I read something very interesting the other day on Frugal Dad: Some credit card companies may be choosing to get rid of the over-the-limit fees that are often charged on credit cards that exceed the limited balance. Indeed, Discover and Amex have already ditched the over-the-limit fees. But this sort of thing won’t be happening in a vacuum, reports Frugal Dad:
Before you feel too sorry for Amex or Discover (yeah right), realize that this loss of income will be made up elsewhere – probably by reducing reward program benefits, and increasing rates.
When all of the regulations associated with the recently passed Credit CARD Act are put into place, issuers will have to get your permission to allow transactions to go over your credit limit. This means that you will have to opt in to over-the-limit charges. While some people will decide that it is worth to be able to go over their credit limit (and not be denied upon check-out), many will probably opt out. And, besides, there is a lot of administrative stuff that will have to go into dealing with this provisions. It’s no surprise that some credit card issuers are just deciding to say “forget it.”
However, that doesn’t mean things will get better for you. You will still have to watch out for interest charges (probably higher than in the past) and other fees — such as late fees. And you might want to use your rewards while you can. Credit card companies may be forced to bring their practices more in line with consumer protection standards, but they still have plenty of tricks up their sleeves.