4 Reasons Credit Cards Are Better Than Ever Before

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When the Card Act of 2009 became law, many predicted that tighter regulations would force banks to increase fees and curtail rewards. Fortunately, the opposite has happened.

The biggest story in consumer finance in the last few years has been fees – airlines, hotels, and banks love them. Cell phone, Internet, and cable television companies can’t get enough of them.  It’s not uncommon to receive a bill for a car rental where the majority of the charges are taxes and fees.

Fortunately, there’s one product you probably use for which the trend is for fewer fees. In the past year, industry observers have seen credit card fees being reduced or dropped while rewards are being increased.

Here are four ways that your credit card may actually be getting better…

1. The end of foreign transaction fees

These fees are so completely unjustified that they are one of my biggest Credit Card Pet Peeves.

When I first started writing about credit cards back in 2007, nearly every bank (except Capital One) was charging a 3 percent fee on all transactions processed outside of the United States, even if the bill was in dollars. Since then, all cards from Discover and the Pentagon Federal Credit Union (PenFed) have dropped this fee.

Several products from Citi and Chase that offer travel rewards have also eliminated these fees. Finally, American Express waived the fee on their Platinum cards. It’s now only a matter of time until competitive pressure forces more banks to end this outdated money grab.

2. Cracks in the balance transfer fee

Zero-percent APR balance transfer offers sound great – until you examine the fine print to discover that a balance transfer fee of 3 to 5 percent nearly always applies. Last week, Chase introduced a version of its Slate card that doesn’t charge the 3 percent fee on balance transfers conducted during the first month the card is open.

The zero-percent rate applies for six to 12 months, depending on the applicant’s credit worthiness.  In addition, there are several low-APR balance transfer offers that have no fee. For example, the PenFed offers several product,s like their Low Rate Visa Gold, that feature a low 4.99 percent promotional APR on balance transfers for 24 months, with no fee.

3. Increased rewards

2011 has been a year of unprecedentedly generous sign-up bonuses. Although several of the best offers have come and gone, there are still some impressive deals among our 5 Best Credit Card Sign-Up Bonuses. In fact, reward offers across the board are continuing to grow in value as banks compete fiercely for the business of high-spending and low-risk customers who prefer reward cards.

4. Fewer penalty rates and fees

Banks try hard to retain their valuable credit card accounts,  only to enrage customers with late fees and penalties. In response, some banks have introduced simple products that do away with many of these fees. For instance, the BankAmericard Basic Visa features just one interest rate on all purchases, balance transfers, and cash advances, with no penalty rate if you happen to miss payments. The City Simplicity has the same policy, as well as no late fees.

Meanwhile the PenFed Promise Visa may be the ultimate no-fee card. It features no balance transfer fee, no cash advance fee, no late fees, no over-credit-limit fee, and no penalty APR. Nevertheless, late payments will still have a ruinous effect on your credit.

Fees may be dropping as banks struggle to retain their profitable credit card customers. In fact, it may be that their recent attempts to increase fees on debit cards were partially an attempt to steer customers  back to more profitable  credit cards. Whatever the reasons are for our good fortune, this is a golden age for credit card users. Check out our Credit Card Search Tool to find the perfect card for you.

Stacy Johnson

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