Low Interest Credit Cards

While Citi warned us last year that it planned to tack on an annual fee to accounts that didn’t meet a specified spending threshold, that news became a reality this week as notices of this policy change poured into cardholder mailboxes. Effective April 1, 2010, an annual fee of $60 is being added to many Citi credit card holders’ accounts. That fee will be credited back to the account holder if spending reaches $2400 in the calendar year. Alternatively, the cardholder can opt out of this change and cancel their account.

The changes come as the enactment of the next phase of the Credit Card ACT on February 22 draws nearer, and banks look to find ways to offset the accompanying loss of revenue.

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.

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.

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