Credit Lines Shrinkage

It looks like credit card companies are cracking down hard on unused credit. As I had blogged about previously, Citi had began charging an annual fee for inactivity. I actually called in this past weekend and inquired about switching to a different account with no fees. Unfortunately the customer service rep told me that it didn’t really matter which account I switched to, I’d be getting a similar letter soon afterwards telling me about the inactivity fee. I ended up closing that account. I believe I had about $6,000 in credit limit on that card.

Today I received a letter from American Express stating:

We’re writing today because we noticed that you’ve only been using a small portion of your available credit limit. To more closely match your spending history, we have adjusted the credit limit on your account to $6,500.00 The cash advance limit is $1,3000.00. If this new credit limit is not sufficient for your business, please call us at 1-800-660-2454 between the hours of 8:00am and midnight Eastern Time, Monday to Friday.

I believe my previous credit limit on this card was either $10k or $11k, so basically reducing it in half. Technically, I only put about $100/mo on this card, and mostly for gasoline purchases since it gives me 3% back instantly.

Banks must be hurting.

Citi Credit Card Now Has Annual Fee

Ooooh! 3rd post in 3 days. Fortunately it’s a different topic today. I’ve calmed down a lot since last night’s spew, but my heart still skips a beat every time I think of it.

Anyway, I got a letter to day from Citi:

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 amid 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.

Wow… credit card companies must be pushed back a lot to now include annual fees. Unfortunately, I know longer use this card on a daily basis as the rewards structure is no longer beneficial to me. I keep it around as an emergency card since my credit limit on it exceeds $10k.

I was hoping I would be able to consolidate this card onto a different account, one hopefully without annual fees, but it looks like this is the only remaining Citi account I have. I’m going to give them a call later this month and see if I can switch my account to a non-annual fees (even reward-less account).

I would like to avoid closing this account, since it’ll hurt my credit score, especially if this account has been opened for a long time.

There was a Consumerist article on this just a few days ago: Avoid Credit Card Annual Fees: Just Charge $2,400 Per Year

Interesting… JerusalemCherry says:

I just called Citi at 800-950-5114 They advised “ALL” CitiCards will now have annual fees due to the congress changing laws etc. She advised even, non rewards cards do too. They also said the Citi-website will be updated with info soon. The customer service rep at Citi also told me its not fair to the Citi customers since tax payers bailed Citibank out etc.

I guess even non-rewards Citi cards will have an annual fee. Bummers.