As new provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 come into effect, JP Morgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC) have slapped new fees on their credit card customer base and are all but eliminating rewards programs.
JP Morgan Chase & Co is now charging a $30.00 fee to customers of its “Chase Freedom” card. Customers are given the option of paying the new $30.00 fee or switching to a no-annual fee card that has a rewards called “Ultimate Rewards” which is much less generous than what cardholders had received previously.
Both JP Morgan Chase and Bank of America have raised the fees that they charge on balance transfers. Before the Credit CARD act went fully into effect, most banks, including Chase and Bank of America, were charging their customers 3% of the balance as a balance transfer fee. Bank of America has raised their balance transfer fee to 4% and JP Morgan Chase have raised their balance transfer fee to 5%.
Provisions in the legislation limit banks’ abilities to arbitrarily raise interest rates that consumers are paying and prevent banks from charging certain fees on their customers. As a result, credit card companies are raising other fees to offset the revenue that they can no longer correct. The first cost savings that many banks are taking are cutting rewards programs and instituting new annual fees.
The days of having a pile of credit cards in your wallet that go unused are over. Within a few years, most credit cards will likely end up charging their customers an annual fee and rewards programs will be all but gone. As a result, consumers will likely go back to making use of two or three credit cards and cancelling the rest.
Has your bank raised fees or cut rewards on your credit card account? Leave a comment and let us know!
