As featured in The Wall Street Journal, Money Magazine, and more!

Your Credit Card Doesn’t Love You

Happy Valentine’s Day! That’s the message from shizennougyou today. By my home office in central New Jersey the mid-50-degree weather is a welcome surprise, and I like sharing my resulting positive attitude. This isn’t today’s message from your credit card company, however. Several people have written to shizennougyou today to let us know that on this day we celebrate love, they received unpleasant new letters from Bank of America announcing new annual fees. Some credit card users are receiving the worst type of Valentine’s Day gift from this bank — the type that pushes you to consider leaving your partner.

When Congress passed the Credit CARD Act, Bank of America jumped at the chance to increase fees in October 2009, ahead of the new law’s effective date. This issuer wasn’t the only company getting a head start. Many card issuers raised interest rates ahead of the deadline imposed by the law, in addition to adding annual fees. The issuers saw this as the best opportunity to make additional money in an environment where they perceived their revenue would be reduced in the future. The new law, once it went into effect, would make surprise changes more difficult.

The Credit CARD Act doesn’t completely stop credit card companies from changing their terms. There are many no-fee credit cards on the market right now, but there’s no guarantee they’ll stay that way. With these new letters going out in February 2011, Bank of America is converting more of its customers, those enjoying the benefits of a credit card with or without interest, to paying customers. Don’t be surprised if more issuers follow suit. Interest rates have not changed much overall, and if card issuers feel they can earn more money in addition to interchange fees — basically guaranteed income — and customer fees like interest and late fees, then they will listen to shareholders who demand financial performance, and they will go after additional sources of income.

Debt is a double-edged sword. Those of us who are responsible with credit, or are in a financial position to use credit not by need but by choice, manage to avoid interest and late fees and maximize rewards, but still perpetuate the industry by hurting our own bottom line while small retailers struggle with the industry. As more small businesses can’t afford to operate in a cashless society, the middle-class economy will falter.

Don’t expect the Credit CARD Act or the government to stop the credit card industry’s search for more revenue. Even if you haven’t received a letter yet, chances are, the credit card you keep in your pocket will eventually change its reward or fee structure to make it less valuable. Stay aware of your options and shop around. If you use a credit card by choice, take an honest look and decide whether you want a third party interfering with your money and if the benefits continue to be worthwhile. If you use a credit card because you have no other option, consider taking a tough look at your financial situation and find ways to get out of debt.

Photo: Neal

Published or updated February 14, 2011.

About the author

Luke Landes is the founder of shizennougyou. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 24 comments… read them below or add one }

avatar 1 Sarah

Hmm, I use Bank of America and haven’t received anything about new fees. Maybe I’ll have some sort of letter sitting in the mail when I go home, though…

Reply to this comment

avatar 2 Luke Landes

The changes don’t apply to every customer. I have a BoA card as well and haven’t personally received any notifications, but I haven’t checked my mail yet today.

Reply to this comment

avatar 3 Anonymous

B of A recently publicly announced that they were notifying about 5% of their customers that they would be instituting a $59 annual fee. They claim the customers targeted for this change in policy are those with very low credit score and those who consistently carry risky balances near their credit limit.

Well I am none of those things and I received the same letter. My credit score is 788. My credit limit is $25k and I rarely have a balance over $4k, which I always pay off every month. Every attempt I have made to discuss this matter with them in person has been parried and forced me into an automated phone system where my two options are “accept” or “decline” and have my account closed. As a B of A client for the last seven years I find this very frustrating.

Anyway, I know banks can cut customers for whatever reasons they want, but I suspect they are claiming one thing (annual fees for the riskiest customers) because it’s less controversial but actually behaving differently (cutting customers who pay on time). I realize that I am just one data point, but I bet there are tens of thousands of people out there just like me.

Thought it couldn’t hurt to share.


Reply to this comment

avatar 4 Anonymous

Same here. I have great credit, I’ve done business with them for over 15 years, never missed a payment and never late. So I agree those letters are not going out to their riskiest customers. I do have a number that got me to a person. It’s at the office. If you like, I’ll send it to you tomorrow. Just know, the conversation was not good and the result was that I declined the annual fee and they are cancelling the card, and at this point, that’s fine with me.

