Are you ready to pay new charges on credit card this New Year?
The New Year might not bring good news for the credit card users because card issuers are devising new tactics to get around the Credit Card Act 2009 to keep their profits rising.
The Credit Card Act was expected to bring huge relief to millions of credit card users who were suffering under the burden of credit card debt. However, it seems that banks and other financial institutions are imposing new charges and fees upon the customers which were unknown before the enactment of the Credit Card Act 2009 in May. This write up has focused on some of these new charges that you may find surprising in your next credit card statement.
New charges on credit cards
The creditors are introducing new charges which will increase your total cost of borrowing, like-
- Minimum finance charges: Some creditors have increased the minimum finance charges on their credit cards. Hence, you may have to pay more because of the charges even when the minimum interest rate remains unchanged.
- Inactivity fees: If you have many cards in your wallet but don’t use all of them, you may be incurring inactivity fees. Hence, if you want to cancel some of your credit cards, follow the proper method of canceling in order to avoid paying inactivity charges.
- Balance transfer charges: When you're switching the existing balance on a card to another one, you may be incurring balance transfer charges. The lender may charge a certain percentage of your existing balance as fees to let you switch the balance.
- Late fees: You're already required to pay late fees on the balance if you don't pay within the time period of the bill. But now the late fees may vary depending upon the amount on your statement.
- Minimum charges on cash: If you use your credit card to obtain cash then you're required to pay interest on it along with a minimum charge, which would increase the total cost. For example, your rate can be 2% of the amount withdrawn with a minimum charge of $15. Hence you’re required to bear an additional expense of $13 ($15-2%*100) for borrowing $100.
The issues of variable rate cards not attended
In addition to the charges, the consumers are likely to experience a change in their interest rates. The Credit Card Act has imposed restrictions on interest rates that lenders can charge on fixed rate cards, but it is surprisingly silent about variable rate cards.
Many customers carry variable rate cards to enjoy lower rate when the market rate changes. But the creditors now can base their rates on previous quarters to deprive consumers from enjoying lower rates of the current quarter.
The changes in the economy demand consumers to be more knowledgeable and aware of their rights. The customers can escape some of the new charges by using their cards more wisely.