RICHMOND, VA (WWBT) - The agency that set out to protect consumers may abandon a rule that limits big, upfront fees on credit cards.
Proposed new rules were announced by the Consumer Financial Protection Bureau.
This new consumer watchdog agency would allow credit card companies to once again charge you high fees that had been capped.
Of course the move is drawing criticism.
When people heard the news, it was upsetting.
"That's a big concern to me. A big concern. That's not a good thing at all," said Nicole Brown.
Nicole said she learned her lesson when the economy crashed.
"Use your credit card only when necessary."
But she thought the government — and big banks — had become wiser too after public outcry over exorbitant fees.
Consumers felt vindicated and safer when the Obama administration created a watchdog agency to keep credit card companies from over-charging their customers.
But now, that agency said it is backing off its plan to limit large up-front fees.
"Some of those fees are just astronomical, and I just don't want to go through that again."
Judging from the reaction we got — there will be backlash.
"We pay enough fees as it is. Late fees or overcharge fees. I don't think it's fair to consumers at all."
But some financial experts say the new agency is simply learning to pick its battles.
Banks pushed back when it tried to limit credit card fees totaling more than 25 percent of a person's credit limit, in the first year of the account.
Now, they are allowed to charge whatever they want, as long as they do it upfront... before the card gets activated.
Those fees can include processing or activation charges, of over $100.
"I wouldn't see the use of using a credit card to pay $100 just to use that credit."
Lenders may see another exodus of customers.
But banks and credit card companies say they need the freedom to make enough money, to continue offering loans, in the first place.
For now, consumer groups are criticizing the CFPB and pressing the feds to stay the course.
Meantime, your best protection is to make sure you understand all the fees and interest rates, before you activate a credit card account.
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