BofA to charge annual fees on some credit cards
NEW YORK — Bank of America Corp. said Tuesday it will charge a limited number of its credit card customers annual fees ranging from $29 to $99 starting next year.
“We’re testing this to see what the feedback is. In terms of any plans going forward, we haven’t made any decisions,” said Betty Riess, a spokeswoman for Bank of America. She said the fee is being “tested” on less than 1 percent of its credit card accounts globally, but declined to give specific numbers.
Bank of America, based in Charlotte, N.C., had 80.2 million credit cards in circulation last year, making it the third-largest issuer of cards, according to CreditCards.com. Chase was first with 119.4 million cards, while Citi had 92 million.
The Bank of America accounts that will be charged fees were selected based on “risk and profitability,” Riess said. That means customers in good standing who never carried a balance — and never incurred interest charges or late fees — could be among those getting notices.
The notices of the new fee comes after Bank of America last week vowed not to hike interest rates on credit cards ahead of the sweeping new credit-card reforms that go into effect in February. That pledge came as Congress considered moving up the effective date of the law to Dec. 1. Customers across the country have seen interest rates hiked and credit limits lowered since the law was signed in May.
Among other consumer protections, the law limits how and when banks can hike interest rates and fees on credit cards.
Analysts have predicted banks would make up lost revenue by charging annual fees more frequently on credit cards and checking accounts, even for customers in good standing.
“We are making this change in response to market conditions, new federal laws and regulations, and the increasing costs of providing unsecured credit,” states a letter sent to a Bank of America credit-card customer and obtained by The Associated Press.
Customers are told that they can reject the fee, but will subsequently have their account closed. The deadline to reject the change of terms is Dec. 16.
Closing a credit card account can come with repercussions to a person’s credit score, since it would lower the amount of available credit a person has access to.
Some Bank of America cards, such as airline rewards cards, already come with fees.
Chase also charges annual fees on select rewards cards, but a spokeswoman said the company has no plans to test annual fees on a broader basis. Wells Fargo said it does not “speculate on future business policies and practices.”
A Citi representative could not be immediately reached for comment.
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Takes effect a year after enactment, except for requirement of notice before interest rates are increased, which goes into effect in 90 days.
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