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October 20, 2009 6:09 PM

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I don't think this is terribly surprising. Until banks find a new way to get the profits they're used to out of credit cards, some will likely try to get rid of the \"deadbeats\" that pay their balance every month. Of course, I wonder how much business BoA will lose if those \"deadbeats\" are also customers that have money in BoA checking, savings, and investment accounts that will follow them out the door.

1 replies

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Rey

October 20, 2009 6:13 PM

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@giggitygoo: You are exactly right. I am with BofA as a convenience and should they try to assess a charge for my credit card, every single one of my other accounts will follow me over to the credit union.

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October 20, 2009 6:12 PM

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Clark Howard was talking about this the other day. Apparently, BoA has been sending out letters randomly to cardholders. In them, they announced annual fees ranging from $19.95 to $49.95. The speculation at the time was that they are looking to get an idea how much they can charge before customers revolt and cancel their accounts.

6 replies

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October 21, 2009 12:04 AM

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I've read that a lot of people who have received a letter telling them they'll be charged an annual fee have called BofA and asked to be switched to a product that doesn't charge a fee.

If my card (it's a BofA AmEx Accelerated Cash Rewards one) turns out to be one of the ones they want to assess an experimental annual fee against, I'll be calling them to close it. If their little study results in people either doing nothing about the annual fee, or calling to switch cards (but still remaining BofA customers), they'll surely think the annual fee pilot has been a success.

Screw that - the card REALLY is not that good. It would take some serious, serious perks for me to consider paying an annual fee. Much better ones than the poxy 1.25% cashback offered on that card.

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varro

October 20, 2009 7:43 PM

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@Hedgy2136: Sucker-testing, like \"freecreditreport dot com\" (It's not free) - see who just pays the fee without complaint. It's likely they'll make money off it because people don't want to wait for 10-15 minutes to complain to a CSR.

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October 20, 2009 6:42 PM

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@Hedgy2136: It'd certainly be worth calling up and asking for a fee waiver first. This might be one of those situations where they'll do it just for the asking. Or, you know, not.

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Cant_stop_the_rock

October 20, 2009 6:25 PM

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The flaw in trying to do a pilot program like this is that people are going to be pretty pissed when they find out they were chosen for some unknown reason to pay a fee that most people don't have to pay.

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October 20, 2009 6:21 PM

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That's the thing that I don't get. What sense is there in trying to charge an annual fee to folks who are obviously using the credit card out of convenience, and not necessity.

When the card becomes inconvenient to use (for example, due to an annual fee) what do they think these people are going to do?

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Cant_stop_the_rock

October 20, 2009 6:33 PM

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@lordargent:
I don't have a BofA CC, but I make several hundred dollars a year from my reward credit cards. Even with a small annual fee I'd probably keep the cards I have. They'd still make me money, just not as much. I don't feel like ending up with dozens of credit accounts because I keep jumping to a different card that will net me slightly more reward money - I have a few that work well (maybe not the best), and I stick with them. As long as they make me money, I'll stick with them.

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frank64

October 20, 2009 6:59 PM

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@Cant_stop_the_rock: They also charge the merchants at least 1% more for rewards cards, then they charge you a fee. It is kind of double dipping. The question is can you get a rewards care with a different bank, or with the same bank with no fee?

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October 20, 2009 6:18 PM

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I just redeemed a bunch of rewards points on my BofA card. If I'm in the unlucky 1% that gets tagged for an annual fee, hopefully they'll let me switch over to a non-rewards card with no fee.

4 replies

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lmarconi

October 20, 2009 6:39 PM

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@hamburglar: I'm just waiting until they hit the non-rewards cards with annual fees. I know that because pay off my bill every month, I'm not a profitable customer to BoA, but at the same time, if banks start hitting all cards with fees, I don't need to pay for the convenience so I'll be saying hello to cash. Maybe I'll keep one card for online purchases since I hate using a debit card online, but that's it.

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October 20, 2009 8:31 PM

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@lmarconi: you have to realize that you are a profitable account for them. they make a fee off of everything you charge (i believe it's around 1%). in a couple years the banks will realize they lost more by chasing off that money than they gained with a $50 a year charge. personally i charge about $10000 a year and pay it off, so they're making $100 a year off of me, and they don't even have to worry about potentially writing off my debt. there was a time when banks loved low risk guarenteed returns.

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October 20, 2009 6:33 PM

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@hamburglar: And if they don't, close the account. Unless this is your oldest line of credit, then it could get tricky. My wife and I each have a BoA credit card, but I also have a Discover Card that I opened nearly 10 years ago so I almost hope I get hit with a fee so I can turn around and cancel, help to lower that threshold for customer revolt.

