New Credit Card Traps

How you make up for billions of dollars in lost revenue? When you’re a credit card issuer bound by the provisions of the CARD Act, which tightened regulations on the industry, you get aggressive — and creative. Barred from raising rates without giving a cardholder adequate notice and limited as to late charges and penalty interest rate increases, banks are scrambling to put new fees in place to restore some of those lost revenues.

Some of the increases are straightforward. If you can’t raise certain fees, the banks figure, raise the ones you can. So in addition to charging an annual fee on cards that never had one, banks are upping the fees on those cards that do. The median annual fee on bank credit cards went up 18% between July of last year and March of this year.

Also, since the CARD Act was passed, the average fees on foreign transactions have gone up 50%, and the average charge on both balance transfers and cash advances have been boosted by 33%. Some banks have more than doubled balance transfer fees.

Doctors may be targets for another creative way around the CARD Act. Several card issuers are aggressively pushing the “professional” credit card, a small-business version of the corporate credit card. Unlike consumer credit cards, however, professional cards aren’t covered under the law. Banks offered professional cards to 47 million households in the first three months of this year, up from 13.2 million in the same period last year.

Another creative revenue producer is the inactivity fee, which a bank imposes if you don’t use your card for a certain period of time or don’t charge a minimum amount within a year. As of August 22, inactivity fees will be illegal, but banks are getting around the law by charging an annual fee that will be waived once you rack up a minimum dollar amount in purchases.