NEW YORK – Citigroup has become the first of the major card issuers to start adding annual fees to some existing credit card accounts in an effort to offset the effects of new laws cracking down on certain credit card practices.
Some analysts are predicting other large issuers will make similar moves. In Citi’s case, its new fee kicks in if a cardholder does not spend enough.
“I expect testing of annual fees to accelerate,” John Grund, a partner at First Annapolis Consulting Inc., told American Banker, an affiliate of Credit Union Journal. “It will be gradual, and they will become more prevalent, but they might not be on every product."
Samuel Wang, a Citi spokesperson, said by e-mail on Wednesday the company has “adjusted pricing and card terms for some customers as part of our regular account reviews. As part of this change in terms, a small number of Citi customers may be notified of an annual fee.” Wang told American Banker the move was the result of "the dramatically higher cost of doing business in our industry.”
Cardholders have been informed they will be charged an annual fee of $30 to $90 unless they spend a certain amount per year, usually $2,400.
