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Lessons from an annual fee fiasco

By Leslie McFadden ·
Monday, September 13, 2010
Posted: 2 pm ET

Sometimes you just have to close your credit card account. One good reason: the addition of a giant annual fee.

I'm not a fan of the move, as I like having multiple credit cards at my disposal, and all the unused available credit helps my credit score. Today's drama changed my mind.

Background: I hold a credit card from a bank that's owned by one of the world's top 10 card issuers. I pay an annual fee of $49 for the rewards program, which I happily pay for the generous 50 percent cash back return on movie ticket purchases, among other benefits. (I see a lot of movies.) On Aug. 31, the bank assessed a separate, $79 annual fee.

I had no intention of paying $128 for the same rewards. Not when I had other credit cards that didn't charge an annual fee for their rewards program.

The trouble was, I had somehow missed the opt-out letter they had sent, which informed me of the fee and gave me an opportunity to close the account to avoid it. The deadline to close the account before the fee took effect had passed.

I called customer service on Saturday, only to be told that my only option was to speak with the credit department, which only works weekdays. I called said department this morning, and was told I had to speak to customer service. Another phone call later, I learned there was "nothing" they could do to reverse the recently-added fee, since I had failed to opt-out by the deadline. I pressed for one of the fees to be removed. They said the rewards program was done through a third party, so the $49 fee wasn't technically an annual fee on the account itself. If I canceled the card, I would lose the rewards I had earned.

The representative politely suggested I call the rewards provider to get my rebates quickly processed over the phone so that I could then close the account. After calling what turned out to be a wrong number, I eventually learned that the rebate couldn't be processed over the phone. I would have to mail in my rebate form as usual.

In a final call to customer service in which I threatened to close the account, I was told that even if I canceled, the $79 fee wouldn't be refunded. I was left with two options: close the account and cut my losses or keep the account open and get my money back through the movie rebates.

Lessons learned:

  1. Open mail from your card issuer, even if it looks junk. It could be a letter about a $79 annual fee. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 requires issuers to give you 45 days advance notice before imposing most types of rate increases and fees. You must be given the right to reject the change before it takes effect, which could mean closure of the account.
  2. Be polite but assertive with the customer service representative. Keep pressing for your goal.
  3. Try to stay objective about your options. I ended up keeping the account open so that I can recoup the costs I already paid through future rebates. It pains me to do so, but it's the cheaper route.
  4. Complain smartly. Talk to a supervisor, address the company through Twitter, write to media outlets or file an official complaint with the regulator.
  5. When treated poorly, check out the competition. You don't have to stay married to one card issuer.

Have you ever had a problem with a credit card issuer? How did you deal with it?

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Leslie McFadden
September 14, 2010 at 4:59 pm

Kris, that's a good idea. I grew tired of talking to different people to explain the same situation, but I'll definitely make another attempt.

September 14, 2010 at 3:42 pm

I would have asked for a supervisor the very moment that you were told the fee couldn't be removed. Until last year, I worked at Citibank, and regulations dictated that customers had until 30 days after the fee billed to close the card and have the entire fee refunded.