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Bank of America adds card fee

By Lucy Lazarony · Bankrate.com
Thursday, February 24, 2011
Posted: 1 pm ET

Bank of America will be charging a new $59 annual fee to about 5 percent of its credit card accounts in May, according to an article by the Associated Press.

Whether or not a Bank of America credit card customer will be charged the new annual fee depends on a customer's credit risk profile, AP reports. According to the article, customers that carry balances close to their credit limits, have lower-than-average FICO scores or pay late on a regular basis may be charged the new annual fee.

Bank of America card customers assessed the new annual fee are also unlikely to have any other relationships or accounts, such as a mortgage or checking account, with Bank of America, according to AP.

According to the CARD Act, credit card issuers must provide notice of certain changes to your credit card account 45 days before they take effect. These changes include adding an annual fee to a credit card account.

So it's important to monitor your credit card accounts carefully and be on the lookout for new fees.

Has a credit card issuer informed you that a hefty annual fee is being added to your credit card account? Would you rather close the account altogether than pay the annual fee?

Before you close a credit card account, be sure to consider the impact on your credit score.

Your credit score considers how much of your revolving credit lines that you use every month. This is called a credit utilization ratio. The higher your credit utilization ratio climbs, the lower your credit score dips.

Closing a credit card account, especially one with a high credit line, could push up your credit utilization ratio, nudging down your credit score.

Utilization counts for a good portion of a factor worth 30 percent of a consumer's FICO score, the most widely used credit scoring model. The FICO score doesn't factor the balance and limit of a closed account into utilization once the cardholder has paid off the account.

So if you have high balances on other credit cards when you close a card account, your utilization could climb and ding your credit score. But as soon as you start to pay down those other balances, your credit score should improve.

If you decide to close a credit card due to a hefty annual fee, the best way to protect your credit score is to pay down balances on your other credit cards. If you pay your credit cards in full each month, you can protect your credit score by charging less on your other credit cards.

Ready to close a credit card account? Be sure to follow these steps.

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Come back to our home page Monday, Feb. 28, for our Managing Debt special feature. Find out how to live a debt-free life.

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93 Comments
Rich
April 22, 2011 at 7:11 pm

Fumanchu must be a bank employee. I can hear the conversation now as it was,

"you must take the TARP money."

"But we don't want to."

"You have to."

"Ok. If we have to."

You don't really understand how the free market works do you? The bank was under no obligation to take tax payer money. They decided it couldn't hurt. Not exactly rocket science.

Bart
April 22, 2011 at 1:56 pm

Just got a notice from my bank on my credit card - new fee:
Called the "Penalty APR". If I make a late payment - *any* late payment - my interest rate will be adjusted in a way that they do not define other than "prime rate + factor based on my credit worthiness". And it's permanent. No credit card reform there! What BS!

Roger T
April 22, 2011 at 8:23 am

Jack was correct when he said
:
"
I'd love nothing more than to see 'too big to fail' banks crumble and all the politicians who gave them a pass to be unemployed.

I hope Jack realizes that Chris Dodd and Barney Frank were the key players in the Creation and Cover Up of the economic crisis in America.

Al
April 22, 2011 at 5:17 am

I love the irony that if a credit card changes
its terms and becomes a bad deal, the act of
you closing it causes you to be penalized in
the credit score category.

Maybe it's time for a widely available
"credit score" like number to be issued TO
banks in terms of their service,
financial health and fee structure?

matt
April 22, 2011 at 4:55 am

Buy AMERICAN & pay CASH!

I closed my credit accounts, I paid them off, and I have never looked back.

I have more money now than I ever did and my lifestyle hasn't changed one bit.

I think the bank consider us sheep to be tended, then sheered whenever they want to!

fumanchu
April 22, 2011 at 1:12 am

banks are companies. companies are out to MAKE MONEY. there is a higher risk in lending to such credit card holders (as described in the article)therefore it makes sense (to me) to charge a fee. Customers are notified AT LEAST 45 days in advance of such a change BY LAW. don't like it? close the account or switch to a different card. This bank was NOT bailed out as many of you idiots assume. YES, a lot of banks WERE bailed out. This bank was basically forced to take TARP money and was the first bank to pay it back WITH INTEREST. pay attention idiots....

Robert Werner
April 21, 2011 at 9:36 pm

Just how is risk related to an annual fee? Banks make it appear so by slapping the fee on those trapped with high balances (at blood sucker interest rates allowed by Congress) which may take years to pay off. The banks know the well-to-dos can pay off their balance, flip the bank the birdie, so they are left alone.

Banks should not have been bailed out. A collapse would only be momentary, and does not destroy physical assets. Every house would still be there, only the value and ownership would change. Banks take risks because they are isolated from the cost of failure.

Karen1229
April 21, 2011 at 9:31 pm

alfredo
April 20, 2011 at 9:27 pm

Switch your credit card to a local credit union NOW!
You wont be sorry.
-----------------------------------------------------
This is so true. I didn't even have a balance on my bank credit card. They raised my interest rate to 22.99% (When I did have a balance, I NEVER missed a payment!), and notified me that I would be charged an annual fee. I closed the account and opened one at my local credit union. I got twice the line of credit, a fixed APR that's way less than half of the one on the BOA card, and have no annual fee. It made my day to tell my bank where to go!

Pete
April 21, 2011 at 7:09 pm

I'll start having faith in our government when they finally stop the predator banks and credit card companies from preying on people. But it's not going to happen because our government is in the predators employment.

Moe
April 21, 2011 at 6:28 pm

Funny how credit rating started as a way to find out trustworthy someone is and now it's a way for the bank to know just how much money they will be able to milk from someone. Being trustworthy, paying off credit cards and keeping low balances is starting to work against people.