Mitchell of San Leandro was notified recently that next month his Wells Fargo credit card which he has had over 20 years was now going to hit him with a $45 annual fee.
Banks describe this annual fee as a a yearly charge for basically the convenience of having a credit card.
"I was out of work for a bit, so I had to charge my credit card," he said. "Now I have to pay that yearly fee on top of the interest because I need to keep the card."
If your credit card decides to charge you an annual fee, they are required by federal law to notify you 45 before it becomes effective. You can reject the fee by opting out and closing your account, but this could possibly hurt your credit score.
David Lazarus of the LA TImes wrote about Bank of America charging one customer $59 for their annual fee.
"I feel like an indentured servant," Sue Laman told Lazarus. "But what can I do? I can't refuse their annual fee. They know I have no choice except to pay."
With the banks being checkmated on late fee limits and over charge drafts, someone had to come up with a new way for money to come in.
In Lazarus's column he writes:
Bank of America recently notified about 5% of its cardholders that a $59 annual fee will be imposed beginning April 11. The bank says the fee is to address such issues as payments being too low or balances too high. It also says in letters to some cardholders that the annual fee is a response to "a review of your banking relationships with us."
Betty Riess, a Bank of America spokeswoman, said the annual fee is generally being imposed on "customers who would not qualify for a new account today." "They have a choice," she added. "They can reject the fee and pay off their account."
"It is equivalent to increasing interest rates and is yet another example of banks employing bait-and-switch tactics that place unfair financial burdens upon their customers," said Odysseas Papadimitriou, chief executive of CardHub.com, a credit card comparison site.
Remember the days of free checking, free checks and no minimum balance ? If one million customer are charged a $59 annual fee that comes to, yes $59 million a year.
Do you think that is fair ? I sure don't.