Q: I noticed a small fee on my last credit card statement — on a card I rarely use. If I’m reading it right, it says I’m being charged for not using my card. I thought the CARD Act got rid of this type of nonsense? — L. Palmer from Yardley, Pa.
A: Well, yes and no.
The CARD Act does limit a lot of ways that credit card firms can charge users, especially in areas like late payment fees and how much interest they can charge. But credit card reform is a dynamic beast and federal regulators continue to tweak and adjust the new credit card rules.
The good news is that the “inactivity” fee that your card company charged you is high on the list of credit card carrier no-nos. In fact, the Federal Reserve, in amending parts of Regulation Z (under the Truth and Lending Act), is abolishing credit card inactivity fees starting Aug. 22.
That means companies like Citibank (Stock Quote: C), which charges some cardholders $60 of they don’t make $2,400 worth of purchases on their cards annually, won’t be able to do that anymore — and your credit card company (assuming it’s not Citibank) won’t be able to do it either. US Bank (Stock Quote: USB) is another culprit — it charges its card customers $40 if they don’t use their credit card for a year. That’s gone, too.
The Federal Reserve ruling not only takes care of inactivity fees, it addresses a host of other bothersome late fees. On June 15, the Federal Reserve issued a final rule that stops credit card carriers from slapping card customers with “unreasonable” late payment fees, along with some other guidance on credit card charges and interest rate hikes.
"The new rules require that late payment and other penalty fees be assessed in a way that is fairer and generally less costly for consumers," said Federal Reserve Governor Elizabeth A. Duke. "Card issuers must also reevaluate recent interest rate increases and, if appropriate, reduce the rate."