Thursday, Oct. 15
Posted 11 a.m. EST
Bankrate reporter Leslie McFadden contributed this entry.
If you carry a Bank of America rewards credit card, check your mail. The issuer will impose a $29 to $99 annual fee on some of its rewards credit cards beginning this February, according to a report from the Associated Press.
BofA spokeswoman Betty Riess said in an e-mail statement that "we are testing an annual fee on a very limited number of consumer credit card accounts." She declined to provide an exact number but said under 1 percent of accounts were targeted, "based on risk and profitability."
The bank started notifying customers earlier this month, according to Riess. They can reject the fee by opting out, but doing so will close the account.
Riess stressed the move is a "test," and added that "we haven't made any final decisions regarding annual fees."
The bank's experiment with annual fees on rewards cards comes just after the issuer's recent promise not to raise customers' interest rates before credit card reforms take effect in February. The Credit CARD Act limits rate hikes on existing balances but does not restrict annual fee assessment, even though it does require 45 days' advance notice.
Affected Bank of America cardholders: How did you react to the terms change notice? Will you keep the card? Write to me at firstname.lastname@example.org
The beginning of annual fees?Some experts predicted that annual fees would become more common in the industry as a result of legislation. So far, Citi has said it will charge annual fees on some of its existing accounts beginning next year. Chase imposed a $10 monthly fee on some of its accounts last January (which amounted to a $120 annual fee), but consumer backlash prompted it to rescind the charge.
Annual fees have also started to crop up on credit card offers in 2009. The fees appeared on 27 percent of offers during the first quarter of 2009, up from 18 percent the year before, according to Synovate Mail Monitor, a credit card direct-mail tracking service.
Research from the firm shows that 72 percent of households that possess at least one annual-fee card carry only one such card. Makes sense to me. Annual fees would quickly add up across multiple cards. Why keep fee-based cards, unless you have to or the rewards offset the cost?
Readers, would you dump a card to avoid an annual fee? At what amount would you draw the line?
Questions? Comments? E-mail email@example.com.
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