For many with average credit scores or worse, it is increasingly difficult to find a company willing to issue a credit card. As a result, many times consumers unwittingly find themselves signing up for what is commonly called “fee harvester” credit cards which, without much warning, create a downward debt spiral.
“Fee harvester credit cards” are credit cards with low credit limits but high upfront fees, a high interest rate, and many additional monthly fees that are charged during the life of the card. These fees are often charged against the card’s credit limit, which if not paid off at the end of the month, incur an interest charge. For instance, a typical fee harvester credit card may only offer an initial credit limit of $350, but charge upfront a $50 annual fee and a $150 processing fee. Later, the customer will be charged $10 monthly account maintenance fee, a $10 online payment fee, and potentially a number of other fees, all charged against the card’s credit limit. For some consumers who cannot afford to pay the initial fees, interest starts to compound and a debt spiral begins. While some customers can stop the spiral, most affected cannot.
Over the past few years a number of companies operating these fee harvester credit cards have been successfully sued for failing to disclose all fees associated with the card and misrepresenting the amount of initial credit available on the card. If you believe you have a fee harvester credit card and would like to learn more about your legal rights, Finkelstein Thompson LLP welcomes your call.
