Optional vs. Required Credit Card Fees

Capital One recently got in trouble with the Consumer Financial Protection Bureau for deceptively marketing add-on services like payment protection and credit monitoring services. Consumers complained that Capital One representatives made it seem as though the services were required, when in fact, services like these are purely optional.

Millions of cardholders will receive a refund for these services, including cardholders who tried to cancel the services but were unsuccessful. It’s wonderful that Capital One has to pay up for taking advantage of consumers, but it would have been better for cardholders to avoid these charges in the first place, especially those who were uninterested in the services. When it comes to credit card fees, it’s good to know what you’re required to pay versus what’s optional. That way, you know when you can safely turn down services the card issuer is offering.

Required credit card fees are listed in the credit card disclosure. By law, every credit card offer must come with a credit card disclosure that lists all the fees associated with the card. Reading the disclosure is the best way to know if a fee is required or not. A copy of the disclosure will included with your new credit card. File it away instead of tossing it so you can refer to it if you have questions about fees.

Required fees are typically related to an action or transaction. For example, a late fee is charged when your payment is late and a balance transfer fee is charged when you transfer a balance. Perks and benefits of the credit card like extended warranties or collision damage waiver are either offered for free or covered by the annual fee (if your card has one). You don’t have to pay an additional fee for any perks your credit card offers automatically, even when you use the service.

Optional fees are tied to a service. In Capital One’s case, the services were payment protection insurance and credit monitoring. They won’t be listed in the credit card disclosure obviously because the services are offered. These add-on services are often pitched when you call to activate your credit card or when you call the card issuer with a question about your card. For that reason, it’s easier to confuse these optional services for something that’s required.

Optional fees are, well, optional. If a fee is required, your credit card won’t ask your permission to enroll you or to begin charging the fee. So if you feel like a service is being pitched to you, it probably is. When you have doubts, just ask.

Read your credit card statement each month to confirm you’re not being charged for services you didn’t intend to enroll in. Call your credit card issuer to cancel the charge (be sure the charge is actually coming from your card issuer and not a third-party.) Then, make sure the charge doesn’t show up on any future billing statements.

You can file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov if the card issuer makes it hard to cancel the service or continues to charge you after you’ve decided to cancel the services.

Source: ConsumerFinance.gov