It is ashame that Bank of America which has issued me credit cards in access of $73K will lose me as a customer. But the thing about having good credit in hard times, is that Chase, Commerce and Bank Financial will love to see me! By the way, Ford Credit loves me too, can't wait for the new Fiesta...maybe I will finance it with Chase, if Ford Credit can' come up with 0% interest for 36 months.

I WILL CANCLE MINE

It's one thing to be in business to make money, it's another thing to try to legally steal from someone. They know that changing their fees basically screws people because if you close the account it hurts your credit score.

This is but another example of greedy big banks...charging 12% to 16% or more when the Fed funds rate is close to zero.
Why is it credit card holders have to be the profit the banks can't make elsewhere?

The interchange fee is a hidden tax paid by all Americans, regardless of whether they use credit, debit, checks or cash. This fee imposes the greatest hardship on the most vulnerable consumers – the millions of American consumers without credit cards or banking relationships. These consumers basically subsidize credit card usage by paying inflated prices – prices inflated by the billions of dollars of anticompetitive interchange fees.

The average interchange fee in the U.S. is seven times the interchange fee set by Visa and MasterCard in countries throughout the rest of the world. Using 2008 figures, if the interchange fee charged by credit card issuers was decreased (via comprehensive credit card reform legislation) from the current 2.10% to 0.60%, the result would be an annual savings of approximately $34.3 billion for U.S. merchants and consumers. Credit card issuers could retain 0.3% as a processing fee, the remaining 0.3% could be a "tax" used to fund a Natural Disaster Trust Fund (NDTF). In 2008, this would have generated $6.86 billion in funding for a NDTF.

Again, let's be clear. The interchange fee is a hidden tax, just not a tax subject to political control or for which there is any discernible social benefit. Decreasing, and imposing a transparent tax on, the interchange fee would have the same stimulus effect of a tax break, but without an impact on the federal budget.

http://weblogs.sun-sentinel.com/news/opinion/theslant/blog/2009/10/memo_to_congress_folk_are_gett.html

Liz, Your pique and threat to go elsewhere with your no revenue to the issuers CC business is a largely empty threat... and they know it.

I am (also?) one of those people who never carries a balance but I do get the full benefit of the convenience rather frequently.

Therefore... I don't object to paying a *modest* annual fee for this convenience especially as the alternative (no card) is wholly impractical to conduct a life now.

The question is how BOA determines who gets charged what fee amount. I'll have to check my mail to see where I stand.

Bottom line? We can't have it both ways.

I'm not sure, MrRational ... as long as there are competing cards that don't charge an annual fee, I figure I can take my business elsewhere.

Now, if you collect rewards from a card, it might make sense to keep it if you collect enough in points to pay for the annual fee. --- lfk.

HSBC cancelled my card a few weeks ago because it said that I didn't use it enough---even though the card was not scheduled to expire til 2011. I paid off what I owed this past Feb. because HSBC was charging 20% interest, but the company has made a ton of money off of me over the last 15 years and I always made the required payment on time. What is one to do !!!

I found one of these letter in my mailbox last week. I of course was stunned. This card has been used by me since I was in college 15 years ago, and now they want to charge me a few. Aparrently they are doing this because I use it sparingly ($200.00 to $300.00 per month) pay it off each month and make my payments on time. HOW IN THE WORLD IS WHAT I AM DOING BAD? What a nightmare of a idea and what a nightmare of a copmpany.

Oh boy......

How wonderful... It's like the Wild West...

Regulation of the credit card companies is sorely needed.

Any word on which cards? Can they charge a fee on some holders and not others, if they all have the same type of card/program?

I try to fly Southwest every time I need to because they do not charge for baggage. I will cancel and go to credit cards that also do not charge a fee. The credit card companies incur little to no expense for carrying inactive cards and they make money on cards that are used by the fees they charge the merchants. This is just another BOA attempt to gouge the consumer and I hope they fail miserably.

I have multiple credit cards and none of them charge me an annual fee. If Bank Am chooses to start charging me a fee, then I will just discontinue that card and use the others more.

