Re: Band of America, Citigroup: New charges for zero-balance credit-card users

Sum Guy wrote

I don't get it.

True.

The banks *ARE* making money off people
that carry no balance on their credit cards.

Yes, but its peanuts with cards that have no annual fee.

They make money because 1% to 5% of purchase transactions
are charged by the banks to the vendors at the time of sale.

Yes, but quite a bit of that goes on the card processing hardware etc.

This is insane.

Nope, just gouging. Thats what banks do whenever they can get away with doing that.

Most premium credit cards tied to high-earning FF mile programs
already cost you $50 to $120 a year just to carry in your pocket.

Yes, but they are mostly proposing imposing a fee on cards that
do not have an annual charge, with those who pay their cards off
in full every month. And in fact a majority do pay their cards off in
full every month.

Its not surprising that the banks want to gouge more money from those people.

============================

Got Perfect Credit? You Could Be Charged For It!

Bank Of America, Citigroup First To Try Out Idea, Which Will
Undoubtedly Alienate Many Who Follow The Rules

Oct 27, 2009

http://wcbstv.com/consumer/credit.card.fees.2.1272124.html

---------------

Loraine Mullen-Kress carries a Bank of America credit card and
religiously pays off her balance.

"Flawless credit," she boasted.

Yet now, her good credit habits could cost her. Earlier this month
Bank of America started notifying customers like Mullen-Kress that
they will be charged a new annual fee of $29 to $99.

"There is a big segment of their population that they will have never
made money on, which is people who pay their bills on time every
month," said Ben Woolsey, Director of Consumer Research at
CreditCards.com.

Bank of America said in a statement: "At this point we're testing the
fee on a very small number of accounts and haven't made any final
decisions." Citigroup is also trying out an annual fee with some card
holders, and analysts expect more banks to follow their lead.

The banks are starting to charge fees to reliable customers in
response to a slew of new credit card industry regulations that will
limit when banks can hike interest rates. Cardholders who get a new
annual fee notice in the mail will be in a no-win situation.

"They can either pay that fee or they can close the account, and if
they have had the account for a while and they close it, they are
potentially going to hurt their credit card score," said Woolsey.

Analysts say right now the banks are trying to figure out what their
customers will tolerate. Many say they'd cancel cards with a high new
annual fee.

"I think it is really bad. They're encouraging you to be a bad
creditor or not have good credit," one New Yorker told CBS 2 HD.

Said Mullen-Kress: "An annual fee would not be tolerated."

Credit card companies call the fees an experiment. Whether they stick
depends on whether customers are willing to pay for something that's
been free for so long.

If your credit card company does start charging you to carry its card,
call and complain. If you have a good credit score and you've been a
loyal customer, they may be willing to waive the fee to keep your
business.

You may also see annual fees go up on cards that offer rewards like
miles and hotel rooms. That's when you'll have to weigh whether the
rewards are truly worth the higher fee.


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