BofA to charge annual fees on some credit cards

By CANDICE CHOI, AP Personal Finance Writer Candice Choi, Ap Personal Finance Writer – 2 hrs 9 mins ago

NEW YORK – Bank of America Corp. said Tuesday it will charge a limited number of its credit card customers annual fees ranging from $29 to $99 starting next year.

"We're testing this to see what the feedback is. In terms of any plans going forward, we haven't made any decisions," said Betty Riess, a spokeswoman for Bank of America. She said the fee is being "tested" on 1 percent of its credit card accounts globally, but declined to give specific numbers.

Bank of America, based in Charlotte, N.C., had 80.2 million credit cards in circulation last year, making it the third-largest issuer of cards, according to CreditCards.com. Chase was first with 119.4 million cards, while Citi had 92 million.

The Bank of America accounts that will be charged fees were selected based on "risk and profitability," Riess said. That means customers in good standing who never carried a balance — and never incurred interest charges or late fees — could be among those getting notices.

The notices of the new fee comes after Bank of America last week vowed not to hike interest rates on credit cards ahead of the sweeping new credit-card reforms that go into effect in February. That pledge came as Congress considered moving up the effective date of the law to Dec. 1. Customers across the country have seen interest rates hiked and credit limits lowered since the law was signed in May.

Among other consumer protections, the law limits how and when banks can hike interest rates and fees on credit cards.

Analysts have predicted banks would make up lost revenue by charging annual fees more frequently on credit cards and checking accounts, even for customers in good standing.

"We are making this change in response to market conditions, new federal laws and regulations, and the increasing costs of providing unsecured credit," states a letter sent to a Bank of America credit-card customer and obtained by The Associated Press.

Customers are told that they can reject the fee, but will subsequently have their account closed. The deadline to reject the change of terms is Dec. 16.

Closing a credit card account can come with repercussions to a person's credit score, since it would lower the amount of available credit a person has access to.

Some Bank of America cards, such as airline rewards cards, already come with fees.

Chase also charges annual fees on select rewards cards, but a spokeswoman said the company has no plans to test annual fees on a broader basis. Wells Fargo said it does not "speculate on future business policies and practices."

A Citi representative could not be immediately reached for comment.

http://news.yahoo.com/s/ap/20091013/ap_on_bi_ge/us_bank_of_america_annual_fees

Penalize the ones that play by the rules to cover the ones that don't. That is so wrong and is the perfect example of what is wrong in the United States these days.

So how is it penalizing only the good customers?

That's not possible!
It was sposed to fix the problem and whip those thieving credit card companies into shape

Is this where those opposed to this should say

TOLD YOU SO?

in other words, since Congress is regulating the gouging, they have found another way to do it

Only applies if people bank with the big banks.

If people were smart, they would join their local Credit Union.

I did.

Smart people bank at big banks too. Credit unions have restricted access, and some don't even offer business accounts. Their atm network is not as convenient either. Product and services are limited too. Large loans can be a lot more expensive to repay.

So, if u need the more inclusive services and products that the big banks offer, good customers are going to foot the bill to offset bad customers now thanks to congressional reform.

Penalize the ones that play by the rules to cover the ones that don't. That is so wrong and is the perfect example of what is wrong in the United States these days.

Credit Unions don't restrict access anymore....that is a myth. anyone can become a member of the Credit Union I belong to.

Their ATM network is huge....most Credit Unions, like mine, partner with a Co-Op network, like Allpoint. There are over 57,000 nationwide that are surcharge FREE ATM's. I was even up in Canada quite a bit this summer and accessed ATM's with NO PROBLEM.

Loans are cheaper with a Credit Union. Mine is way cheaper on auto loans and mortgages than any of the big banks.

Not sure what you are talking about "Products and Services are limited"?? They offer savings, checking, money market, IRA's, CD's, credit cards.....ALL FREE of Service charges. I even have a $24,000 Platinum Card with a 7% interest rate.

Please tell me how products and services are limited again?

No BIG BANK can compete with my local Credit Union. Believe me, I checked.

Love my credit union. I live by my debit card, which is accepted as a charge card. And I can get money from most other credit union atm's without a fee because they partner together.

If your last comment was correct there wouldn't be a BIG BANK near you. I expect there are far more big banks closer to where you live than credit unions so they must be competing. Some credit unions don't even offer merchant accounts.

