Credit Card Fees and Bank Fees

We have talked about credit card fees before, but with the Credit CARD Act of 2009 and all the changes that have taken place over the last year, we figured it is time to take another look. The CARD (Credit Card Accountability, Responsibility and Disclosure) Act was signed into law by President Barack Obama in May 2009. Here is a quick overview of some of the most important parts of the bill:

• No more random interest hikes
• No more universal default rate increases
• No more contract changes
• No more double cycle billing
• No more fees on interest only
• No more due date tricks
• No more breaking up payments

So that is a lot of "no more" and it all sounds pretty good when you put it that way. No more taking advantage of the customer that is doing their best to pay what they can as soon as possible. No more sneaky tricks that you don't find out about until you get your monthly statement, only to be told that it isn't a trick and that it is in the credit card disclosure you received when you applied for the credit card (you know that 10 page booklet in size 6 font, written in legal jargon that no one understands). The same idea is coming forth with the changes to banking regulations, most likely you have been asked, or received a notice from your bank, about overdraft protection. This is an effort to make sure that banks are telling customers, up front, what they will be charged if they account is overdrawn. They aren't necessarily lowering what they charge, they are just telling you before hand what it will be.

Hopefully what these laws will do is bring awareness to the consumer about what fees they are likely to be charged in any given number of circumstances so that they can avoid, or at the very least know ahead of time, what their financial choices are going to get them in the end. There are some credit card fees that may be worth paying:

• Balance Transfer Fees - you have probably received an offer at some point for 0% balance transfer for 12-18 months. These always come with a balance transfer fee (generally between 3-5% of the total balance you transfer) but if it keeps you from paying anywhere from 6-24% interest that you would have paid over the same amount of time, you will still save a lot of money!
• Annual Credit Card Fees - you may wonder why this is a good idea when there are so many cards offered with no annual fee. Well, it depends on how you use your credit card. Generally credit cards that have an annual fee offer some pretty lofty awards. So research the card, find out what they are offering and if you will gain more than it costs you in annual fees. If you gain more than you pay, it's a good deal

We don't really see any benefits to paying bank fees, but they may just be one of those unnecessary evils. Just make sure you are aware of what fees your bank charges. Free checking accounts are getting harder and harder to find. Shop around to different banks to see who has the least fees and then find the one that will best fit into your monthly financial situation. You can avoid most bank fees by simply maintaining a set minimum balance in your account. This may take a little planning and discipline, but the amount of money you save in fees will make it well worth the effort.