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Cant_stop_the_rock

October 20, 2009 6:36 PM

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It's not just the age of your oldest account that matters - the average age matters too. That makes it tricky, because closing an account now might increase the average age of your accounts, but if you were to open a new account (now or in the future) that additional older account would help reduce the impact of that new account...

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Jesse

October 20, 2009 6:19 PM

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I have an NFL Extra Points Card which is now through BOA since it acquired MBNA a few years ago.

After years of responsible use and not carrying a balance, I either have the option of paying an annual fee or closing the account, which could potentially harm my credit score since this is one of my older accounts.

4 replies

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winshape

October 20, 2009 6:32 PM

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@Jesse: No kidding. It is ransom money, with the victim being your credit score.

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October 20, 2009 8:32 PM

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@winshape: i've been informed recently that it won't impact your credit score until it's off your record in 7 years, so the impact may be minimal by then as your other accounts will be older. you may want to double check this since i just heard it today for the first time.

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frank64

October 20, 2009 7:00 PM

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@winshape: Not really, it isn't that bad. The banks like us thinking that though.

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Jesse

October 20, 2009 6:19 PM

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I may potentially have the option.

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October 20, 2009 6:20 PM

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Well, Christ, I can't resolve to do LESS business with BOA than I actually do. I've successfully talked about a dozen people into transferring their money out, though. Maybe I should step up the pace. BOA sure makes it easy on me with stunts like this, I must say.

1 replies

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October 20, 2009 8:33 PM

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@speedwell, avatar of snark: i launched a similar campaign against Fleet Bank years ago. of course who bought out Fleet? BofA.

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October 20, 2009 6:20 PM

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This is where consumers will either teach the banks an expensive lesson or cave in and pay what amounts to ransom.This is nothing more or less than a \"profitability maintenance fee\" that will help fund giant salaries ,bonuses and perks for executives like the trash that just got swept out at B of A ( Ken Lewis).

I'm not much on activism , people are generally better left to think for themselves ,but I would encourage anyone that reads this that receives one of these to cancel the card and keep it cancelled. That will do two things :

1) Force the banks to re evaluate their need for market share.

2) Deprive them of the merchant fees that you generate as a card holder/user.That really will be their lifeblood as new consumer friendlier rules take hold next year.

I hope that the good guys win this time...

1 replies

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frank64

October 20, 2009 7:16 PM

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@Snarkysnake: The good guys normally have been accepting anything the CC companies do. That is why they think they can get away with it now, historically they have been right.

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Blueskylaw

October 20, 2009 6:21 PM

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If I was about to undergo an operation where the mortality rate was 1%, I would be very, very nervous and reminiscing about whether I had lived a good life or not.

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October 20, 2009 6:29 PM

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Just another scare tactic from a banking industry still angry that credit card legislation pasted this year. Now, they throw a few temper tantrums and make threats to harm customers with excellent credit who pay their bill of each month... like me.

I don't carry a BofA credit card. However, the moment ANY of my credit cards attempt to penalize me for paying my bill in full with a fee, the account will be closed within 24 hours. Not gonna happen.

Let this 1% leave BofA and go to competitors not charging fees and see how fast BofA backs off.

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TCama

October 20, 2009 6:31 PM

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Is it only rewards cards? I have a BoA card, but it doesn't have rewards.

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pecan 3.14159265

October 20, 2009 6:33 PM

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In Soviet Russia, card charges you!

1 replies

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October 21, 2009 3:25 AM

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@pecan 3.14159265: Nice to see another Damn Interesting fan:

[www.damninteresting.com]

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H3ion

October 20, 2009 6:38 PM

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On the same front, Citi announced (or didn't announce, just did it) that they were canceling co-branded cards from Shell, Exxon and a few others. The letters were mailed Monday, this week, and the cards were terminated today as some people found out when they tried to use their cards. The major cards used to be American Express, Diners Club and Carte Blanche, all of which charged a fee. Then Mastercard and Visa rolled out without fees and picked up millions of customers. If I have to pay a fee and have to choose between Mastercard/Visa and American Express, I can guarantee you that the response will not be priceless.

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chiieddy

October 20, 2009 6:38 PM

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And that's when I'll close my BoA cards.

1 replies

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October 21, 2009 12:05 AM

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Ditto. I'll lose a tiny bit of credit history 10 years from now, but so what?

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October 20, 2009 6:41 PM

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Yay! I can't wait till they hit me up for a fee!

(/sarcasm)

I was given an offer about 8 months ago to switch my regular card over to one with world points. I took it, figuring it couldn't hurt. How wrong I was.

It's my oldest card, unfortunately. If it does go to a fee, I'll have to think hard about closing it or figuring out a way to argue with them to not charge the fee or switch it from rewards to a non-reward card.

