How much would you pay to keep your credit card?
Annual fees for credit cards are a rarity today, but more cardholders may soon have to decide between paying them or forfeiting their cards. Bank of America last week said it's "testing" annual fees of $29 to $99 on select customers starting next year. Customers were chosen based on "risk and profitability," but the company declined to explain how it decided who was charged $29, versus $99, or anything in between.
The problem is that closing an account comes with repercussions, since the average length of your credit history and the total amount of your available credit factor into your credit score.
The experiment by Bank of America comes as the credit card industry searches for ways to make up the revenue it stands to lose as a result of new regulations. As part of the sweeping new reforms that go into effect in February, banks will be limited in how and when they can hike interest rates and fees.
There are of course credit cards that already charge annual fees, including rewards cards tied to specific airlines or hotels. Subprime credit cards, marketed to those with poor credit, also come with a list of eye-popping fees. But for most credit cards, including general purpose rewards cards that use point systems, annual fees have become an alien concept to many consumers.
The American Bankers Association, a trade group based in Washington, D.C., hasn't yet recorded any data to show annual fees are making a comeback, according to Carol Kaplan, a spokeswoman for the trade group. The group says the vast majority of cards currently in circulation don't carry annual fees.
For now, Bank of America says the fees are being assessed on less than 1 percent of its credit card customers, but declined to give specifics.
There were about 80 million Bank of America credit cards in circulation last year, according to CreditCards.com; 1 percent of that is 800,000. Even half that figure provides a large enough sample size to make anyone conducting a scientific study envious.
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