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Card rates up and fees mixed

By Lucy Lazarony ·
Thursday, February 3, 2011
Posted: 10 am ET

Interest rates on credit cards increased and card fees were mixed in 2010, according to a new credit card survey from Consumer Action, a consumer advocacy group based in San Francisco.

The average variable interest rate on credit cards increased from 13.2 percent in 2009 to 15.06 percent in 2010, according to the survey.

"Issuers have been trying to make up for any limits imposed by the CARD Act by increasing margins on variable rate card offers," explains Linda Sherry, director of national priorities at Consumer Action in a press release.

Balance transfer fees also increased in 2010. The average fee for balance transfers in 2010 was 3.53 percent, up from 2.94 percent in 2009.

Balance transfer fees ranged from 2 percent to 5 percent in 2010, up from a fee range of 2 percent to 3 percent in 2009.

Discover began charging a 5 percent balance transfer fee in 2010, up from 3 percent in 2009, according to the survey.

Other cards charging the top 5 percent fee for a balance transfers in 2010 include Citi Platinum Select, Chase Freedom and Wells Visa Platinum.

The Consumer Action survey also found many cards applying new restrictions on transferred balances such as the Discover Miles and Discover More cards, which no longer offer rewards on balance transfers.

Not all the news on balance transfers fees was gloomy. Some issuers are offering new customers a break on balance transfers.

Discover, Fifth Third, HSBC, Pentagon Federal Credit Union, Town North Bank, U.S. Bank and Wells Fargo all waived fees on balance transfers for new customers on some of their cards in 2010.

As for annual fees, fewer credit cards were charging them in 2010, according to Consumer Action. Twelve percent of credit cards surveyed in 2010 charged annual fees, compared with 20 percent of cards in 2009.

The average annual fee in 2010 was $65.20, up from $62.75 in 2009.

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