Discover card will be introducing two new changes to their cardmember agreements 2aDay is told.  The changes will go ito effect after October 1, 2007.  Income from fees associated with credit cards is where banks make their dough not from reinvesting overnight the balances owed etc.

Fee income is king to bankers but it should be anathema to you.  Here is what changes for you Discover card holders:

Special Cash Advance Offers:   When you take advantage of special rates on cash advances there is usually a proscribed time when a lower fee is attached (or better yet, waived).  However, the new rule will be that after the expiration of the special rate, the standard APR for cash advances will apply.  Plus, if you miss making a payment (missed snail mail while on vacation etc), the special rate will end and a Default Rate will apply.

Minimum Monthly Payment:   Here is the new rule that goes into effect.  If more than 90% of your New Balance consists of special-rate balance transfers, they may (read: will) increase your Minimum Payment Due to a maximum of 4% of the New Balance if it would normally be less than that (these have typically been at 2% for years).   So, their fee income just doubled on you folks who have been riding their special rate balance transfers schemes they offered you but jacked up your total amount owed over their new 90% threshold.

Late fees:   The mack daddy of all fees set by bank card institutions.  Late fees used to run about $15-$20.  However, with Discover’s new rules going into effect this Fall, the fee is set on the amount of the balance owed at the time of the missed payment.  If your balance is $250 or less, the will be $19.  If the balance is greater than $250 (hello, that means just about everyone), the fee will jack up to $39!

You have until September 25, 2007 to notify Discover that their new schemes suck and that you are canceling your card.  Better yet, pay that freaking plastic beast off once and for all.   You can call Discover Card at 1-800-DISCOVER (1-800-347-2683).

You almost gotta have plastic to rent cars, stay in hotels, and protect your credit rating (the institutions hate cash for some reason) so be smart with your money.

PS – don’t get sucked into believing that using your debit card (usually on Mastercard or Visa) will keep you out of hot water.  The consumer protections are DIFFERENT for purchases using debit cards versus credit cards (one is treated sorta like cash and the other is a de facto loan).  So, use debit cards for stuff under $250 and anything over that use the real deal to ensure you automatically gain the protections you deserve.