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Credit Card Fees

Credit Card Fees

 

          Ever been over the limit with your credit card?  Charged more than fits under your credit line?  Maybe by accident, maybe knowingly. In the past, credit card companies could charge penalty fees that seemed almost limitless.  Being charged close to $40 for going over your credit limit by even a few dollars was common.

          As part of the Credit CARD Act of 2009, credit card companies can no longer automatically assess you a $39 fee for exceeding your credit limit.  Now card issuers must contact you for your permission to allow the excess amount to be charged to your card and thus acknowledge that you will be charged a fee.

          Even if you give your permission, the fee charged to you has been greatly reduced.  Since the Credit CARD Act, over the limit fees are limited to $25 per incidence. As part of the CARD Act, penalty fees must be “reasonable and proportional.” The Federal Reserve does allow card companies to charge more if they can make a valid case that their costs exceed the $25 cap – such as if you are a chronic over-the-limit charger.

          While there are now limitations on penalty fees, there are no restrictions on your interest rate being increased due to a penalty.  Most card issuers reserve the right to increase your interest rate in the future if you exceed your credit limit.   Meaning – that one-time charge of $10 that puts you over your credit limit could mean your interest rate will increase significantly, costing you more in interest for future purchases.   As always be an alert consumer, and know your limits with credit card purchases.

 

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