Less Fees, More Interest

A chart from Consumerist showing average late fees from '94 through '05. Today they average about $35.

Fees for going over your credit limit are a huge money maker for the industry. In fact, they are estimated to bring in around $3.7 billion in revenue this year alone. The recent credit card reform (which doesn’t kick in for another half year) will help protect against these fees: creditors won’t be able to charge you a fee for going over your limit, unless you have specified that you want to be able to spend beyond the limit.

American Express has recently announced they will soon no longer charge customers fees if they exceed their limit. Discover has stated they also will be doing the same. However, give with one hand and take with the other… Amex is raising interest rates for a huge number cardholders by an average of 4%. In fact, this past week I received notice in the mail for this, and so did a few friends and family members I spoke to whom also have Amex cards. I have a FICO score of 810 and although I don’t know the scores of the others, I do know they use their credit responsibly.

So they may be socking it to you even if you have exceptional credit. Although the press release I am basing this off of doesn’t say this increase is across the board, when I called up customer service, the rep told me it was an “across the board increase on all accounts.”

But back to those late fees… did you know you should never exceed 30% of your credit limit anyway?

Written August 2009

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Thank goodness we have reform coming soon!

If the grace period is 25 days or more that is plenty of time to pay the bill. I can’t feel sorry for irresponsible people that don’t pay on time.

Chase is usually pretty good with waiving these fees if you’re a good customer or at least they use to waive them.

Well luckily this will be changing very soon.

Yes the fees are absolutely ridiculous today. Compared to inflation they’ve risen about 3 or 4 times faster.