Get Set for New Credit Card Fees and Professional Cards

The Credit Card Accountability Responsibility and Disclosure Act of 2009, known as the Card Act, was designed to protect consumers. However, as we warned earlier, many credit card issuers will certainly raise fees on credit cards in order to recover income lost due to changes specified by the new law. Some of the biggest card issuers including Citigroup, J.P. Morgan Chase & Co. and Discover Financial Services are already instituting new fees designed to recapture some of the income they’re set to lose when the changes come into full effect. Bsically, they’re trying to figure out how to replace old fees with new ones as any profit-seeking entity is apt to do.

How will they do it? The Pew Charitable Trusts research group recently released a report revealing one way. The report revealed that the median annual fee on bank credit cards has jumped 18% to $59 between July 2009 and March 2010 whereas annual fees soared 67% to $25 at credit unions. The median cash-advance and balance-transfer fees jumped by 33% over this same period. So fees are already up.

Another way banks are trying to get around the new laws is through the issuance of “professional credit cards.” Professional cards are like corporate cards but usually carry terms similar to those of consumer credit cards. However, these cards aren’t covered under the new law, and so their old system of fees can apply. In 2010 Q1, issuers sent out 47 million offers for professional cards, which is up from 13.2 million from the same period last year. Just change the name and call a pig a horse and you can get around the Card Act; this seems to be the strategy of these issuers.