Not to long ago you could find a handful of credit card applications in your mailbox that advertised their newest credit card with no annual fees. Those offers still exist but in a change that is reflecting a shift in the credit market, credit card companies are starting to impose annual fees for those who cherish their plastic. Times they are a changing. Higher credit card annual fees are starting to pop up with increasing regularity so the question must be asked; Why?
Increased Regulation. The government has been looking into enforcing more regulation on the credit card industry. In an effort to protect the consumers from predatory lending the government will be inflicting more laws in an effort to shore up the economy. As revenue streams for credit card companies begin to dry up they will begin to look for ways to stabilize their income. One way they will do this is by imposing higher credit card annual fees. Annual fees will range between $29 and $99 dollars depending on the card and credit score of the owner. The math is simple. Creditcard.com estimates that there were some 80 million Bank of America Credit Cards in the wallets of consumers last year. By raising the rates on 10% of those cards or 800 thousand cards by an average of $29 per year Bank of America will see an increased revenue stream of $23 million dollars
Decreasing Debt Liability. Another reason credit card companies are imposing higher credit card annual fees is an attempt to limit their credit liability. As credit card companies continue to look for cash and hold onto cash they must find ways to decrease the amount of cash they are lending out. By limiting the number of credit card holders they have they decrease the amount in which they are responsible for lending. Chances are that if you have a credit card that is rarely used then you may be a victim of higher credit card annual fees. Others that may be affected by annual fees will be those with poor credit scores or those with extremely high credit availability.
Its all a test. Yes, I believe this is one giant test by the credit card companies to find out just how much our precious plastic is worth to us. If enough customers drop their credit cards because of higher credit card annual fees then you can rest assured the credit card companies will begin issuing cards with no annual fees once again. My guess is that as a country we have become so addicted to debt that we are willing to pay an annual fee just to maintain our ability to buy more than we can afford.
If you see higher credit card annual fees in your future, you have a tough decision to make. Hopefully this information will help you make an informed decision.