Credit Cards Boosting Fees

By Jane J. Kim | August 26, 2007

Be on the lookout for notices from credit-card companies.

In recent months, a number of issuers have raised their interest rates and fees. Some, such as Capital One Financial, have notified some cardholders that their fixed interest rates would be moving to higher, variable rates. Others, such as American Express, have raised their late fees.

Although issuers have the right to change the terms and conditions of customers' cards at any time, they will usually notify you in advance and give you the chance to opt out of any changes. To do so, you will typically have to call a number or send a letter to the company by a certain date. In many cases, customers will be able to pay off any balances under existing terms, although you may be forced to close the accounts.

A number of lenders are tightening their credit standards and raising fees given concerns over a slowing economy and a changing interest-rate environment. Many lenders, for example, are becoming more cautious about extending credit to people in weaker housing markets and to people who hold certain riskier mortgages.

Meanwhile, hold on to any generous credit-card introductory offers that come your way, because issuers have been cutting back on direct-mail offers to new customers. Many are also tacking on bigger fees to transfer balances. Previously, such fees were often waived or limited to 3% of balances, with a cap of $50 to $75.

"We've seen the length of the introductory periods diminish on certain offers and more lenders offering introductory rates ranging from 2.9% to 6.9%, instead of 0% financing offers," adds Curtis Arnold, founder of CardRatings.com.

Referring Source: The Wall Street Journal Online