Beware credit card fee-creep

It's no secret that banks and credit card issuers are looking for ways to make up the money they'll lose when both the new Federal Reserve rules on overdraft charges and the Credit CARD Act kick in. One way they're doing this is by tacking on a host of new fees.

Both MSNBC and pointed out that more companies will charge you if prefer to receive a paper statement in the mail.

But while many people prefer electronic statements for convenience or for environmental reasons, Ed Mierzwinski, consumer program director at advocacy group US-PIRG, told WalletPop in an interview that it can be risky to trust a financial institution to store your data. "In my opinion, you are better protected when you have a paper copy of your records than [having them housed] by a web site that can change," he says. Paperless billing is a way to pass that cost of printing along to the customer, he added.
One way around this? Sign up for paperless billing to avoid a fee, but save a digital copy of all of your records on your computer and back it up to an external hard drive. Yes, it's more work, but it's the only way to ensure access to your data without having to pay for hard copies.

More credit card issuers have been adding annual fees, as well. "You'll see more annual-fee cards because they were making money off late fees," predicts PIRG's Mierzwinski. Annual-fee cards used to offer hefty rewards to offset the fee, or else they were restricted-use cards peddled to consumers with credit too poor to qualify for a traditional cards.

In the future, Mierzwinski says, more middle-of-the-road cards will start tacking on this fee. Keep your eyes peeled for anything that comes in the mail with fine print on it; that's where card companies like to bury their fee notices. If a card isn't worth the annual fee to you, cancel it before the new charge kicks in.

There is also an "inactivity fee" charged by some issuers, which business news outlet Bloomberg wrote about last month. Mierzwinski says it's more typical for smaller institutions to charge this type of fee, although Fifth Third, the bank called out by Bloomberg, is a good-sized exception to this rule. In addition, inactivity fees usually only kick in if you don't use your card for a year.

Ideally, you want to use a credit card at least a few times a year anyway, since banks have been stepping up the number of dormant accounts they close. If you use the card for one automatic payment a month or use it a few times a year for small purchases you know you can pay off before the finance charges kick in, you'll dodge both the risk of having the account closed for dormancy and any inactivity fee the company might charge.

Sometimes dodging fees can feel like playing whack-a-mole, but it is possible to avoid them and still enjoy the convenience of cards to which many American consumers have become accustomed.
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