Fee-harvesting credit cards

Fee-harvesting credit cards are those whose purpose is to generate fee income for the issuer. The cards tend to have low credit limits, much of which can be eaten up by the various fees imposed, from processing fees to monthly and annual fees. Because the worst of these cards were seen as unfair to consumers, the Credit CARD Act of 2009 included caps on fees. The act says no more than one-quarter of a card’s credit limit can be consumed by fees in the first year the account is opened. Thus, fees on a card with a $400 limit are capped at $100.