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BofA rolls out an annual credit card fee

Bank of America calls it a 'membership' fee; others expected to follow.

By Karen Datko Oct 15, 2009 1:29PM

This post comes from Mark Huffman of partner site ConsumerAffairs.com.

 

When Congress passed credit card reform legislation in May, many industry analysts warned that lenders would find new ways to extract the revenue they would soon be losing from consumers.

 

Among the mentioned new fees is actually an old one -- the annual fee.

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.

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:

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