Higher Fees, Rates May Be Downside of Credit Card Rule Changes

With credit card rule changes on the horizon, many cardholders are probably looking forward to a more level playing field devoid of excessive fees and other shady practices.

But we all know big business will find a way to make up the difference, and that’ll likely come in the way of new fees and higher interest rates.

One possible method to recoup lost revenue could come in the form of annual fees, which are typically only charged for select rewards cards or to those with bad credit.

As competition becomes less fierce, card issuers may begin imposing annual fees as opposed to dropping them, especially for higher credit-risk borrowers and those who don’t spend enough on their cards.

For example, if you don’t spend a certain amount on your card annually, a fee may be imposed; the same could be true if your credit score is below a certain threshold (credit score range).

We’ve already seen no fee balance transfer credit cards get phased out, and many 0% APR credit card offers have since disappeared.

Credit card issuers will also likely raise interest rates to make up for lost income they used to reap via questionable practices like universal default and negative payment hierarchy.

So you better believe the card issuers are putting their minds to work, figuring out ways to exploit or circumvent the new laws.

That said, keep a very watchful eye on your credit card terms and conditions going forward.