by Joseph Kenny | 11/3/09

There are new federal regulations getting ready to take effect that will impact how credit card companies are allowed to make fee and interest rate changes. But these new rules do not have a capped interest rate regulation so companies can continue to charge what they want. The law only limits the amount of the fee increase that can be instituted at one time.

Consumers were warned that companies would add new fees before the law takes effect. In all fairness, it must be pointed out that no one is forced to take a credit card. It is a voluntary financial instrument that can be managed. But the problem is that credit card companies have always had the upper hand and free reign to charge whatever fees they wanted even if those fees were unreasonable or unfair.

Other financial operations are closely monitored and regulated by the federal government, but it seems it took a recession to get the attention of Congress.

Citibank has been in the news a lot lately because the company has informed customers of new fees and has been cancelling credit cards without giving consumers warning. But Bank of America is now in the news too because it is finding new ways to charge fees to offset potential revenue losses expected to be incurred as a result of the new federal regulations.

In this case, Bank of America plans on charging a membership fee that is actually an annual fee. It’s somewhat difficult for consumers to call a credit card fee a membership fee. This fee in effect is calling the right to charge and then pay interest on those charges a benefit that is in the same league as a country club membership. A membership implies privileges and special benefits.

Some claim that owning a credit card is a privilege. Others say it is not a privilege but rather a financial decision. After all the credit card company makes a lot of money on the fees added to credit card accounts. When deciding to use a credit card, the consumer is deciding to borrow money at a price. The price must eventually be paid or there are severe consequences. Join a country club and you get access to services that simply cease once you stop paying the fee.

Perhaps that is why Bank of America is not unilaterally instituting the membership fee but rather says it is being market tested. This gives the company a lot of leeway by using this kind of terminology. For example, only designated people will be ‘market tested’. If they accept the charge without too many complaints, the market will be expanded.

Annual credit card account fees are making consumers angry. It’s not the fee itself but how the fee is implemented or charged that causes the problems. For example, one consumer said he was charged an annual fee he didn’t know about and the charge put him over his credit limit. The credit card company added annual limit fee resulted in the account being charged another fee because it caused the account to be over the limit. If the credit card owner had known the charge was going to be imposed he could have taken action.

Of course, talk to the credit card companies and they will tell you it is not their fault a consumer has incurred maximum charges on an account. The credit card company also tells consumers they are free to pay off their account balances and cancel the card. But the reality is that it can be difficult today to get approved for credit cards.

Consumers are warned to be sure and take the time to read the fine print in the documents included with their credit card statements.