Consumers who are attempting to rebuild their credit and find greater financial flexibility by increasing their ability to take on credit card debt may still be faced with higher upfront fees for opening an account as a result of a U.S. District Judge's Ruling.
Judge Karen Schreier recently placed a preliminary injunction on a rule from the Federal Reserve Board over the upfront fees credit card lenders charge to riskier customers when they open new accounts, according to a report from the Sioux Falls Argus Leader. The institutions that filed the suit, First Premier Bank and sister company Premier Bankcard, claimed that the Fed's rule would cost them more than $1 million per month and wanted clarification on how it could charge subprime borrowers as a means of mitigating risk.
"First Premier has sufficiently demonstrated that it is 'likely' to succeed on the merits of its claim because the board acted in excess of its statutory authority," Schreier wrote in her decision, according to the newspaper.
Many consumers who worked to reduce debt may now be in a position where they want to open new credit card accounts to increase their financial flexibility, but high fees may not allow them to do so.