Credit Limit Increase Fee

Monday, August 07, 2006

At Consumer Action we survey about 150 different credit cards a year, so we’ve seen some crazy fees over the years. Late fees that are 20 times greater than the delinquent balance, “account maintenance” fees, “currency conversion” fees for purchases abroad. Nonetheless, Applied Card Bank's charge of $100 for a “Credit Limit Increase” is an eye-opener:

Applied Card Bank may offer a Credit Limit Increase to you or you may request an increase. When the increase is granted, your account will be billed a Credit Limit Increase Fee of $100.

Since the credit limit for this card frequently is about $500, you could pay for a credit limit increase smaller than the fee you paid to obtain it.

The bank has a good candidate for runner-up in the Bogus Fee Hall of Fame: a $6.95 charge to make an automated payment online.

As is the case with most credit card fees, banks are allowed to rip you off as long as they tell you they might rip you off. Since Applied Card Bank discloses these ridiculous fees, by using the card you implicitly agree to the bank’s cardholder agreement.

Subprime lenders always claim to be going out of their way to help credit impaired borrowers—Applied Bank is no exception, claiming that it is “a leader in providing credit cards to people with little or no credit history.” But someone at Applied Card Bank seems to realize how junk fees like this might impact their cardholders’ budgets: the final item on the bank’s FAQ (frequently asked questions) responds to, “What do I do if I am filing for bankruptcy?”

Do you have a juicy Fee of the Week? We'd like to hear about it. Click here to e-mail us at the Hotline.