I know one thing, I'll take my business somewhere else if they start this on my BOA account. There are plenty of other credit card companies out there that can offer you a better deal than this kind of BS.

I am one of those people that was assessed a fee by BofA. I can't believe I am being penalized for being a responsible consumer. I did, of course, cancel my credit card. Maybe BofA needs more profits to pay for Ken Lewis' $125 million serverance package...I guess the taxpayer bail out wasn't enough for them. We are living in a corporatist society run by the corporations, for the corporations. I want my democracy back! I also need another credit card.

Liz,

My wife and I could very well fall into this category. We have a B of A card we almost never use. We have a card from a different bank which is our main card and we use it frequently, typically paying off the balance every month. We use the other card because they offer a good rewards program.

Any idea as to what level of use would prevent a B of A cardholder from getting charged this fee?

PK, not sure about the level of use, but it sounds as if they *are* targeting the rewards cards. Funny thing, though: they usually charge a higher interchange fee for those, too! --- lfk.

ANOTHER "OVER THE TOP" EXCUSE TO bLEED" CUSTOMERS..

I went through the process of canceling a credit card from bank several years when they insisted on an annual fee. When talking to a bank representative, I was told that if I canceled the credit card, it would appear as a serious negative on my credit record even though I had been paying on time and in full for years. I suspect that, and other tactics, will be used my various banks again!

I fully agree - I refuse to use a card that charges me an annual fee. Worst comes to worst... I'll pay cash. (Oh, the horror!)

BofA cards are lousy to begin with - many others have much better rewards. I would never pay any "membership" fees.

Actually BofA doesn't seem to find any other business strategy then overcharging their customers. For a simple document they charged me 20$. Their wire transfer fees are the highest. They're going to drive themselves out of business working like that.

I cannot believe I would be penalized for paying my account on time and not incurring any penalties. If they institute this fee, I will cancel my Visa account. I will, in the end, be richer for not having it.

Well folks, I'm with you. I found this on a google to get into and clean out the BofA points I otherwise would lose when I close the card account - probably this afternoon. BofA, you now lost the chance on $42k of buisness and those trans, chg's. you've gotten from my local merchants.

I've been paying an annual fee with B of A since I've had my card 10+ years, I'm stunned to find out a lot of people dont. This is crap and totally unfair to do it to some people and not others.

I will definitely cancel mine if this fee applies to my card.

If I get such a letter, I will cancel mine as well. I wrote to them and said basically the same thing.

What really irritates me is that not only do I pay my bills, but I have a mortgage with them as well (transferred from countrywide). They are making plenty off me already.

As a BAC shareholder, I don't like this idea as it will ultimately discourage new customers from getting cards from BAC, thus leading to a lower bottom line.

Btw, I have another credit card with a high limit that I can use it the mean time, so its not an empty threat on my part.

Matt O.

My mortgage was bought by BofA and I cannot tell you how angry I was. BofA was the only credit card issuer here in CA who pursued the illegal immigrant by offering credit cards to them without social security numbers. Of course the limit was low and they paid a substantial annual fee but still...
Bank of America is the most cutthroat banking company I know and refuse to have anything to do with them. If I weren't upside down on my mortgage, I would refinance JUST to get away from them.
Join a credit union and then you most likely won't have to pay an annual fee. Discover doesn't have an annual fee either (though they just raised their interest rate). If you pay off the balance every month, then that wouldn't matter anyway.

So, the banks go up to the discount window and get money for nothing, then turn around and rape consumers. I believe the mafia has better terms! Seriously, the banks create/produce nothing. The bankers (Rubin) risked the world with fraud and the Fed is complicit. www.zerohedge.com

Everyone needs to understand that a credit card is a financial product that allows banks to make money. It is not a basic necessity like food, clothing and shelter. You do not need to use a credit card or maintain one. Quit complaining or justifying that if you pay the balance on time, an annual fee should not be levied. Just pay cash for your purchases and move on. Millions around the world do so everyday, you too can!

AA, you're right that it's not the greatest injustice if credit cards start charging annual fees. My argument is that the card issuers are still making money regardless. --- lfk.