(Although, the card does carry a very small balance, so maybe, just maybe I won't be hit up with this annual fee crap))

1 replies

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October 20, 2009 7:05 PM

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@Sunshine1970:
Same here. It was over a year ago and I didn't see the harm in converting - in fact I just got my first $80 rewards check. But still - if they bring in a fee it would negate any reason for using the card, especially since they jacked my rate from 9.9 to 15.xx

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zarex42

October 20, 2009 6:43 PM

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BoA already has a lousy return on points credits. In general, you should expect at least 1% back in cash or gift cards (merchandise is always a ripoff); it's a pretty common going rate. BoA is closer to 0.8% due to their \"rewards inflation\".

If they institute fees, it'll just get anyone who knows better to cancel, which may be what they want anyway.

2 replies

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October 21, 2009 12:06 AM

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My BofA card has a 1.25% cashback rebate, but... that's still not very good, really. I consider it danger money for having to deal with BofA.

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October 20, 2009 6:45 PM

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@zarex42: Yeah, I've looked at their catalog. I wasn't impressed.

I was going to to with cash back once I hit $25 but I'm not quite there, yet.

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TPK

October 20, 2009 6:49 PM

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A company should not be allowed to do \"marketing tests\" using a product that can adversely affect one's credit rating. If half of that 1% decide they don't like the fee and cancel their account, all indications have been that their credit rating may be negatively affected... all in the name of a new fee test.

This is a class action lawsuit waiting to happen.

3 replies

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October 21, 2009 12:06 AM

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Its not a class action. They're giving you an option. If you want to use our product, you pay a fee. If you dont, close it out. Its your decision. No one is forcing you to do anything against your will.

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October 20, 2009 6:56 PM

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@TPK: That would be a class-action suit the plaintiffs would most likely lose. Unless BofA charged some exorbitant fee, it wouldn't be tantamount to canceling anyone's card and certainly wouldn't force anyone to cancel it.

As crappy as the practice is, it wouldn't affect anyone's credit score UNLESS they chose to cancel the card on their own.

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TPK

October 20, 2009 7:29 PM

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@GearheadGeek: But in a campaign that has multiple price points, it seems obvious that they are by definition trying to price at least some of the folks out of a \"reasonably priced\" product. I realize it's a stretch... perhaps more of the way things should be than the way things are. :-(

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October 20, 2009 6:56 PM

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Oh joy. First BofA slashes my credit line in half for no reason. Then they won't increase/reinstate it because other people don't know how to use credit wisely. Now this. I'm pretty sure I'll be hit with it too. Bastards.

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October 20, 2009 7:19 PM

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Well, anything more than $1 a year and I'm outta there. This is even more insulting as a large share of their CC business are all the cards they snapped up from MBNA. And of course first thing they did after acquiring MBNA was to kill off a large number of customers. Perhaps this is a move to kill off the rest???

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October 20, 2009 7:27 PM

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YAY, makes me glad I don't have a Bank of Asshat account. One less thing to cancel.

Long live ING Direct.

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Naame

October 20, 2009 7:38 PM

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I have already started comparing different credit unions and what they are offering. Seeing more BS like this from BoA is only motivating me more to go through with a full transition to one them.

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October 20, 2009 7:53 PM

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Listening to the radio this morning they also said that they were likely to only do this to those folks who didn't charge at least $2400 a year. So I am assuming that this is to nail those who pay off our credit cards and don't treat them as our personal ATM's.

3 replies

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October 20, 2009 8:35 PM

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@theblackdog_Oktoberfest:

As noted in a subsequent post, I charge almost everything on my BoA card. That behavior does not imply that I somehow naively (or perhaps irresponsibly) think of the card as an ATM. No. I think of it as a credit card...that offers me a wide range of purchase protection, facilitates returning items without a receipt when necessary, provides me with rewards, and reduces my liability in cases of fraud vs. a debit card.

Frankly, when the purchase price is the same for an item whether you use cash or credit, I cannot fathom why someone would use cash.

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October 21, 2009 1:52 PM

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@ScubaSteve: I probably should have clarified it to say \"those of us who pay off our credit cards every month\" because it was meant for those of us who do pay and don't just run up a balance and then take forever to pay it off.

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October 20, 2009 8:07 PM

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@theblackdog_Oktoberfest: \"didn't charge at least X\" != \"doesn't carry a balance of at least X.\" This seems fairly reasonable... if you're cycling that kind of money through the card you're at least generating merchant fees. If you carry any of that as a balance month-to-month you'll be generating even more in interest. So, if you have a BofA card that you don't use at all it seems like it would be a candidate, but if you're using the card for your regular expenses and then paying it off at the end of the month and you run more than $200/month through it on average, they'll leave you alone (assuming what you heard on the radio is true.)

