Once stamped out in one area unethical credit card practices seem to be propping up in other niche markets of the credit card industry. One of these markets is the subprime credit card market which targets individuals who have no credit or bad credit. While the subprime credit card market has its place in that it can help debtors rebuild their credit rating after bankruptcy, debtors must be aware and avoid the “black-hat” credit card companies who simply prey on their customers using what is commonly known as “fee harvesting.” Fee harvesting is when a credit card with a low credit limit makes its money primarily through credit card fees. And while the Credit Card Act prohibits charging annual fees greater than 25 percent of the debtor’s credit limit, the law does not have a restriction on other fees.
So what we have now are fee harvesting credit card companies issuing low credit limit cards with ridiculous fees attached which can add up to as much as $100 a year. Those other fees are not calculated into the 25 percent quota allowed by the Credit Card Act; but some legislators are trying to have the law be tweaked so that credit card companies can’t charge any type of fees that total more than 25 percent of the customer’s credit limit. In the mean time, debtors must be wary of any credit card company who has a long list of fees. Make sure that you carefully read the terms of the credit card and if you find excessive fees then keep looking for a better deal. There are still some fair companies issuing credit cards to those trying to rebuild their credit.
