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Credit Card Inactivity Fees Coming Your Way?

Posted By admin || 26-Jan-2010

Since the passage of the Credit Card Act, many credit card lenders have been dreaming up new ways of getting more money out your pockets.  One of the newest tricks on the block is the infamous "inactivity fee."  Inactivity fees were at one point commonplace for credit cards; but eventually fell out of fashion.  But at least with some credit cards, the inactivity fee could make it comeback.   How does it work? It's simple, if you don't use your credit card every month or for whatever set amount of time chosen by the credit card company, you will be hit with an ugly inactivity fee.  Under the new Credit Card Act, every credit card consumer has the right to opt out of any new fees; however, opting out means that the credit card account will be closed down, which takes us to our next problem.

When a credit card account closes it can negatively impact a debtor's FICO score because it impacts the credit to debt ratio.   But debtors may soon be forced to choose between paying an inactivity fee or closing their credit card account and  thus lowering their FICO score. Fifth Third Bancorp is now charging its credit card consumers a $19 minacity fee if they don't use their credit card on a regular basis.  While it's not clear if other major credit card issuers will charge inactivity fees, Bank of America is introducing annual fees to a portion of their cardholders and Citigroup is offering a monthly rebate to cardholders who charge beyond a specified amount on their credit card.

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