While consumers know to look for high annual percentage rates before signing up for a new credit card, some fees and charges are sneaky. Consumers who use plastic to pay for their purchases may wind up with a variety of fees by using it, by not managing it correctly, or simply by accepting the card.
The Credit CARD Act of 2009 imposed limitations on the amount of late payments and other fees that could be charged to customers. Federal regulations allow a credit card company to charge a late payment of $25 if the minimum payment was received after the due date for the first time. Subsequent offenses can trigger a $35 late payment if more than one late payment is received within a six-month period.
Credit card companies can levy a penalty on consumers who charge more on their card than their balance technically permits. The Credit CARD Act of 2009 changed prior rules regarding overlimit fees so that credit card companies can no longer charge a fee that is in excess of the amount of the violation. For example, a consumer who goes over the credit limit by $5 can only be required to pay an overlimit fee of $5 or less.
Credit card companies may impose an annual fee. This fee represents the cost associated with ownership of a credit card from a particular credit card company. Some credit card companies waive this fee for the first year, and the fee may come as a surprise to a card holder in the second year.
Whether credit card companies can charge inactivity fees is a tricky issue. Bankrate conducted a survey of credit card fees when the Credit CARD Act was being considered and found that inactivity fees were not common among issuers. The Credit CARD Act prohibited issuers from being able to impose inactivity fees. Some credit card companies have been able to continue with these fees by classifying them as annual fees that are charged only when a certain amount of spending has not been reached.
While most credit card fees are levied by the issuing credit card company, merchants can now impose their own fees. Litigation that arose in 2005 resulted in Visa and MasterCard permitting merchants to impose a surcharge on consumers when they use a credit card, beginning January 27, 2013. Ten states specifically exclude this type of fee, including California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
Credit card companies may charge other fees. Consumers should carefully examine the fine print before agreeing to accept a credit card. Additionally, federal laws require credit card issuers to provide notification if new fees will be imposed on the consumer.
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