Banks Unveil New Fees On Customers
DON GONYEA, host:
You may have opened up a credit card statement lately and noticed a fee for card inactivity, a higher annual fee, perhaps, or maybe a new balance transfer fee. As banks grapple with fewer customers and new government regulation, they're testing out new fees on customers to see how much they'll tolerate. To find out what consumers can do, we called Ron Lieber. He's personal finance columnist for The New York Times.
Ron, thanks for joining us.
Mr. RON LIEBER (Columnist, The New York Times): Thanks for having me.
GONYEA: So are credit card issuers - and we're talking about banks here, right?
Mr. LIEBER: We are.
GONYEA: Are they adding these new fees on because they really need to, because they can?
Mr. LIEBER: Well, I think it's both reasons. On the need-to front, there's been a whole bunch of new legislation recently that affects them. There was the credit card act, which imposes a whole bunch of new rules and limits fees in various ways and changes related to overdraft fees. Both those things will cost big banks potentially billions of dollars, and they need to find a way to make it up. And so they're pulling every lever that they have available to them to try and make it happen.
GONYEA: So we listed a few things that they're doing - you know, the fees for inactivity. Are there things that you've seen that surprise you, that have kind of stunned you, that have prompted you to say, gee, I never would've thought of that?
Mr. LIEBER: Well, nothing really surprises me at this point. You know, I've been watching the industry for 10 or 15 years now. And it never ceases to amaze me the number of ways they find to attempt, you know, to potentially nickel-and-dime people.
But, you know, let's talk about that inactivity fee. There - I actually have some sympathy for the financial institutions, right? I mean, you're not using the card at all. So to them, it represents a potential form of risk. You know, if you have a $10,000 credit line you're not using any of it, well, if things go bad in your life - say if you lose your job - you may run that credit card up to that $10,000 limit and then potentially declare bankruptcy.
So, you know, they want to protect themselves. And, more importantly, they want you to use the card, because if you use the card, you might generate more fees.
GONYEA: Is there an inactivity threshold that you've noticed that seems to be the tipping point for them?
Mr. LIEBER: Nobody knows for sure, and it is different with every bank. But my general sense is is that if you manage to use the card once or twice a month, you can probably stay off their radar screen. And, you know, that isn't very hard to do.
I mean, what some people do who are, you know, really sort of vigilant about this is that, you know, they'll go to the gas station and they'll use a couple of different cards to fill their tank, you know, once a month or twice a month, just to make sure that they're not going to hit some sort of, you know, inactivity floor with one of the cards.
So that's an easy way to do it. You can also do it at the grocery store when you're buying stuff.
GONYEA: Maybe the day when the customer was king has passed. But does the cardholder have any leverage when it comes to getting some of these fees waived?
Mr. LIEBER: If you are a credit card customer with good credit, you have all sorts of leverage, because you can turn around and walk anytime you want to. Now, what the card companies are counting on is the fact that so many of us have, you know, automated pings on our credit card each month - you know, the Netflix bill and the cable and whatever else is being charged to your credit card each month. So they are counting on the fact that we don't want to make all those changes, put a stop to those things and start them up with a new card.
But if you have good credit, you can leave anytime you want to and apply for a different card that will be happy to have you. And it's helpful to, you know, call up and remind the card company that you do have the ability to walk away, because sometimes they'll waive the fee for a year or more. It certainly doesn't hurt to ask.
GONYEA: Ron Lieber is personal finance columnist with The New York Times.
Ron, thanks for joining us.
Mr. LIEBER: Thanks for having me on.