I worked for BofA, I knew this is coming over a year ago. Since the mortgage market downturn, BofA employees were asked to push Credit Card applications, and lured many customers with LOW or NO
interest during initial period, usually 6,9 or
12 months. I do not agree with their policies and strategies.......I QUIT!!!

I'll be canceling my card as well. Why "punish" the ones that pay off their debts monthly. The credit card company is just ticked off that we are the ones, collecting the "incentives" they offer and we aren't paying their fees. They (the CC Companies) are becoming more like "loan sharks" .. Cut it up... cancel it out... I have more than BOA Card... don't need em...

definitely will cancel mine...why am I gonna tolerate a credit card that will take advantage of me...I'm a good customer, I always pay on time & more than my minimum...it's unfortunate they're becoming one of the sharks....

I read one post here saying they have no problem paying a fee. Well thats fine an dandy for you then, why don't you get a card that charges a fee then? Instead of being a hypocrite posting here.

FACT IS, all credit card companies make big money of of EVERY transaction. They charge a percentage of the total to the store that charges the card. Anyone acting like we are getting some kind of "Free ride" is either ignorant, or plain lieing.

This is what we get for bailing out these companies. They should have just let them die off instead of wasting our taxpayer money on them.

Then on top of all this, they will pay their multi-million dollar bonuses. But yet still stick it to the customer as if they have no money. Its can't get any more sick than that. These guys need to be locked up in jail.

Sorry for this being my 3rd post here, but I can't stand by and let some of these comments go without a reply.

The last one I read here by AA, tells people to just pay by cash. Sorry, but MOST people use credit cards to buy things over the internet. Please explain to us how you think people will pay with cash over the internet.

If we all had that attitude of "quit complaining" then they would get away with murder.

"... as long as there are competing cards that don't charge an annual fee... " and "... My argument is that the card issuers are still making money regardless. "

I can't believe I'm actually defending BoA (who I loathe and use only because my road travel requires their size and branch network) but... the angst filled groaning in all but two of the 27 posts seems to avoid that the policy doesn't even apply to most of them.

Will Donna's still make a profit when more and more "customers" come in with a thermos of their own coffee?

How long will these other banks everyone seems ready to flock to with their busy charge churn but no interest paying activity... how long will they (can they) tolerate the expense?

The costs have to be made up somewhere and perhaps the merchant fees and interest paid by debtors are enough to do that (I don't know) but somehow I doubt that is the case.

Simple really---if Bank of America attempts to assess me an annual fee, their card gets cancelled. No question about it.

They are making enough money off me by the amount they get from the merchant when I charge something.

I’m guessing that the BofA fee letter is a trial balloon. If the bank gets enough negative feedback from this it may rescind it before the deadline, so don’t cancel your account(s) right away. Besides, depending on several factors, abruptly cancelling a CC could really hurt your credit score.

IMO the smartest move now is to wait. While you do, pay off your BofA balance ASAP and have 2-3 other CCs available for backup.

I am among those which received this letter about the fee. I am going to be charged an annual fee of $39!!! This is crazy.. I have never missed a payment and never exceed my credit limit. Are they out of their minds? Driving customers away...

Why wait George? I just received my letter today. They are crapping of the very people that bailed them out...it's an insult as borderline criminal. They regulated check cashing facilities for charging excessive fees, why are credit card companies exempt. No George, I won't wait....first I'll cancel my card first thing tomorrow, and then I'll copy the letter and send it to my Congressmen and tell them what a bang up job they're doing up there on the hill!

I'll cancel my card

Please explain to us how you think people will pay with cash over the internet.

What about just using a debit card? I had credit cards for the longest time...until I got a bank card with the Visa logo on it. Now, I can still make Internet purchases and the money comes right out of my account. No need to worry about due dates, or banks charging interest on my purchases.

And nowadays, most online merchants accept forms of payment other than credit cards. It is much easier to purchase things online and not have a credit card.

