BofA rolls out an annual credit card fee
Bank of America calls it a 'membership' fee; others expected to follow.
Among the mentioned new fees is actually an old one -- the annual fee.
- Bing: Worst credit cards
When credit cards were first introduced, almost all cards charged an annual fee. But as the industry grew more competitive, with more and more banks and financial services firms offering cards, the annual fee gradually disappeared from major bank cards.
- Video: Wall Street big-bonus battle
Now, Bank of America says it will begin test marketing a new "membership" fee for some of its customers. In other words, not every customer will be assessed the charge. If those who are charged don't cancel their cards or protest too loudly, presumably all customers will soon be required to pay it.
While other banks are expected to follow suit, it may be helpful to point out that many current credit card users are already paying an "annual fee" for the privilege of carrying a credit card.
- When major banks offer a credit card in partnership with another business, such as a hotel or airline, customers often get slapped with an annual fee.
- Small credit card issuers that target the subprime market have always charged a high annual fee, one of the many things making these low-credit-limit cards such bad deals.
Michael, of Hershey, Pa., said he paid a $100 annual fee recently on his Imagine Visa card.
"This month I get a letter stating that their credit card program has ended, and that my account will be closed immediately," he told ConsumerAffairs.com. "If they would have sent a letter, stating their intentions, before charging me the annual fee of $100, I would have paid the balance off and cancelled the card myself."
But to other credit card customers, the appearance of an annual fee on their credit card bill comes as a surprise.
Rick, of Erskine, Minn., said he had never been assessed an annual fee on his Washington Mutual credit card. Then Washington Mutual was acquired by JPMorgan Chase.
"I got a charge for over the limit, which was only a few bucks over my limit," Rick told ConsumerAffairs.com. "I looked at my account and saw that what put me over was a $39 annual fee. I had no warning about this charge and didn't know about it."
Last year, Anna, of Brooklyn, N.Y., lost her Citicard and asked for a new one. The replacement card was Citi's new Diamond Preferred Rewards card, even though she just wanted a replacement for her old card.
"When I called to inquire about the change, I was told that the new card works just the same as the old card, and only adds the 'Thank You Network' feature, at no charge," she told ConsumerAffairs.com. "I asked if I can instead have my old card back, and was told no. Now, less than a year later, I'm being charged a $30 membership fee, for doing nothing more than always paying the card charges in full every month. This change comes without any notice, although the company claims that there was a letter."
Is there any way to get out of paying an annual fee?
Maybe. Scott Bilker, author of "Talk Your Way Out of Credit Card Debt," suggests calling and asking politely if the bank would waive the fee. He says that in his experience, 95% of the time the bank will agree.
Related reading at ConsumerAffairs.com:
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'