After the passing of the Credit Card Act, which will restrict credit card companies' ability to increase interest rates, amongst other things, the credit card industry took decisive action to soften the blow to their profits. Below are some of the changes you may see on your credit card in 2010:
- An annual fee. Since the Credit Card Act was passed, about 43 percent of new credit card offers contained annual fees, which is significantly higher than the 25 percent we saw last year. Even some current credit cardholders are seeing new annual fees introduced on their credit cards even if they are current. For example, Citigroup will implement a $60 annual on April 1st on the accounts of many of its customers.
- New and increased miscellaneous. fees. Processing fees, balance transfer fees, inquiry fees and other miscellaneous fees are increasing or being implemented for the first time on many credit cards. Many retailers such as Ann Taylor and Victoria Secrets have already added fees.
- Raised interest rates on variable credit cards and newly issued credit cards. The average interest rate offered for a new credit card account increase from 10.7 percent to 13.6 percent in just one year. Many credit card companies fear they won't be able to raise their interest rates once they secure the customer so they are offering higher starting interest rates.
- More difficulty getting approved for a credit card. It will be more difficult to get approved for a credit card in 2010 especially if your credit score is below 660. Debtors with low credit scores may be forced to use high interest subprime credit cards with high annual fees.
- Credit card companies will target debtors who don't pay off their balance every month because they are the most profitable. And those debtors who have a habit of paying off their credit card balance may find that some companies will decrease their credit line or even close their account as they did in 2009.