighting the mobs in the malls. Everything was delivered as promised and exquisitely wrapped.

    No hassles = it’s their money and I’m their customer. While I might be a “deadbeat” in credit card company terms because I pay my bill in full each month, they still treat me like gold. If there’s a problem with my statement, it is addressed immediately, AND it’s not my money in jeopardy. While I’ve never had to do a charge-back, it’s nice to know the option exists. In the few times I’ve been double-billed, the issues were resolved the same day.

    FWIW, The Palm restaurants in Tampa, Orlando, and Coral Gables all take credit cards. Been to all 3 of those, and you guessed it — paid with a credit card each time.

  14. Chicago7 says:

    Like I said, I come from an ERA where restaurants DIDN’T accept credit cards. And yet, somehow I managed to eat there a LOT. Go figure.

    If you want to use credit cards, fine. But don’t whine about fees. And don’t try to say you can’t get along without, because I’m living proof you can – 15 years and counting.

  15. Chicago7 says:

    I’ve also had a debit since they came out, and I’ve never had ANY problems. I had more problems with my credit cards not crediting my account after sleaze bags charged me too much or decided they were going to double charge for something.

  16. You2 says:

    Bank of America and Capital One unfairly obtain late fees by setting due dates that fall on a Sunday-a day that you cannot pay. A Due Date is a due date is a due date!!! They could call it a “Fee Date” maybe or a “Let’s Take Your Finances to the Dump Date” or a “This is When We Get To Cheat You Date”, But certainly NOT a “DUE DATE”. The only option I was given with B of A was to do a phone payment that incurs a fee in order to get it paid on that day. Capital One wouldn’t let me pay at all–and let me know I would incur a late fee. I filed complaints with both the Federal Trade Commission and the Office of the Comptroller of the Currency and wrote to the Federal Reserve Board. I intend to call the Attorney General’s office as well. Most people are unable to spend the amount of time it takes to make a complaint and frankly, I didn’t have the time either. I did it anyway and it cost me plenty. I’m sure most people just put up with it and move on or they would be late to work and these Banking Credit Card Companies count on it–you can be sure! Where is that consumer-rights Attorney out there that WANTS to take this unfair practice down?

  17. FLConsumer says:

    @Chicago7: So, if you claim it can be done, how would you have handle the international transaction which I had to do last month, given in my example above?

    The whole point of my original post was aimed at the whiners — pay your bills off in full each month and there aren’t any fees, unless you do something stupid and get an “ego” credit card like the AmEx Centurian card. Why should I pay $2500 to just carry a credit card? Visa’s Signature concierge service has been top-notch every time I’ve used them.

  18. Chicago7 says:

    And MY original point, which you seem to have a problem with, is that it’s GREAT not to have to worry about all these charges and credit card hassles?

    International transaction? Debit card? A bank transfer? Western Union? With a just a little imagination, you can do it. Anything you can do with a credit card, I can do with a debit card. I make international purchases on regular basis, including purchases from Russia and Turkey.

  19. Neobahamut says:

    Just don’t try and rent a Nintendo Wii, Xbox 360 or Playstation 3 game from Blockbuster. I recently took a wii game i had rented back and picked out another to find out that i couldn’t rent w/o having a credit card on file. And yes i tried using my debit card.