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Will credit card fees rise?
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August 14, 1996: 6:22 p.m. ET
A U.S. Supreme Court ruling opens door to higher fees, smaller grace periods
From Correspondent Irv Chapman
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NEW YORK (CNNfn) -- Even if you never make another charge on your credit card, your bill could soon rise.
That's because the U.S. Supreme Court ruled this summer that credit card issuers can charge fees based on laws in the state where the issuer is located, rather than the state where the customer lives.
Most card issuers are located in South Dakota and Delaware, two states with some of the least restrictive laws regarding fees.
As a result, industry experts predict card holders are about to see an explosion of new, higher fees.
Visa, MasterCard, and American Express declined to comment, but Robert McKinley of Card Trak predicts fees are heading up.
"We're not only going to see late fees going up to $18 or $20 across the country, but also over-limit fees going up, cash-advance fees, probably new fees - for example, fees for not using your card enough, low usage fees, or perhaps fees for accessing customer service," he said. "To find out your balance is going to cost you."
Experts say the ruling will also decrease grace periods for paying your bill late.
Some predict banks will -- and in some cases, already do - impose late fees if you're tardy by just one day. Currently many banks offer a 25-day grace period.
Still, more than 6,000 companies issue credit cards, so you do have a choice.
"Vote with your feet," McKinley recommended. "Do more comparison shopping. Know what the fees are. Read carefully, and if you don't see something you like, go elsewhere."
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