When Credit Card Protections Backfire


As new credit card rules are put into effect to help consumers, banks are coming up with more ways to charge fees, like the formerly rare annual fee.

Citigroup has already started instituting annual fees on some current credit card accounts in an attempt to offset new restrictions on interest rates, overlimit and other fees, according to The Wall Street Journal.

"These changes … reflect the dramatically higher cost of doing business in our industry as we work to preserve the broad availability of credit," Citigroup told the Journal.

Credit card issuers have already been hiking interest rates, cutting credit lines, reducing rewards and closing accounts

Annual fees have generally been only charged by cards with big rewards programs, but as Citi brings them back, other credit card issuers will be keeping a close eye on the reaction to the policy to determine whether they will follow suit. 

Discover Financial Services (Stock Quote: DFS) has no plans to charge an annual fee, American Express (Stock Quote: AXP) hasn't raised fees or imposed them on its fee-less cards but didn’t comment on its plans going forward, Capital One Financial (Stock Quote: COF) still hasn’t decided whether to impose annual fees and Chase (Stock Quote: JPM) declined to comment, according to the Journal.

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