Ever since the banking meltdown, Allen Schwartz knew he would face far higher credit card interest rates sooner or later. But he was stunned to learn he also must pay $1 a month to get a Beall's credit card bill mailed to his New Port Richey home.
"Outrageous," said the postal worker. "In this economy, how can a store charge to send a bill?"
For anybody who thought store credit cards might be a way around the avalanche of new fees banks are dreaming up to shore up their credit card business, think again. Alliance Data Systems, the Dallas bank that handles credit card business for Beall's and 90 other chains ranging from Ann Taylor to Victoria's Secret, is notifying cardholders they all must pay $1 a month for printed statements.
Alliance points out that online payment accounts and e-mail billing alerts are free. But not everyone has access to the Internet or has taken the leap of faith to put their financial information there.
Some utilities and cell phone companies coaxed customers to switch to online billing by pitching convenience or appealing to environmental sensitivities to save paper.
Alliance says its fee recoups only the extra cost of a new federal credit card law requiring more disclosure of card terms.
"The new requirement we disclose standard terms on each monthly bill will increase our paper costs 30 percent," said Shelley Whiddon of Alliance Data.
"That's the first time I've heard that one," said Charlene Crowell, a spokeswoman at the Center for Responsible Lending, a North Carolina nonprofit research firm.
It's one of several tactics card issuing banks are using to maximize their fee income to offset the new law, most of which takes effect Feb. 22 and limits interest rate hikes and hidden over-the-limit fees.
The center found some tricks lurking in the fine print that banks are trying to get back some of an estimated $50 billion the law costs them:
Pick a rate: Many banks have shifted from fixed to variable interest rates. Variable-rate cards traditionally are usually tied to a specific prime rate. But some now permit the bank to charge the highest prime rate of the last 90 days. So the consumer gets no benefit from a rate decline.
New or higher fees: Minimum finance charges of $2 even on balances as low as a penny, $3 transaction transfer fees increased by $1 or $2, minimum cash advance fees imposed and ceilings eliminated. Some shrank the value of rewards points.
Inactivity fees: While many banks are shifting customers to annual fee cards, a few now impose fees for not using a card enough. The center found inactivity fees as steep as $36 for a card not used for a year or charged for less than $2,400.
"Everything is fair game as the banks talk about creating fees we haven't even imagined yet," said Bill Hardekopf, chief executive of LowCards.com, a Birmingham, Ala., Web site that compares more than 1,000 credit card deals.
"This is the first we've seen a card issuer charge for a paper bill. But if they don't lose many customers, it will spread fast because this industry has a herd mentality."
Schwartz is still waiting.
"I'll cancel the card the first time they bill me $1 for their bill," he said.
Mark Albright can be reached at firstname.lastname@example.org or (727) 893-8252.