Some Credit Card Holders Must Choose Between Extra Fees or Lower Credit Scores

A wave of new service fees has credit card customers asking whether the benefits of keeping a dormant credit card open are worth the price. According to a recent Bloomberg report, Fifth Third Bank altered its customers this summer that it would institute new inactivity fees for most of its credit cards. Fees for maintaining an account with no charge activity could pay $19 or more per statement cycle.

Like other major banks, Fifth Third issues credit cards with Visa and MasterCard logos. Accountholders use some of those credit cards in conjunction with checking overdraft protection plans. Those accounts get used rarely, making them prime candidates for unexpected inactivity fees.

Closing those accounts may save money in the short term, but could carry some long term side effects. For instance, Fifth Third customers closing overdraft protection accounts may have to pay more severe non-sufficient funds penalties without the safety net of a linked Visa or MasterCard. Because closing a credit card account often carries a negative impact on a credit score, saving $19 a month on inactivity fees could cause some consumers to spend more on mortgage financing or insurance products. Personal finance advisors recommend avoiding fees by using cards to pay one or two regular transactions each month, like utility payments or online subscriptions.