Some headlines sound ridiculous.   Obviously “Fees For Perfect Credit!” is one of them.    Here is the story. Bank of America and Citigroup are experimenting with the idea of annual fees on some of it’s credit cards targeted at people with very good credit.

Not So Shocking

I am not surprised by this headline at all, but not for the reasons you might think.  I know that the banking industry claimed that it was going to have to raise annual fees in light of the new CARD Act regulations.    That was a scare tactic then and now.   Banks are experimenting with these fees as I had predicted they would.    It is up to the credit card holders to decide whether they want to pay these fees in light of so many cards available to them with no annual fee.    What is even weirder is that they claim to be targeting those with good credit.     The reality is that they are just throwing this fee out there on the theory that some people will just pay it.

Ever Hear Of Telephone Rental Fees?

If you are above a certain age, you probably have.   Until AT&T was broken up in the eighties, it was common for the phone company (there was only one) to charge you a few dollars a month to rent your telephone.     Incredibly, there were some people who kept paying this fee for decades, long after you could buy a telephone for $10 at any store.

What does this have to do with credit cards?   The point is that some people will pay just about any fee on their bill that is not too outrageous.     A $59 fee in the middle of a $3000 credit card bill could easily be missed.    Or, the card hold might just accept the fee, feeling that there is no alternative.   It is easy to imagine that credit card companies could charge an annual fee, and that a significant percentage of people will just pay it.   The rest might complain and get the fee removed, but those who don’t could pay millions.

You Are Part Of The Experiment

I will not go on a populist rant and say that everyone should cancel their credit cards in a mass revolt.   This is not democracy, this is capitalism.   If your credit card company charges you an annual fee, you need to think really hard about what kind of return you are getting for it.    There are many, many cards out there with great rewards that charge no annual fees at all.   If your credit is good, not even great, but merely decent, you will have no problem loading your wallet with fee free cards.

What To Do If  This Happens To You

You have two options.   One is the nice way where you call up and demand the fee be removed.   This is nice in that you are actually providing the marketing feedback they are looking for at the expense of your time and aggravation.     Essentially, you are an unpaid market research subject who is being taken for a chump unless you tell them otherwise.

The other option is the upset way.    Tell the company that you don’t like being treated like a rat in a maze, and you would rather not participate in their experiment or be their customer.    Cancel your card and replace it with one that values your business and provides a respectable reward for no annual fee.

Note, I do not consider paying the experimental annual fee an option.

This entry was posted on Thursday, October 29th, 2009 at 20:00 and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.