Bank of America and other big credit card issuers are handing credit unions with card programs another strong marketing message by starting to add annual fees to their cards once again.
Annual fees had been a regular feature of credit cards until 1990 when AT&T started offering a credit card without one and other card issuers quickly followed suit. A combination of the economic downturn and increased regulations has helped bring them back, card analysts say.
So far, Bank of America says its annual fee of between $29 to $99 is "experimental" but analysts expect them to stick and for the bank try to wring at least a little money out of card holders who pay off their balances in full each month and therefore provide no finance charge income.
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They also expect the practice to spread to other big bank issuers, leaving room for credit unions and other smaller card issuers without the bank's high default rates to offer consumers a better deal.
"Actions like these are rarely singular events. One issuer takes a new step and the others likely follow. Issuers are trying everything they can to reduce risk and increase revenue, especially since regulations are limiting their options," said Bill Hardekopf, CEO of LowCards.com, a Web site hat helps consumers make card decisions. "Consumers have to pay attention to their bill and the notices they receive in the mail."
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