DISQUS

janice schmidt · 1 month ago

I have had my Bank of America credit card for many years. I always pay off my balance and now see that I may have to pay a fee for that "privlege". I have a small business so know how much you make on this end of your charges. I guarantee that I will stop using your credit card immediately if I find you are going through with this "plan". I will not use my credit card for anything but will find one to use for online payment and may even have to use Paypal which at least does not require a fee for using it and paying it off. You are going to hear from all of your customers and will regret your decision.

Robert · 1 month ago

Looks like I won't be getting a B of A card anytime soon, then.

Anonymous · 1 month ago

There are plenty of no fee credit cards to choose from so it will be interesting to see how many people switch from using their BOA cards to other cards if they get hit with fees (especially when some of the BOA cards don't have the benefits that many of the other cards have).

bromoney · 1 month ago

Does this mean there will be new fees for cards we already have? I certainly would close any card that would start to carry a fee.

Julio · 1 month ago

Personally, I don’t see how they could asses this fee unless all banks did so simultaneously and gave us no options. If one bank started charging these fees they would simply force customers to close accounts and move on, especially if they target their ‘“deadbeat” customers whom typically have better credit and more options as to which cards they choose to carry.

Steve · 1 month ago

+1 to what Apex said. It's certainly true that interest charges and more recently the abundance of fees such as overlimit fees have both been great profit sources for credit card issuers. However, even a so-called "deadbeat" generates plenty of money for the issuers. People who use their cards regularly, especially those who use it a lot for all their middle-to-upper-middle class spending, will continue to find cards without an annual fee. Even lower spending consumers should be able to find such cards, though they might not get 1% cash back or perhaps might have to agree to get electronic statements or something.

Basically I think this "we're all going to get annual fees" stuff is FUD coming straight out of the mouths of industry spokespersons. Too bad for them it's too late!

Apex · 1 month ago

There is a misconception out there that banks only make money off customers who pay interest. That's entirely false. The minimum credit card fees are 2% of any transaction. 0.5% of that goes to the merchant bank which represents the seller, not the card holder. And 1.5% of that goes to the cardholder's bank. 1.5% of every single dollar spent for doing basically nothing. It's a rediculously high percentage for something that is so commoditized and so free of expenses as is the electronic clearing of credit card transactions.

Now granted the cardholder's bank has exposure because some people default. That's what the high interest is for. To cover the bad credit risks. Those of us who don't carry balances and don't pay interest are of zero risk to the cardholder's bank. ZERO as in free money. 1.5% of every transaction for ZERO risk. Where do I sign up?

This is why all these different companies are giving 1% cash back because that 1.5% fee is literally a cash cow. It's a market anomolly that if it weren't for the monopoly that the credit card clearing house has on setting those fees would never exist. So if they want to find profit there is all kinds of room in that 1.5% fee. They could just start lowering their cash back percentages. Frankly that fee should be no higher than 0.5% and then it would still be great plenty for doing almost nothing.

The idea that they need to charge you an annual fee to be allowed to make FREE MONEY off clearing your transactions is a joke, and any bank that tries that on me, can find my shredded card in the mail with instructions on where they can stick it while they kiss my posterior and my free money good bye.

Flexo · 1 month ago

Absolutely right, even those who make the most of their rewards are lining the pockets of Visa, MasterCard, and American Express. (Note these aren't the same companies that benefit the most from fees, the issuers -- except American Express who is the processor AND the issuer in most cases.)

Apex · 1 month ago

I didn't know that about AMEX, but I guess you don't usually see a bank name on a AMEX card. So they get both ends of the fees and have about 1-1.5% higher fees than Visa/Mastercard.

Frankly, why does anyone take this card? And why does anyone carry it? I really don't understand how they maintain their ability to charge nearly double the market rate (which is already too high) when I can't think of a good reason for a merchant to accept their cards. If I was a merchant I never would.

Can anyone explain why AMEX can maintain this well above market fee structure?

Dan · 1 month ago

@Apex: Every card user carries risk. Every. Single. One. Every time you use your credit card, the bank is lending you money for that transaction. And with that, there is a small risk that you won't pay it back. (Why do you have to pay interest to be a risk?)

One thing that I never figured out is why most consumers think they have a god-given right to no-annual fee credit. I consider myself lucky that those products are available, but I don't feel entitled to it.

As for me, my BofA card is my oldest trade line. I'll likely pay a small annual fee to keep it open.

janice schmidt · 1 month ago

I wonder if you know how much money they make on every transaction you make? The merchant or business is charge varying fees for the privilege of accepting the card for payment. I have owned a small business for 30 years and know their fees. They DO NOT need an annual fee from you and I.

Apex · 1 month ago

Yes you are correct that there is the risk that I suddenly stop paying. But the history is that I never carry a balance, and thus I have the funds to pay. If I start carrying a balance then I might not pay, but then I am paying interest, high interest, and I go into the pool of people who are much higher risk and thus pay the high interest penalty.

But the point was about those who never carry a balance and that those people are making the company no money. But they are, and they are doing it in a way that posses no risk because the company always gets all its money back if I never carry a balance. But I do get your point that until I give it back there is always the chance that I decide to change my habit or that my finances change and that is the small risk.

Apex · 1 month ago

Also, I don't think I have a right to a annual fee free card.

But I do expect the market to work. And when they have this 1.5% fee of all transactions going over the card and I charge probably 20K on it in a year ($300 of fees), they then need charge me 30-50 bucks just for the right to collect those fees? I don't think that makes any sense. If there were no fees to clear the transactions above the costs to the issuer, then sure, that would make sense. But the profit is built into the model, and the profit it provides is plenty big.

There is no need to charge a fee.

That goes right into things like checking account fees. Why does a bank need to charge me a fee to keep my money and pay me zero interest. Yes they have costs associated with having tellers and clearing checks but they get other business from you by you being part of the bank and my account has to float between 500-3000 dollars a month to make sure I have enough funds in it. So they get to keep all that money all year long and pay me nothing for it. I don't think they need to charge me a fee and there are plenty of banks that don't so I sure wouldn't have an account at one that did.

Matthew · 1 month ago

Has anyone seen a review of top cash back credit cards recently? With Blue Amex dropping its top rebate amount and Chase Freedom moving to a rotating 3% reward (and eliminating the $200 to $250 bonus), I've been looking to make a move again. I converted my Blue Cash to a Blue Sky Card with 1.33% rebate, but I was curious what others are doing.