@Uborrow-Upay wrote:
@creditwherecreditisdue wrote:
I didn't misread the press release. I posted regarding Citi's "test program" earlier in this thread. It was announced by Citi, but since then you haven't heard a word about it. I just don't see AF programs gaining much traction unless the issuer imposing the fee is intentionally seeking to lose many of the accounts on which the fee is imposed. That may in fact be the purpose of the fee - to get cardholders to close their accounts without inflicting AA and incurring the wrath of Congress.
CWCID, I think we haven't heard about Citi's fees because no fees have yet been applied (at least not to my accounts). But I saw the entry for it on both bills.
Back in June, I saw a line item on each of two Citi statements labeled annual fee (perhaps it was "membership fee" ). Each showed the charge as "$0.00" for the period June 09 - May 10, meaning the next twelve months. My understanding is that once the first 12 months rolls by, they'll assess the fee on my June statement in 2010 if I haven't run at least $2400 thru the card during the year, and they'll do this for each card.
I never said a word about it, since it was zero dollars. Had it been an actual charge, I'd have screamed bloody murder. But they've got their foot in the door, and provided notice to expect this charge in the future if card usage is low.
The $0.00 fee entry has been appearing on Citi statements (usually once a year) for a fairly long time, and started long before the annual fee test was announced. I suspect Citi did that to try to create the impression that they were giving cardholders a break by not charging a annual fee. Banks in general have been advertising "no annual fee" for a while to promote their credit cards, as if an annual fee was the rule rather than the exception.
Unless you received a specific notice from Citi, detailing the annual fee (which varied between $30 and $90), you are not part of the test group with the $2400 purchase requirement. The test group was only 500,000 cardholders, which is actually a very small percentage (less than 1%) of Citi customers. Also, the Citi test group's 12-month window for spending $2400 did not run from June 2009 to June 2010.
I personally think the Citi approach - charging a fee that can be negated if the cardholder reaches a spending target - will get much less opposition than the straight annual fee BOA is testing. If BOA does proceed with the fee on a more widespread basis, reaction will be mixed. Some cardholders will overlook the fee, or not be in a position to avoid it, but other cardholders will be angry when they get their announcement or later find the fee on their statement. In a climate where a lot of people are paying closer attention to their expenses, fees tacked on "for no reason" are going to get a very negative response. No doubt, other banks who do not charge an annual fee will make a big deal about their no-fee rewards cards and steal customers, many of whom will be good spending, low-risk customers. Unless all the major banks adopt annual fees, those who do risk losing customers to those who don't. Loss of interchange fees from those customers who switch will more than cancel out the potential annual fee income the bank was hoping for ...
Message Edited by Revike on 10-16-2009 06:44 AM