Reply to this comment

avatar 5 shellye

I haven’t received any letters from BofA but I haven’t checked my mail today, so perhaps there’s something waiting for me – who knows. LOL

One thing I am keeping a close watch on is BofA’s Point/Reward offers on its credit cards. I fully expect those to either go away completely or have changes made that are not beneficial to the cardholders…

Reply to this comment

avatar 6 Anonymous

I got mine today – $59 a year. After closing my Citibank and a second BOA card, because they wanted to double my interest rates last year (even though I’ve never been late on a payment), I started using this one for most of my monthly charges. I’ll continue to use it, since even with the added fee, it’s still the lowest interest card I have, and I tend to carry a balance a lot of months. I’m just resigned to having $4 a month user fee for the next few years.

Reply to this comment

avatar 7 skylog

nothing for me so far, but i will certainly keep an eye on this. my BOA card is my oldest account, i would hate for an annual fee to force my hand.

Reply to this comment

avatar 8 Anonymous

I expect to see fees increase, however then they will have to compete on the rewards. You know they won’t compete on interest rates.

Reply to this comment

avatar 9 Bobka

I don’t have a BofA card, but my daughter does have one. She received a letter today raising some fees. I read over the notice before it was shredded and did not notice anything too unusual. If I missed an annual fee addition, then, at the first sign of such a charge, out goes the account. Fortunately there is no balance currently owed, and she has not used it in quite some time.

Reply to this comment

avatar 10 moneymatters

I haven’t seen any changes personally to my credit card, but I have heard of people, specifically with BofA having their rewards card change and start charging an annual fee. It could be easy to miss that, so we need to be careful and read those notices we get in the mail – for fear of missing a rate hike!

Reply to this comment

avatar 11 Anonymous

I received my letter yesterday, and cancelled the card today.

Reply to this comment

avatar 12 Anonymous

I got my notification yesterday. It cited delinquencies… I’m kind of baffled, as we do have a mortgage with BofA (via Countrywide), have a total of two less-than-30-day late payments on our credit report (admittedly, both on the card), have good credit generally (no delinquencies other than those), pay the card off a few times a year, have a crazy low interest rate (just over 6%), and have never used more than a third of the available credit. Another of the issues listed is the lack of accounts with longevity… on an account that’s been open since 2004 (we’re in our early 30s).

Also, when you call the number in the letter for more information and/or to reject the change (which forces you to close the account), the only number the customer service reps have to call for more information is… the number in the letter.

So as far as I can tell, my choices are to accept the fee, or jeopardize my credit score by closing my oldest account. And I can’t talk to anyone at BofA who can offer me any other options.

No idea what to do that won’t come back and bite me in the ass.

Reply to this comment

avatar 13 Anonymous

I hate to say it but…. the best alternative is to get rid of the credit card debt that you can’t pay off in full every month. That will solve so many financial problems! Check out some of the awesome on line debt calculators to help motivate you to get rid of the debt.

Reply to this comment

avatar 14 Anonymous

@Barb Well, yes. :) We keep a single card for emergencies and planned purchases — like after my husband got re-employed recently, he needed to replace his computer, so we put that on with the understanding he would pay it off from his spending money over the next few months — rather than us emptying our already depleted savings.

Reply to this comment

avatar 15 Anonymous

@Flames-Sounds like you are making a wise and calculated decision. Sometimes the absolute “rules” don’t always work. :)

Reply to this comment

avatar 16 Anonymous

I haven’t gotten a letter imposing annual fees, but I will cancel my two cards immediately if I get one. I have never been late on a payment, and I have been their customer for ages.

Reply to this comment

avatar 17 Anonymous

Is it possible to cancel my BofA Credit card even if I still can’t pay the whole amount I owe them? I received the letter just today.

Reply to this comment

avatar 18 Anonymous

Yes, it is. You can’t use the card anymore but you continue making payments until the balance is paid off.

Reply to this comment

avatar 19 gotr31

Another reason for me to keep credit cards out of my wallet. I haven’t had any for over 5 years and I have been just fine. If you can build up your savings you don’t need a credit card and I have a debit for hotels and rental cars.

Reply to this comment

avatar 20 Anonymous

That’s the way to do it!

Reply to this comment

avatar 21 wylerassociate

i’ve paid off a few cards and have one more left to pay off. Once that debt is paid off, I’m going to be using my debit card and rely less on credit cards.

Reply to this comment

avatar 22 eric

It’s just waiting for me to mess up right?!? :)
Use credit responsibly folks!

Reply to this comment

avatar 23 Anonymous

It has nothing to do with that.

Reply to this comment

avatar 24 tigernicole86

Honestly, citi hasn’t treated me that well and I’m just waiting for the right credit union to get a credit card now that I’ve moved.

Reply to this comment

Leave a Comment

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these