Last summer, Citibank started testing a new annual fee for some of its cardholders: Customers would have to pay anywhere from $30 to $90 a year for the privilege of using their Citi credit cards. If they charged $2,400 a year on their card, the fee would be refunded.
It looks like the tests went well (for Citi, at least).
This weekend, I received this letter, dated Feb. 13, regarding my PremierPass MasterCard:
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 and 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.
Here’s how it works. Each year, we’ll credit the $60 fee back to your account once you have made $2,400 in purchases during that year. That comes to an average of $200 in spending a month, an amount you can reach by using your card for purchases you already make, like gas, groceries, cell phone plans or your cable bill.
As always, you have the right to opt out of this change and close your account. Please read the Notice of Change in Terms and Right to Opt Out beginning on the back of this letter so you are fully aware of all your account changes. If you have questions, call 1-866-915-9425.
Customers who choose to close their accounts but still carry a balance will be able to pay off the debt at their current rate. It’s unclear how many customers are targeted by these letters, but the decisions are based on individual customers’ credit history and performance with Citibank.
Now, I don’t charge $2,400 to this card each year (I get better cash back rewards with another bank), but I do use it enough to keep it active. Guess that wasn’t good enough. It certainly wouldn’t break my heart to cancel the account–but doing so will cause my credit score to dip a little bit (I’ll have less credit available to me, increasing my debt to credit ratio–a factor that impacts credit scores).
So I called customer service to see if I could get myself out of the fee. The rep who took my call at first reiterated the letter–that I could get the fee credited back to me by spending an average of $200 a month with the card. But then I explained that if that was the case, I’d probably want to cancel the card–and wasn’t there a way to get out of it altogether? I was told that he couldn’t reverse the fee right now–since I hadn’t been charged it yet–but that when it actually appears on my statement, I can call back to get it reversed. I was a little skeptical, but the rep said that he looked at my history and I seem to be a good customer, so it shouldn’t be a problem. (He did imply that I was probably targeted because my annual spending on the card was low.) He even gave me his ID number as some sort of confirmation. I ended the call without canceling my account, but I’m not sure what to do just yet. What if I don’t opt out before the March 31 deadline hoping for a reversal–and get stuck with the $60 fee?