Warning To Consumers: Credit-card Companies Increasing Annual Fees

Citigroup’s commitment to quality and integrity is once more put to the test, and  yet once more come out with flying colors!

The warnings from the banking industry to credit card issuers to compulsorily rewrite the playbook on plastic according to new credit-card laws is intended to implement new limits on interest-rate increases. The new legislation is expected to swing into action by February 2010. The regulations target (1) limiting fluctuating interest rates and fees and (2) fortifying consumers with more information on their debts. This directive affects existing balances and calls for greater disclosures. Understanding the implications of the development on credit card holders, Citigroup commits to the levy of annual fees, which are otherwise associated only with cards that have generous rewards programs.

Citigroup is now a connoisseur in the arena and has not only effectively responded to the legislation, but has also developed a strategy to be able to cope with credit-card loans that are going sour. Instead of raising fees and interest rates, readdressing various rewards programs or reducing current credit lines, Citigroup’s initiative remains for, of and by the people’s vested interest in the company!

In response to the legislation, the group has adjusted pricing and card terms as part of regular account reviews, according to Samuel Wang, a Citigroup spokesman. He goes on to admit that not only have these changes amply reflected the dramatically higher cost of conducting business but has also offered respite to customers as the company continues to preserve the broad availability of credit. This development seems in complete agreement with the views of the spokesperson of the Banker’s Association of America, Peter Garuccio, who said that the fees charged annual enables card issuers to be able to reconfigure credit card records and readdress the prices of their products.

According to sources, the increased annual fee was first publicized by blogs such as American Banker. However, different responses call for an overview:

A Bank of America spokeswoman said that her company hadn’t additional any annual fees to its cards since May, when the legislation was approved and it continued to stand by its plans of charging absolutely no annual fee on the cards in question.

In response to the legislation, a spokeswoman at American Express, a company known to charge its credit cards annual fees, said the company has no plans of raising fees or imposing them on feeless cards.

A spokesperson of Capital One Financial Corphas declared that the company has not made any adjustments to annual fees yet and as for future plans, executives are still assessing the new regulations and developing strategies to address them.

Chase, a unit of JPMorgan Chase declined to comment on its future plans but said most of its cards don’t have an annual fee. The company policy is to charge fees on some cards, like the travel cards that come with premium rewards.

In contrast a Citicard holder who received a mailer that mentioned the waiving of an annual fee of $30 in return for a $2,400 spending racked up on the card annually. Citigroup is experimenting with a range of annual fees, some in excess of $30. The best part of the Citigroup’s offer is that cardholders who are notified of these annual fees get a notice period of two months to opt out, while continuing to pay balances under current rates and terms for the rest of the contract tenure.

So What do you think about the rise in Annual Fees, is it just?