New Credit Card Fees Got You Down?

(They've got me down.)

I talked the other day with a rather successful businessman who had just seen his "no annual fee forever" card add an annual fee.  (His comment: "I guess 'forever' means 'until 2009'")

What's going on here?  Congress.

If your credit is good, or your credit card balance is low, you may soon pay more on every credit card bill. Why? Congress passed a misguided new credit card law, the Credit Card Accountability Responsibility and Disclosure Act of 2009. As a result of it, you may end up paying an annual fee. And you may end up losing your percentage rebates, your cash back, or your rewards program.

The new law arbitrarily limits credit card companies’ ability to increase rates on credit card balances, even when a cardholder’s balance has been rapidly increasing  -- meaning that a sensible bank might raise the interest rate, because a rising balance drives up the risk that the credit card company won’t get paid what it’s owed. (Increasing numbers of credit cardholders have run up big balances in recent years, then failed to pay them off).

In response to the new law, some credit card companies are starting to charge annual fees on their credit cards to protect themselves against potential losses. Others will likely drop their rewards programs, or stop giving customers’ percentage rebates on credit card purchases.