In what can only be described as a uniquely American way of blaming large companies for having the audacity to do things like charge fees and increase costs in order to stop losing money hand over fist Jen Stryker over at Bankaholic.com has written an article lambasting Bank of America (and Discover) for announcing that they would levy annual fees on certain credit cards.
Jen Stryker went so far as to label Bank of America and Discover as “not being one of the good guys” simply for daring to add annual fees to some of their credit cards. Let’s take a look at this issue and see if there are any valid concerns or if it is just more of the same type of lazy thinking that avoids anything to do with personal responsibility and relishes in chastising large companies for daring to make a thing called profits.
The first thing to note is that Stryker’s statements quickly appear somewhat ridiculous when you consider that Peter Eichenbaum and David Mildenberg of Bloomberg just released an article with the title of “Bank of America May Overhaul Cards After $4.7 Billion of Losses” which goes on to explain that Bank of America’s credit card operations have lost money for 5 consecutive quarters and is predicted to not even make a profit for quite some time.
Certainly many Bank of America credit card holders have every right in the world to discontinue using their credit cards if BOA decides to hit their cards with annual fees out of the blue and in fact it is probably a good idea in some situations. However, to say that BOA is somehow unjustified, predatory, or greedy to test out annual fees on certain credit cards is ludicrous when you realize that BOA’s credit card division is bleeding money right now and has been for over a year.
Granted, the upcoming Credit Card Accountability, Responsibility, and Disclosure Act (CARD) has caused some credit card issuers to receive negative press by jumping to raise card interest rates on existing card holders before the legislation comes into affect (most notably Wells Fargo: Wells Fargo Expected to Raise Credit Card Interest Rates 3%) and negative press is exactly what those card issuers that raise interest rates should get. But to say that the credit card companies like Bank of America that are losing money hand over fist issuing credit cards should be criticized for conducting business so as to stay in business and make a profit is absurd.
If you have a Bank of America credit card that has just been hit with an annual fee then realize that there are many other credit card options out there that likely have benefits that are just as good if not better than your current card benefits and without an annual fee. Avoid the temptation to characterize Bank of America as a greedy company out to punish its customers because although getting hit with an unexpected annual fee can certainly feel like a punishment it is in actuality the move of a company that is trying to deal with these uncertain economic times just like the rest of us.
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