Citibank charging annual fees if you fail to charge

February 18, 2010 – 1:25 am

In a move that will likely be replicated by its competitors, Citibank has begun charging annual fees on some credit card users. The new annual fee, according to a source who has received notice, is $60 and can be credited back if enough money is spent on the card over the course of a year.

This new development is likely a beta-test in which a range of customers will be slapped with a range of fees and terms. Once Citi is able to guage customer reaction, they may initiate these fees on a broader scale or drop the endeavor altogether. Unfortunately, figuring out Citi’s moves is never an easy task.

Charging an annual fee to customers who use their cards infrequently may be a larger trend this year-and one with consequences. Consumers who do not wish to pay annual fees will likely opt to close their accounts which can, in many circumstances, adversely affect their credit scores. Thus, just as the interest rate increases of 2009 took many excellent credit scores down a few notches, the imposition of annual fees may inflict even more damage, as the CARD Act leads banks to take actions that are essentially making America a subprime country.

Financial Source