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June 01, 2011

  • News:  What's Up With Card Fees? 

    Industry analysts continue to review the effects of the CARD Act on the credit card market. recently updated a study from April 2010 where they surveyed 66 cards from the 50 largest issuers and looked at the same 73 non-premium cards that they included in the 2010 study. The study was conducted from April 14 through May 2, 2011, using information from credit card offers and customer service representatives. Annual fees were expected to run rampant as a reaction to the restrictions imposed on rate hikes and fees, but that has not happened. The results of the study show 95% of the credit cards surveyed did not have an annual fee compared to 90% in 2010.

    Balance transfer fees were not regulated by the CARD Act so they can fluctuate greatly from card to card. Most of the credit cards surveyed charged 3% of the amount transferred although minimums and maximums varied. Five of the cards surveyed charged 4% with no maximum. However, most of the credit cards issued by credit unions had no fee for balance transfers, which is consistent with the 2010 study. If a balance transfer is on the horizon, shopping around is always the best strategy. Foreign transfer fees vary greatly as well. About 30% of the card surveyed charged 1% of the transaction and 30% charged 3%, while eight cards didn't charge any fee for foreign purchases.

    In a review of secured credit cards they found the CARD Act helped to limit excessive upfront fees by limiting “non-penalty” fees assessed the first year to not exceed 25% of the initial credit limit. The Federal Reserve Bank clarified the law to include the application and processing fees. Secured cards typically charge annual fee as well as a number of other fees. Annual fees for secured cards in the survey spanned from $18 to $40. The required minimum deposit ranged from $49 to $500 but about half of them required a $500 minimum.

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