Once again, the credit card reforms passed by Congress put more expense on good customers to offset bad customers as predicted. And that is what in many ways is wrong with this country. Like the public option in healthcare, it will never be paid for and those with insurance will pay more eventually to cover those who shouldn't have it (illegals) or just don't want to pay for it (typically, 25 to 35 that will be forced to get it)Too bad that the whole debate was over the public option and not how to reform health care.

I believe that most people just simply don't know about the benefits of Credit Unions and how much better they are than the big banks. Maybe they believe the "myth" that you stated previously, that they are restrictive as to who can belong. ??

If the big banks keep screwing people over, maybe people will start shopping around and find better alternatives. Even switching to what are being referred to as "Community Banks" is starting to catch on.

I don't know why anyone would continue to support BIG BANKS after the shenanigans they pulled and continue to pull.

Bank Local.

Let's all shed a tear for the poor Big Banks who had to bow before Uncle Sam to get the money to stay in business because of their recklessness.

Sheesh, it's really rich to be shilling for people who get money from the Fed for almost nothing and then loan it out at usury rates that The Ghosts of Republican Congresses Past allowed to surpass 30%. Such rates were once the sole property of loan sharks.

I had a card with Citi a few years ago and they cancelled me. Not because I was delinquent, but because I didn't charge enough and religiously paid off what little I did charge as soon as the statement came in. And the thing that really griped me is that I would never have EVER have taken a card with Citi in the first place-- they got my account by being the biggest fish at the end of merger feast that is one of the REAL reasons companies are failing right and left.

But hey. Let's all give often and give generously to the Save the Bankers Foundation.

-Kerry O. "Their Gulfstreams await your donations so they can proudly Fly the Friendly Skies once again."

Absolutely, I switched to a community bank, no fees, no check charges. I'm happy. I'm going to see if we have a credit union next. My friend switched to a credit union for her personal and business and is also happier. She talked me into moving to a community bank.

I have also noticed online where credit unions themselves are trying to educate the public about the myths of credit unions. Interesting.

Immorality, like ****, rolls downhill. Banking is controlled by a quasi-governmental agency (the FED), so it is only to be expected that bad ideas will come from regulated banks. (Not surprisingly, the free-banking era in the US did not face such problems)

It's not the arguement that if it's good to have Credit Unions or not owning credit cards and so on how many are already have credit cards and loans from big banks. Those people are getting punished. I personally don't have any credit cards, but My mom went berserk after hearing about it, she got "big bank" cards and a fairly good credit, now she is thinking about rejecting these fees and shut down her account.

And I KNOW for sure many will. the "Big banks" just signed their death will, which is one point of view is good, another point of view, not so good.

Which will encourage them to be more customer friendly after they lose too many so it will turn out the best in the end.

I don't have a credit card either.

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nothing has changed . they always have recovered there bad investments that way ...

I couldn't fanthom a life with out a credit card. Can you even book a hotel or airline without one. What about running a small business. I put everything and I mean everything on mine. I almost always budget what I put on it so I can pay it off in full each month or within a few months if
necessary. I have no sympathy for people that go charge happy. Because of credit card reform I get penalized. Once again this illustrates what's wrong with the US. It the same old story = responsible people paying for irresponsible ones and I'm tired of it.

How many people do big banks employ? How many other jobs are directly related and exist only because big banks exist? Better think about that one before you close them all down.

I can't believe how many references there are in these threads insinuating that Americans are not smart. Some on here act like if you are not banking at a credit union that you are stupid. People have good reasons for choosing a big bank over a credit union.

It is becoming more of a possibility that the big banks will eventually repay all of the Tarp money. Some already have and the government actually MADE MONEY. The automakers won't repay the money.

Don't you just LOVE getting in line behind a bunch of people at the fast checkout who each whip out a credit card to pay for a chocolate milk and a bag of peanuts? Think of all the lost time, not to mention that prices are higher for everyone because of the merchant fees the credit card companies collect.

As for being penalized, some people seem to forget that wave after wave of bank mergers created these big Goliaths that became a law unto themselves. Without competition, they know they can charge all kinds of fees, raise the rates through the roof and then point the finger at the deadbeats. Deadbeats that they THEMSELVES issued cards to, knowing they could clip them for 30% after they had them snagged, and because their lobbyists got their mostly GOP friends in Congress to change the bankruptcy laws locking them in.

I have a card with a big bank, and they are extremely annoying. I get a call about every other week from them hawking some new financial product they want me to charge.

I'm sure things will get SOOOO much better when the 'free market' creates the completely unregulated One Big Bank Of America as the only card issuer left. I, for one, welcome our new financial overlords.

-Kerry O., "BTW, that last line was sarcasm."