Now there are new restrictions on the penalty fees ever since the CARD Act of 2009 was introduced and this has been confirmed by the a recent study. There is a dramatic change that has been brought about regarding the amount of fees that issuers could charge in case of delayed or missed payments, overdraft, inactivity etc. After the passage of the CARD Act, card issuers can no longer charge a fee for non-use of the credit card.

There are at least 66 cards that have been surveyed to gauge the impact of this Act regarding the card fees that customers can be charged. All these cards were from 50 of the major card companies and these were the same cards that were surveyed during the 2010 study.

The study has also collected data on the deposit requirements, the fees, and the other conditions that are imposed on these secured cards which are issued by the 50 card majors. There were some issuers who had offered secured credit cards which required some form of collateral from the borrower just in the case there is a default. During the survey there were 15 such cards that were found. This study was conducted between the 14th of April and the 2nd of May, 2011. The information that was used was from the credit card offers and the customer service representatives.

Prior to the CARD Act there was a penalty fee that was charged for going over the credit limit and on missed or delayed payments. But now, the issuers cannot charge penalty fees as they wish to as there are caps on the penalty fees and they can charge only up to a certain amount or they will have to face the regulators.

On the first violation the penalty would be $25 but if there is more than one violation within the next 6 months, then the penalty would go up to $35, but the issuer must justify the hike in penalty. Added to this the issuers cannot charge over the dollar amount associated with this particular transaction.

Most credit cards now reflect the safe harbor caps but there were also a good number of cards which indicated that the late fees could go up to $25 or $35. Now there has been a drop since the survey that was conducted during 2010, where at least 28 out of 73 cards had charged a flat late fee which was around $39.

Similar Posts:

Share