Credit Infocenter

Credit Card Companies Backing Off on Fees

January 28th, 2011 · No Comments · Banking, Credit Cards

by Kristy Welsh

(Last Updated On: February 14, 2011)

Irritated at being charged Foreign Transaction Fees? How about late fees of $30 on credit card balances less than $100? It seems that this type of fee might be going away.

After the passage of the Credit Card Responsibility and Disclosure Act of 2009 passed, there was much wailing and gnashing of teeth in the credit card industry about all of the loss of revenue they would face. They promptly raised all of their interest rates and imposed new fees to make up for the cash shortfall before the law was enacted.

It seems to have backfired. Customers (including yours truly) canceled their cards by the thousands. Like me, they were incensed – I’ve always kept my accounts in good standing. Why should we be punished when we are good customers?

In effort to stem the growing defection in the ranks of credit card users fed up with such costs, banks have been trying to lure their more well-to-do clientele back with a reduction these kinds of fees. American Express and Citibank have both decided to waive foreign transaction fees. One note: I’ve traveled extensively out of the country and I can tell you that hardly anyone outside of the U.S. takes American Express. I’m not sure this gesture by AMEX means much.

Bank of America and Wells Fargo have each publicized the fact that they are going to waive late fees on balances less than $100. The Wall Street Journal quoted Chip Rossi of Bank of America, “Many of the late pays many arose from simple payment oversights. We didn’t think it made sense to assess fees in these situations.” The WSJ article also quoted Wells Fargo spokeswoman Lisa Westermann in saying that her bank changed its penalty-pricing practices on certain accounts as part of an effort to “provide credit to as many credit-worthy customers as possible and to help our customers succeed financially.”

Of course, after raising them last year, there is no sign yet that the credit card companies are lowering their interest rates – yet. Could this happen? I wouldn’t count the possibility out. MSN Money’s Liz Pulliam Weston was prophetical last year when she stated that credit card companies would initially raise fees out of fear, then lower them in order to gain a competitive advantage. Looks like she was right.

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