I keep a habit of reading fine prints of every credit card offer I receive. (Three months ago, I blogged about an expensive card from First Premier Bank that have a fee of $244 in the first year for a credit line as low as $250.) Today I definitely increased my knowledge of how many different fees credit card companies can charge. The discovery: Credit Line Increase Fee.
The credit card offer is from Household Bank (SB), N. A. (Address is 1111 Town Center Drive, Las Vegas, Nevada 89144). At first glance, it looks like a pretty good offer: 0% APR for 6 months, then an APR of 14.74% for a credit line up to $5,000 with no annual fee. However, the disclosure includes one paragraph about a "Credit Line Increase Fee:"
Credit Line Increase Fee Finance Charge: If you request and are approved for a credit line increase ("CLI"), a CLI fee FINANCE CHARGE of 10% of the credit line increase may be charged to your Account depending on your creditworthiness. Any CLI Fee Finance Charge may increase the actual Annual Percentage Rate on your Account.
The disclosure also says that the initial credit line may be as low as $300. Therefore, the CLI Fee looks suspicious. Theoretically, the bank can give an initial credit line of $300 and waiting for you to ask for a credit line increase. Assuming not many people will read the fine print, the Bank can immediately pocket a $470 finance charge by increasing credit line to $5,000 for creditworthy customers. What a sweet arrangement for the Bank!
I am not saying this is a scam. This offer should be perfectly legal, but without doubt, this credit card will be costly to own.