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"Don’t get punished for NOT using your credit card"

By admin | November 23rd, 2009 | Credit Cards, Featured

Most of us are well aware of just how convenience and flexible it can be to use a credit card to make purchases. However, the global credit crunch has changed our spending habits in many ways, and quite rightly many of us are now nervous about using our credit cards and getting into debt unless there is a real need to do so.

As a result of this many people are simply deciding to put their credit cards to one side and use them only in an emergency.

For some lucky people a financial emergency that warrants the use of their credit cards may not arise for some time. However, whilst this is good news there is also something that credit card customers need to watch out for.

There are some credit card companies that are now charging annual fees to those that do not use their credit cards for a period of time, such as twelve months, which means that effectively the customer is paying out good money simply for not making any transactions on their credit card.

It can be very useful to have a credit card put aside for emergencies, and many people have realised that this can prove to be an invaluable measure.

However, many of the people that are doing this are now being hit with, or at risk of being hit with, annual fees for simply being careful and keeping their cards to one side to use for emergencies rather than using them all the time to make everyday purchases and impulse purchases.

It has been advised by some industry officials that it may be a good idea for those that have emergency credit cards put aside to try and use the cards now and again and then repay the balance within the interest free period.

This would allow the cardholder to enjoy the benefits of having a credit card without being charged any interest and without being subjected to the annual dormancy fees that some providers are now starting to charge.

Many have said that the reason behind the dormancy charges is that credit card firms need to make more money from their customers, and in particular from customers that have a credit card account that has to be administered and looked after but which they do not use, therefore not making the credit card company any profit.

For credit card firms this is one way to get some extra revenue from customers, which has become vital to many providers that have struggled to cope with the losses stemming from the global credit crunch and rising bad debts over recent years.

Consumers can also take action if they have a credit card that has a balance outstanding but which they choose not to use again in order to avoid these dormancy charged. Officials have advised that these consumers switch their credit card balance to a balance transfer deal on a card that does not make charges for failing to make transactions within a certain period of time, as this can then save them the annual fee.

One of the credit card providers that has recently started charging these dormancy fees is American Express, which has started charging its platinum credit card customers around twenty pounds a year if they do not make a transaction within a twelve month period. However, this could be just the tip of the iceberg, as many industry experts believe that more and more credit card providers will start imposing these fees on customers that are not using their credit cards regularly in order to boost their revenue.

Tags: credit card fees, credit card inaction fee, credit card charges

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