Citi Adds $60 Fee Right Before CARD Act Goes Into Effect Monday

One week before the CARD Act goes into effect, Citi has added an annual fee to more accounts on many of its popular credit cards, Lowcards.com said today.

Many Citi cardholders are receiving letters about a $60 annual fee that is being added to their account effective April 1, 2010. If consumers make $2,400 in purchases during the year, then the annual fee will be credited back to their account.

It appears that Citi’s test of adding an annual fee to a small percentage of their customers in August of 2009 proved successful for the issuer. At that time, Citi began charging some cardholders an annual fee of $30 to $90 unless they spent at least $2,400 per year. Now a far greater number of customers are receiving this notice.

“The reason we are making this change is to maintain the quality of our service amid the rising cost of doing business,” said Ken Stork of Citibank in a letter to the cardholders receiving this notice.

“This is a very concerning sign for credit card consumers and it is further evidence of how issuers will react in 2010. Issuers are having to find creative ways to generate revenue. The tough economy, the high default rates they have experienced, and the enactment of the CARD Act have combined to make it a very stressful period for the issuers,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “Adding annual fees is one way to generate new revenue. Consumers need to watch for this on their accounts since only about 20% of the credit cards currently carry an annual fee.

“If you spend at least an average of $200 per month on your Citi card, this may not be a big deal. However, it is a problem for the cardholders who charge less than $2,400 per year, who keep the account open for emergencies or to boost their credit score. Other credit card issuers may follow Citi and add a similar fee.

“If the annual fee will be added to your account, contact the issuer to ask them to waive it. This may not work, but it doesn’t hurt to ask. You can opt out of the card and close the account. If you have a good history with this card and it is building your credit score, shift some of your spending to this card to reach the $2,400 limit and pay it off each month.”

LowCards.com ( http://www.lowcards.com ) simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card. The LowCards.com Complete Credit Card Index ( http://www.lowcards.com/CreditCardIndex.aspx ) is the most objective and comprehensive resource on the Internet which allows consumers to compare rates for all 1060 credit cards offered in this country. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for ten years.

 

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5 Comments on "Citi Adds $60 Fee Right Before CARD Act Goes Into Effect Monday"

  1. Citi received a call from me yesterday when I saw the notice. I canceled my card. CitiBank received TARP money. They just don’t get it.
    I used their card as a convenience. I don’t pay somebody a fee to allow them to make 6% of every dollar I spend via the card plus interest it I carry a balance.
    My congressman and Senators have received suggestions from me that they should pass a federal law requiring all merchants that accept credit cards to post the fees they pay to the cards and to offer that amount as a discount for those who choose to pay cash. End of tantrum.
    As regards members of the house and senate whose seats are up for re-election in November, please vote against the incumbent PARTY, regardless of the candidate. We need to clean the house (and 37% of the senate). Congressional experience has gotten us where we are (near national bankruptcy). We need new blood.
    “Life, Liberty and Property are most at risk when the Legislature i in session” – Daniel Webster

  2. I am also out, don’t need their card

  3. cancelling my card right now! bye Citi you slimey poo.. I cancelled another one of their cards for this reason some time ago… what a HORRIBLE company.

  4. Canceled my card as soon as was physically possible after receiving the letter.

    Please spread the word regarding Citibank’s greed.

  5. George Gombossy | March 1, 2010 at 2:21 pm |

    By the way, I do own some Citi stock and have their credit card. Might as well try to make some money off of them. Wish I bought Citi at 99 cents.

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