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October 20, 2009 8:27 PM

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I charge approximately $3500 every month on my BoA mastercard...12 months per year. That's $42,000 per year since I am a \"deadbeat\" and pay my bill off in full on time each month.

So how much of a deadbeat am I?

In general, they rake 2% from retailers at a minimum...and often rake more...but let's just assume 2%.

2% of $42,000 is $840.

I get rewards. For each $6000 dollars I spend, I get about $50 in rewards...which is less than 1%, but let's round up...and assume that I get 1% in rewards.

That leaves them 1% net at a minimum from me...or approximately $420 per year for me using their card. In actuality, it is probably more like $500 to $600, but let's just assume around $400.

What do they do for me? They mail me a statement and process my electronic payment.

If they decide that they don't want to do that for $400 a year, screw them. If they notify me of a 2 cent annual fee, I will cancel. In a heartbeat. I just bought a house, don't plan on moving, and have an 803 FICO average the last time that I checked...so screw them. Seriously. Try it BoA.

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eirrom

October 20, 2009 9:41 PM

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I have 2 cards w/ BoA. I had them with MBNA America before they were purchased by BoA. As other have said, the minute they try and charge me an annual fee to use their card, I'm gone. I have had those 2 cards for years, but I not going to pay for the privilege of using their card. I do not carry any balance on them so I'm sure I'm not much of a customer in their eyes.

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Stile4aly

October 20, 2009 10:50 PM

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Ok, here's the deal. Banks exist to make money, and credit cards are a profit source. The way banks make money on credit cards is either when the customer is a transactor or a revolver. Revolvers put a balance on the card and then pay it off slowly, so the bank makes money on the interest. Transactors process a large number of transactions each month, but tend to pay off their entire balance monthly, but each transaction is accompanied by a settlement fee paid by the merchant.

If a customer has an open account that they never use, or they use their card in a manner that isn't profitable to the bank, then the bank has no reason to keep that customer's account open since it costs the bank money to maintain it even if there is no rewards program. Once the bank starts paying out rewards on top of servicing an unprofitable customer, it needs a way to offset the cost of those rewards. An annual fee is one way to do this. It wasn't all that long ago that all rewards cards had annual fees, and not long before that that all credit cards had annual fees.

Think of it this way: if you're collecting rewards and not paying interest or an annual fee, you're basically getting something for nothing. A good deal, while it lasts, but not something you're entitled to.

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ryan_h

October 21, 2009 12:16 AM

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I got this notice........my card is not a rewards card........I dont pay it off each month, nor am I a \"risk\" (I usually pay $75 over my minimum, before due date each month).

I guess they dont like that I have been paying off my debt and not charging new stuff for the last two years or so............................

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Grrrrrrr, now with two buns made of bacon.

October 21, 2009 2:24 AM

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BoA can kiss my assets if they think I'm going to pay them an annual fee.

WTF? They already make money on balance interest *and* merchant fees. Even if you pay your balance off every month, they've made money on 3% of your purchases.

Hey, BoA, piss off! I'll go right to my credit union and dump your stupid POS rewards card so fast it'll make your greedy bloodsucking heads spin.

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savdavid

October 21, 2009 3:00 AM

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LOL! I can see they will never say \"OK, pencils down\" on this test.

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October 21, 2009 4:55 AM

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Yet another example of why the dracanion power FICO scores can have on our lives make absolutely no sense. The CC companies can pretty much change whatever they want and you're left to deal with it (pay up in other words) or face having your FICO score lowered.

Two of my 4 accounts are unfortunately with BofA. Soppose I get ticked off by the piss poor service and now outrageous fees. Why should I have to personally suffer?

1 replies

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October 21, 2009 6:46 PM

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@Neurotic1: exactly why i wrote an email to executive customer service yesterday. it may not make a difference, but maybe if enough consumers tell BofA what they think of this \"experimental\" fee, it'll go away.

yeah, it's a romantic notion. but it doesn't hurt to try.

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bmike78

October 22, 2009 10:57 PM

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It appears that I was in the 1% that got this letter. I have really good credit with them, been a member since 2005. I have a Platinum Plus card.

Here is what I did:

Called 1.800.732.9194
Dial 0 for operator.

Gave them my card number and asked that they waive the fee. He said he could try to find another card with no annual fee. If you have a business, they can try to get you a new card that way.

He was able to upgrade me to a Visa Signature card with no annual fee.

Same points, 1 point per dollar spent, no spending limit, hotel upgrades... Points from old card transfer to new one :)

Tried to sell me promotion for 0.99% balance transfer or loan... I DECLINED

Tried to sell me credit protection plus, free for 30 days.. I DECLINED

If you have really good credit, then you might be able to \"upgrade\" your way out of the new annual fee.

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