The First National Bank of Omaha is giving its clients a new option. Since some of its cardholders have not used their plastic in about two years, bank administrators are asking them if they would rather have their credit card account closed or if they would choose to pay annual fees in order to keep it.
Consumers all over United States may face more questions like this, as the credit card industry braces itself for new federal regulations that will take effect on February 22, 2010. The new credit reform, which was signed by President Barack Obama May this year, will limit the profits of card-issuers: something banks are dealing with through new consumer policies.
As of late, creditors are experimenting with what consumers want and how much they are willing to bargain to keep what they want. Banks are also letting consumers pay greater attention to their notices since they will not just be mailing new product offers. Many cardholders have recently received letters from banks saying that their cards are either getting cut off or charged with higher interest rates.
Representatives from First National's national credit card division say their main goal is to still have a consumer product and to provide real value to its clients. However, they add that so many things are happening in the card industry which is why they are employing some changes. They maintain though that they will try to keep their products competitive.
Representatives explained that most banks are opting to charge annual fees on existing customers instead of charging them with "nuisance" fees such missteps as late payments, over-limit charges, or returned checks.
Some larger banks are already experimenting with the fees, including those which are charged to cardholders who use their plastics regularly and pay their bills every month.
Bank of America is testing annual fees on about .5 percent of its customers, with some fees charged on zero-balance consumers. Representatives from BofA say the fees will appear on their February billing next year. Cardholders may choose not to pay but the bank says it will have to close their accounts.
Citigroup is also charging new fees, including interest fees which typically cost $2,400 a year.
American Bankers Association in Washington, D.C. says new rules will prevent them to raise interest rates on a cardholders account even if there is a high risk of default. ABA explains they need to make new adjustments in order to keep their products available to consumers.
Bankers also assure customers that the credit card industry remains competitive despite this economic crunch so they can easily look for other deals which would suit their preferences and payment ability.