One result of the country’s economic recession is the emergence of new service fees on credit cards.
According to this article in the Washington Post, when the recession hit, tens of thousands of credit card users were unable to continue paying their credit card debt. In addition, consumers are now behaving more frugally, which results in less money spent on credit cards. In addition, new federal regulations limit the amount of penalties that can be charged.
Therefore, credit card companies are scrambling to find ways to replace lost income. The new federal credit card laws, which in addition to limiting penalties also ban interest rate hikes on outstanding balances, have cost the credit card companies about $12 billion a year. According to a study by the Pew Charitable Trusts, on average annual fees and service fees have increased over the past year. However, average penalty charges have remained the same.
In addition to raising annual fees and service fees, credit cards are also trying to bait customers into using their cards more often, which will result in increased fees from merchants. Some credit cards offer extra perks, such as airline miles or cash back, if consumers use the card a certain number of times in a set period or charge a certain amount on the card.
One consequence of these changes is that consumers with high credit scores are now sometimes being turned down for credit cards. Consumers who do not use their credit cards or pay off their balance in full each month are not profitable for credit card companies.