More fees dropped to lure credit card holders

Customers, though, would be wise to read the D ne print

No- fee credit renaissance.

Over the past few weeks, American Express and Citibank have issued noannual fee, nolate fee credit

cards. Commerce Bank introduced a product earlier this year with no fees and the same M oating rate — currently at 9.74% for the cards

Personal ! nance

are enjoying a D rst six months, then at 10.74% that— for all its bank customers.

“ Customers really dislike late fees,” says Antony Jenkins, an executive vice president at Citibank. “ They are busy and theyw ere asking that the relationship with the organization be taken into account.”

The moves come as fees, along with consumer complaints to bank- regulatory agencies, are on the upswing. In 2005, penalty fees —such as those for late and over- the- limit charges— are expected to rise 11% to a record $ 16.5 billion, bringing total fee income to $ 54.9 billion, says R. K. Hammer, a bank-card advisory D rm.

No- fee credit cards have been around for more than two decades in different forms. Issuers used to market cards this after way if they didn’t charge an annual fee or assess one if customers paid off monthly balances in full.

Today’s generation of no- fee cards go a step further, often charging no fee for being late, going over the credit limit and possibly for cash advances.

Consumers considering these deals, however, should beware: While paying late won’t incur you one- time fees, doing it multiple times could raise you up to a permanent penaltyrate up to 30%.

“ There has to be some consequence for not paying your bills,” says Larry Sharnak, executive vice president of American Express, which moves customers up to a M oating rate, currently at 28.74%, the second time they pay late in 12 months.

Citibank also applies a penaltyrate on its cards, in addition to charging a foreignconversion fee and one each time customers go over the credit limit.

Customers who pay off their balances each month generally don’t need to worry about penalty interest rates.

But cardholderswho regularly carry a balance might want to think twice before applying for a no- fee card that could raise them to a stiff rate, according to Greg McBride, a senior D nancial analyst at Bankrate. com.

“ The point is that the 28% interest rate can exact more of a price than a onetime fee,” says McBride.

Commerce Bank’s card doesn’t have any of these fees and also doesn’t charge for cash advances. The catch: You can only get it if you bank with the company.