Citi Credit cards to start charging annual fee on some cards–I have 2 citi credit cards, and my wife has 1. Both of mine are the “diamond preferred” Mastercard by Citi. What is so special about that you ask? Well, it turns out that I received 3 letters in the mail yesterday (for my 3 Citi credit cards), and here is what each letter read (an excerpt):
Letter From Citi Cards Stating They Will Charge Annual Fees on Credit Cards:
Dear Mr. XXX,
We’re writing to let you know about an important change we’re making to your account. Effective April 1, 2010, an annual fee of $60 is being added.
The reason we are making this change is to maintain the quality of our service amid the rising cost of doing business. However, because we value you as a customer, we wanted to give you an opportunity to have the annual fee credited back to your account.
[…] Each year we will credit the $60 fee back to your account once you have made $2,400 in purchases during that year.”
I was disappointed to receive this letter, as I really do not use any of my Citi cards at all for purchases. I have in the past, but I just kept these open to help my credit. I like to use my Chase card for my regular purchases as I like the rewards program much better.
Should You Pay An Annual Fee on a Credit Card?
Therefore, it looks like I have 4 options:
- Keep the cards and use them all to avoid the annual fee, which would be a total of $7,200 that I would need to spend to avoid the $60 annual fee.
- Keep the cards and don’t use them, but pay the $60 fee (which would total $180 just to keep the 3 cards).
- Use some cards to avoid the fee, but don’t use some and either cancel those or pay the fee.
- Cancel them all, since I don’t use them anyway. Bingo, we have a winner folks.
Well, this is basically a no-brainer for me. I am certainly NEVER going to pay an annual fee on a credit card. If they need to earn money so badly, perhaps they should start with their OVER COMPENSATED CEO’s, or their luxurious office’s and buildings. Don’t you think??
The funny thing is, I googled this about Citi charging annual fees, and one website said this,
Now, Citigroup’s attempt to charge annual fees — perhaps the first time a large card lender has used such fees in response to the legislation — will be watched closely by competitors. (emphasis by me)
So their competitors are interested in knowing what will happen, eh? Well, if you are a Citi Card competitor, I will save you the suspense and wait. This is exactly what the average consumer will do (and exactly what I will do in just a few hours from now):
I am going to call the credit card company and cancel all 3 accounts TODAY, and forget about Citi. That’s right folks. Citi is a great company, but they certainly aren’t the ONLY company. As long as their competitors give me a “no annual fee” credit card, I will gladly use it. I am not going to pay to use a credit card, any more than I am going to pay to use a bank. They benefit from my having a card in many ways (by selling my info to companies, charging interest when I use it, and so forth). So if they want to get greedy, it will probably backfire fast.
If you have a citi card, and don’t want to pay the annual fee (and don’t spend enough to get the fee credited back), it may be time to pay off the credit card, or do a balance transfer.