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Posts Tagged ‘credit card fees’

Bank of America Penalizes Good Credit

October 28th, 2009 by Krayton M Davis | 1 Comment | Filed in Credit Cards, News

This just in from the “let no good deed go unpunished” department: Bank of America, a recipient of tens of billions of dollars of federal (taxpayer) bailout money, has decided in their erudite wisdom to start charging its best customers fees for their credit cards. This means that if you have good credit and pay off your credit card every month, our nation’s largest bank may assess you an annual fee of $29 to $99 to use their cards.

Merrill Lynch

According to columnist Mike Morin and various news sources, Bank of America is experimenting with this fee to help offset costs as well as to test customer reaction. Apparently, the bank doesn’t realize just how angry many people are that they have benefited from government assistance which also paved the way for them to purchase Merrill-Lynch, one of the most extensive financial management firms in the world.

To defend itself, Bank of America is pointing to the practice of Citibank, one of its chief competitors, who is now charging credit card fees to their best customers. Citibank was by far the largest beneficiary of taxpayer largess, receiving more than $300 billion in funding last year.

Your Choices

Customers have a choice when they receive notification that their credit card issuer will be charging fees. By law, you must be notified in advance of any changes to your credit card agreement, including lending terms and fees. With such notification you can choose to 1) keep your card and pay the fees or 2) cancel your credit card.

Of course, if you choose the latter, your credit score will take a hit because one of the five components of determining your credit score is your credit history. A closed account will lower your score.

Temporary Hit

Still, expect that many consumers will tell Bank of America “enough” and order their accounts closed. Though a hit to a credit score can be painful, it is only a temporary setback, one that many people with good credit will likely decide is one worth taking.


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Senate Agrees To Control Credit Card Practices

May 20th, 2009 by Matthew C. Keegan | 1 Comment | Filed in Consumer Tips, Credit Cards

If  you are a proponent of Big Government, then the U.S. Senate’s recent action designed to limit the practices of credit card providers doesn’t come as any surprise to you. In fact, you probably will be welcoming the day that President Obama signs the legislation into law, an event expected to take place as the House and Senate versions are reconciled.

Special Rights For Cardholders

credit cardsThe legislation, dubbed the Credit Cardholders’ Bill of Rights Act of 2009, was put together to counter what some have been saying is are abusive practices by credit card companies over the past several months. In particular, since the economy began its free fall last September, card companies have tightened lending, raised interest rates, cancelled accounts and raised certain fees.

These moves, which come on top of job loss, personal bankruptcy, foreclosures and other consumer challenges, have raised the ire of consumer activists although by current law these practices are in fact legal.

Support From Both Parties

The bill passed 90-5, representing strong bi-partisan support. Some political analysts have suggested that widespread support was needed especially from those politicians who are up for election in November 2010. With the election cycle beginning in January, few are of the mind that voting against the bill won’t be something that beseiged voters will soon forget.

Credit card companies will have nine months from the time that the bill becomes law to make the changes stipulated in the bill. As the bill now stands it restricts high interest rates; requires lenders to give advanced notice before raising rates; prevents high “over limit” fees; allows customers to pay bills via phone or online without added fees; and requires lenders to post credit-card agreements online.

America’s Bankers Raise Concerns

Bankers aren’t thrilled with the bill for reasons beyond the obvious restrictions which favor consumers. Most say that the legislation will make credit harder to obtain, as fewer lenders will be willing to assume the risk that goes with what is essentially an unsecured loan.

Specifically, American Bankers Association president and CEO Edward L. Yingling said, “Credit cards are a strong economic driver and are relied upon by consumers and small businesses to make payments and to bridge short-term financial gaps.  The goal in the legislation should be to obtain the right balance:  providing protections, while maintaining the important role of credit cards in providing loans to consumers and small businesses.  Unfortunately, we believe the bill does not achieve that balance and will therefore cause an unnecessary decrease in credit availability.”

Change On The Way: In Nine Months

Consumers should be aware that most of the required changes will not happen immediately. As mentioned earlier, it will take nine months from the time that President Obama signs the bill into law before the provisions of the bill must kick in.

Adv. — Are you shopping for a new credit card? Pending legislation changes will be making obtaining a credit card more difficult as credit tightens. Apply today for a new credit card, including prepaid cards and reward cards.



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Choosing The Right Credit Card In 2008

January 7th, 2008 by Matthew C. Keegan | 3 Comments | Filed in Consumer Financing, Credit Cards, Credit Reports

It is a fact: not all credit cards are created equally. Some credit card providers charge annual fees, others offer low introductory rates, while some offer rewards every time that you use them. Confusing, isn’t it? We think so! With this in mind, SayEducate offers the following tips to help you navigate through the credit card maze.

credit card paymentsWhen comparing credit card offers, even having a master’s degree in business administration will not ensure that you will understand every single offer. The language used by credit card providers is often confusing, even nonsensical with enough small print qualifiers to give anyone a headache.

So, why should you consider a new credit card in 2008? Well, if you have received you most recent credit card statements, it likely reflects the spending you did for Christmas. For some consumers, the shock of a January credit card statement can put them into a panic forcing them to scramble to find the money to pay their bill. Sure, making minimum monthly payments can buy you some time, but you know how that goes — you’ll never get the card completely paid off before the next important holiday or event comes up.

Comparing offers can get complicated, but the following should be considered whenever you apply for a new credit card:

Annual Fee — unless your credit isn’t good or excellent, then paying an annual fee makes no sense. Yes, American Express and some other elite cards will charge a fee, but these fees are usually offset by some special services including travel insurance, concierge services and the like.

Interest Rate — if you pay off your card every month, then it doesn’t matter what the interest rate is for you. For everyone carrying monthly balances, the lower your interest rate, the better. Lots of cards offer teaser balance transfer rates as low as 0% for the first three to twelve months, with a higher rate offered for new purchases.

Rewards — if you pay off your card monthly, then shopping for a card that offers rewards is the way to go. Some will give one or two percent cash back on your purchases, while others will allow you to accumulate points which you can redeem for gifts.

With any card you choose there are some things you should be aware of:

  • What is the default rate on your card should you be late with a payment?
  • If you run into a problem with an unrelated company (a dispute with the telephone company, for example) will your credit issue with that company automatically cause you to be charged the default rate?
  • What fees are involved when transferring balances from one credit card to another one? Usually, that rate is as much as 3% of the balance, so do the math to see if transferring balances makes financial sense.
  • Are you planning to apply for more than one card? If so, be careful! Multiple credit card applications can work against your creditworthiness. Your credit score can take a hit and impact the rate you pay for other loans.
  • Make certain that you understand the terms of your consumer agreement. Most credit card providers reserve the right to change the terms of your agreement at any time — you could be in for a rude awakening when you suddenly realize that you are being charged a higher rate on balances!

Shopping for a new card means you should be very careful which card that you use. If the card you select doesn’t live up to your expectations, then contact the credit card provider and cancel it immediately. An unused card can work against you if it has been activated, but not canceled by you.


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