I'm afraid this is just the first step, and that all (or at least most) other card companies will follow. At the beginning of this year, I had several credit cards, and they all had fixed interest rates. Then, throughout the year, they ALL converted from fixed rate to variable rate terms. If BOA gets away with this fee, I'm afraid that others will follow their lead. We have to make sure that BOA is NOT successful with this fee. I encourage everyone to cancel any BOA card that starts charging a fee for paying balances in full each month.

"This is but another example of greedy big banks"

Do you think that BoA and the other big banks were not greedy before, and only suddenly got greedy?

I don't. I think that they were always greedy. Previously, greed called for them to not have annual fees, as they could make more profit that way; now greed calls for them to impose them.

Their greed has not changed. What has changed? Laws intended to protect consumers.

Did I really read that someone made a comment that they are willing to pay a "modest" fee for use of a card? That person either works for the bank or is an idiot.
Pay them so you can be their customer? Why would anyone do business with a company that treats their good customers that way?
Honestly. Wake up!

Mike, that was me.

For years the banks and CC companies made such a large fortune off the poorly disciplined CC users (and merchant fees) that they let us more disciplined CC users ride along on the wave and all was right with the world. Close enough to correct so far?

What has changed in the business model? Which operating costs have come down? Which are up?

I'm not privy to the BOA internal numbers (maybe you are?) but I haven't seen anything to deny that the business has changed.

The still largely unanswered questions are by how much and what direct costs of those services are not met by the fees already accruing to them.

And the limit of modest for me is $20 - $30 per year; but I still want to see it substantiated (as was also said).

Reporters?

MrRational, you've been patient. I am working on a blog post that will discuss this in more detail, but only about a third of consumers pay off their bills on time, according to the banking industry (see the NYT story in this blog post). Even if that estimate is too low, it seems like card issuers are collecting late fees and interest payments from more than half of credit card holders ... in addition to the interchange fees paid by merchants who accept credit cards.

So ... do the new rules change the business model? Sure. Are they still going to make money? I think probably. --- lfk.

I'm like a dog with a bone now! ;)

"So ... does it change the business model? Sure. Are they still going to make money? I think probably. --- lfk. "

Liz I also have no doubt whatsoever that they shall continue to make money... by hook or by crook.

And in the event that the backlash from this fairly overt approach to fees is large enough then you can be quite certain that the next plan to gain fees won't be quite so overt... will it? On the whole, I prefer the clear and upfront approach.

But all of this is still just so much conjecture without much more detail on the underlying transaction costs that BOA and the other CC companies allege are no longer being covered by the current fee structure.

I look forward to reading your additional information.

Yep, customer of 15 years in good standing. I cancelled my card with BOA, will not be forced to pay an annual fee

I just received a letter in the mail yesterday from my credit card company, and even though I have no balance on that card I chose to cancel it because, in effect it is frozen if I refuse to accept their fee increase and remain with my fixed rate. I have a credit score of 811, and I am taking my business to a credit untion where no such thing occurs. Aren't we all sick and tired of being bamboozled by a system that finds its way into our pockets no matter what?

I can't believe they are trying to do this. I think this is a lose, lose situation. 95% of B of A's customers will cancel their cards. B of A has already lost for even trying to do this. Look at all the responses and reactions they've gotten from their customers. Do they think we are stupid? I don't have anything to worry about, they already canceled my card a few years ago because I did not use it enough. I don't think I even signed up for a credit card from this company. They signed me up after I opened a bank account with them, that wants to charge me a monthly fee. Which I only chose because they have many branches across the country. I and many others do not agree with them charging us an annual fee for being responsible. If I did want to pay an annual fee I'd go with American Express, they have great rewards. For those who think paying the annual fee is fine. I would like to ask "Why? What has B of A done for you? What does B of A have that others don't?" And tell you that you're being loyal to a company that only want to scam your money. Thank you for your time.

I received one of these for my B and A card. A $49 fee on a card that is completely basic and has NO reward system attached to it. What do I cost them a year? Less than $6 to send me statements. I've had this card for 12 years and never paid a penny in interest. I only charge about $150 of purchases per year. I'd let it go it if were $10 or $15, but $49? Who do they think they're kidding!