credit cards

Big no to annual fees on credit cards

Wednesday, Sept. 9
Posted 11 a.m. EST

As credit card issuers gear up for the Credit CARD Act to take effect in February, there's been a lot of talk about annual fees being added to many credit cards. But issuers will "encounter stiff consumer resistance," according to a new study by Cardbeat, a market research report published by Auriemma Consulting Group.

The study notes that issuers are trying to find ways to increase revenues because of the new regulations, losses due to cardholder defaults, and lower consumer spending.

We've heard from many readers who say they will stop using credit cards if they have to pay an annual fee, or they'll drop all but one card. That "top of wallet" position is key for credit card issuers, so it will be interesting to see what they offer to make the fee worthwhile. Better reward programs? Fixed rates? What would make you willing to pay an annual fee?

In the meantime, Americans have been doing a great job of cutting their revolving debt. The Federal Reserve's statistics on consumer debt (the G.19 release) show revolving debt decreased by $22.6 billion between the first and second quarters of 2009. The preliminary numbers for July show the trend continuing with consumer debt at $905.6 billion, down from $911.7 billion in June.

If you'd like to join the debt paydown party, use Bankrate's suite of debt management calculators to track your progress. And good luck!

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