Watch Out For These Two Credit Card Fees

Credit card companies increasingly make their money on various fees, in addition to the interest rates they charge on balances. While new regulations have made some fees less onerous for consumers, there are others that can sock unsuspecting customers.

Card Hub, a company that analyzes the credit card industry, says it has completed an evaluation of over 1,000 credit card offers and focused on two fees in particular that it says should be “alarming” to consumers. The fees are assessed by the same credit card issuer, First Premier Bank.

The first is a 25 percent fee on credit limit increases. First Premier charges customers who ask for and receive a credit line increase a fee equal to 25 percent of the amount by which their credit limit rose.

$50 for a $200 increase

For example, a customer receiving a $200 credit limit increase will get charged a $50 fee. This fee, of course, is on top of any annual fee the customer pays. The fine print dictates that this fee will not be refunded unless the customer notifies the bank that they do not wish to keep the higher limit within 30 days of the date of the periodic statement on which it appears.

The second fee amounts to $170 in first-year fees for a $300 credit limit. The main card displayed on the company's website charges $170 in first-year fees, which is equivalent to 56.6 percent of its credit line. The recently passed CARD Act limits first year fees to 25 percent of the card's initial credit line. Card Hub points out that, with just an extra $30, a consumer could instead use that $170 fee to put $200 in cash toward a secured card's security deposit, which is completely refundable.

Complaints

Consumers have often complained about First Premiers fees and policies.

“First we had to pay over $130 to get the card and activate it in hopes to help our credit,” Lindsey, of Aurora, Colo., told ConsumerAffairs.com. “Then we found out we have to pay to access the account online, make a payment, and you can never talk to a live representative. The fees and rates are astronomical and for what? There is no benefit to owning this card.”

Lindsey said she would like to close the account once she finishes, but worries there will be a fee for that too.

Card Hub CEO Odysseas Papadimitriou notes First Premier successfully went to court to expect a portion of its initial fees from CARD Act limits. He says it's in the industry's best, long-term interests to try and help consumers.

“I think it’s time for credit card companies to really get on board with working together with regulators to do what’s right for their customers and the economy,” Papadimitriou said.