Friday, May 29, 2009

Credit cards may not be free anymore

Credit card customers could soon be feeling the pinch of an extra charge. If banks have their way, they will soon have to shell out annual charge on their credit cards. Banks are planning to take this step because of high issuance costs and rising defaults. Earlier at the height of consumerism and as credit card popularity gained momentum, banks started issuing credit cards indiscriminately. They even started offering free lifetime schemes to many customers without any annual charges. They also came up with many high-end credit cards for HNI and high-income group customers, where they levied some annual charges.

Look at your credit card bills and your spending habits carefully. Apart from interest costs for the credit used, you may have to shell out the annual charges. Indirectly this could be positive to individuals, as the tendency to apply for a card, because it is freely available is reduced. This in turn means that individuals may manage their expenses better and not fall into a debt trap.

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