Many credit card holders are electing not to use their credit cards in an effort to either get out of debt or stay out of debt. Some credit card companies have decided a way they can make money is to start charging those not using their credit cards an inactivity fee.
Credit card debt is at an all time high. These inactivity fees will make it harder for those trying to pay off their credit card balances by adding another charge to the card.
Credit card debt adds stress to the economy and to the individual’s life. The fastest way to get out of debt is to stop putting charges onto the credit card and to pay more than the minimum payment due.
The credit card companies want people to use their cards so they can make money on the interest they can charge if there is a balance on the card. With the trend of more card holders electing not to use their cards, the credit card companies are looking to other fee such as the credit card inactivity fees to boost their revenues.
Only a select few credit card companies have started charging credit card inactivity fees. Other credit card companies are playing a wait and see approach. If the credit card customers do not complain enough about the credit card inactivity fees, then the practice will likely spread through the industry .
Some credit card companies are looking to other ways to increase revenue. Bank of America is testing out an annual fee on some of their credit cards. The annual fee currently only affect a small percentage of Bank of America credit card holders.
Citigroup has elected to approach it a different way. They are giving their card holders a percentage back of their interest owed based on how often the card holders uses their card during that month and their history with Citigroup.
The Credit Card Act of 2009 and other proposed rules are restricting credit card companies from charging some fees and bringing in profits they are accustom of doing. At this time, the credit card inactivity fees are just one way they can make some of the revenue they are not able to charge due to the new rules.
Credit card holders have two options to avoid being charged a credit card inactivity fees if they own a card with one. They can make an occasional purchase with the credit card or they can cancel the card.
Some people do not want to cancel their credit card because they feel it would lower their credit score; which is not as big of a problem as many people feel it is. Card holders with cards that do charge inactivity fees will have to decide if the fee is worth the convenience of having the card.
Written by Denise Clay
For Huliq
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